Maryland State Tax Updates

Our Dash of SALT Blog provides the most recent developments and changes in state and local tax regulations. Here are the latest updates for Maryland.

April 27, 2026

Maryland Budget Reconciliation and Financing Act of 2026

Authored by: Jessie Racioppi and Bonnie Susmano, JD, MBA

On April 8, 2026, Maryland Governor Wes Moore signed the Budget Reconciliation and Financing Act (BRFA) of 2026, enacting wide-ranging tax changes affecting pass through entities, depreciation conformity, tax credit programs, and certain state taxes. The legislation delays and revises prior amendments to Maryland’s pass through entity (PTE) elective tax regime. Effective June 1, 2026, the BRFA 2026 postpones the amendments to the calculation of PTE taxable income imposed by the BRFA 2025. Effective June 1, 2026, for tax years beginning on or after December 31, 2026, a PTE may elect to treat a resident member’s income as derived from or attributable to the PTE’s Maryland trade or business for purposes of calculating entity level tax. If the PTE makes the election, the entity‑level tax is calculated separately for resident and nonresident members and by member type (individual versus entity), applying individual rates plus the special nonresident tax rate to individual members and the corporate rate to entity members. If the PTE makes no election, the tax applies using a more uniform approach, applying the combined individual rates to all individual members and the corporate rate to all entity members based on PTE taxable income determined without regard to Maryland sourcing for resident members.

The BRFA further modifies Maryland’s conformity with federal bonus depreciation rules for manufacturing entities and qualified production property, adjusts caps on student loan debt relief credits, limits annual credits under the More Jobs for Marylanders Program, and establishes rules for interest on potential refunds of the Digital Advertising Gross Revenues Tax.

The act also limits the use of IRC bonus depreciation for manufacturing entities by capping the additional allowance at 20% of basis and fully decouples from bonus depreciation for qualified production property. In addition, the BRFA revises annual funding limits for student loan debt relief income tax credits, imposes a $15 million cap on credits under the More Jobs for Marylanders Program, and directs the Comptroller to set an interest rate for any future Digital Advertising Gross Revenues Tax refunds based on the average prime rate, should the tax ultimately be found unconstitutional.

If you have questions about the impact of state budget bills on your business, please reach out to a member of the Withum SALT Team.

January 20, 2026

Maryland Raises Tire Recycling Fee and Imposes New Tire Surcharge Effective January 2026

Authored by: Breea Boylan, CPA and Courtney Easterday, MSA

Beginning January 1, 2026, Maryland increased its tire-related taxes and fees, affecting all tire dealers and businesses engaged in the first sale of new tires within the state. Under regulatory amendments announced by the Comptroller of Maryland on December 22, 2025, the state’s tire recycling fee will rise from $0.80 to $1.00 per tire, marking the first increase since 2005. At the same time, Maryland will introduce a new $5.00 tire fee on the first sale of every new tire, including those sold as part of new or used vehicles, trailers, farm equipment, and similar machinery. These fees do not apply to tires sold to out-of-state wholesalers or retailers, and sellers must report both fees together on the same return. Once administrative costs are deducted, the revenue from the $1 recycling fee will support the Used Tire Cleanup and Recycling Fund, while proceeds from the new $5 fee will flow into the Maryland Transportation Trust Fund.

In addition to the immediate January 2026 increases, Maryland has also authorized periodic future adjustments to the recycling fee. Beginning in 2026, the Maryland Department of the Environment may revise the tire recycling fee every 2 fiscal years based on the Consumer Price Index, provided the fee does not exceed $2.00 per tire. Public comments on the regulatory package will remain open through February 9, offering stakeholders an opportunity to weigh in before the final rules are codified.

If you have questions about excise taxes and related fees, please reach out to a member of the Withum SALT Team.

August 6, 2025

Maryland Comptroller Issues Guidance on Digital Advertising Gross Revenues Tax

Authored by: Bonnie Susmano, JD, MBA and Eric Wagener

On July 11, 2025, the Maryland Comptroller’s Office provided guidance on the Digital Advertising Gross Revenues (“DAGR”) tax, which took effect in January 2022, and related refund claims in TB-59. The guidance provides various definitions relevant to the digital advertising tax, including the filing requirements and tax calculation.

DAGR tax is the tax imposed on annual gross revenues from digital advertising services of at least $1 million in Maryland. To qualify as a digital advertising service, the service must be banner advertising, search engine advertising, and/or interstitial advertising, or any comparable service. The services must also be both programmatic and conveyed visually. Programmatic, meaning it automates the advertising using workflows or machine learning algorithms. The visual component of the advertising allows for the inclusion of advertising without any auditory element, making the qualifying services much broader. Taxpayers must file a DAGR tax return, Form 600, and quarterly estimated tax returns, Form 600D.

Taxpayers can request a refund for overpayment through an amended Form 600 tax return, which can only be amended for a return already on file. The refund also necessitates supporting documentation, both qualitative and quantitative. Explanations must be included in the amended return, and any changes to previously reported amounts must be described. A refund claim also requires taxpayers to provide any sales records or technical information related to the basis of the refund being requested. The state issued a maximum refund lookback period of three years from the initial tax payment date.

If you have questions about the taxability of digital advertising services in Maryland, please contact a member of the Withum SALT Team.

July 24, 2025

Maryland Expands the Definition of Services Subject to Sales and Use Tax

Authored by: Breea Boylan, CPA and Penny Sweeting, CPA

Effective July 1, 2025, the Comptroller of Maryland expanded the definition of services subject to a 3% sales and use tax to include data services, information technology services, system software publishing services, and application software publishing services described under NAICS sectors 518 or 519, or subsector 5415 or 5132. The NAICS classification that a business reports as their primary business activity code for federal and state income tax purposes is not the determinative factor of whether sales and use tax is imposed. A business must evaluate each service it provides in relation to how Maryland law defines taxable services to determine its taxability.

The new law imposes a 3% sales and use tax rate on the sale of the following services: software publishing services; computing infrastructure providers, including data processing, web hosting, and related services; web search portals, libraries, archives, and other information services; and computer systems design and related services. In addition, this new law taxes SaaS (“Software-as-a-Service”) sold for individual use at the full 6% rate, while the same SaaS is taxed at the lower 3% rate when sold for use in an enterprise computer system.

If you have any questions about the state tax treatment of digital goods and services, please reach out to a member of the Withum SALT Team.

July 17, 2025

Maryland Expands Exemption for Precious Metal Bullion and Coins

Authored by: Courtney Easterday, MSA and Joe Petrucci

Effective July 1, 2025, Maryland has removed the $1,000 minimum sale price threshold previously required to qualify for the state’s sales and use tax exemption on the sale of precious metal bullion or coins. The change broadens the exemption by allowing all qualifying sales—regardless of price—to be tax-exempt. The bill was cross-filed as SB1017 and originally introduced in a prior session as HB1322.

If you have questions about sales tax exemption, please reach out to a member of the Withum SALT Team.

December 17, 2024

Maryland 2024 EITC Eligibility Notifications

Authored by: Breea Boylan, MSA, CPA and Courtney Easterday, MSA

The Maryland Comptroller’s Office requires employers to provide, on or before December 31, 2024, electronic or written notice to an employee who may be eligible for the federal and Maryland EITC. Employees may be entitled to claim an EITC on their 2024 federal and Maryland income tax returns if both their federal adjusted gross income and their earned income is less than the set thresholds. Employees who meet this income eligibility should be advised to visit the Internal Revenue Service Website at irs.gov, or contact a tax advisor, to see if they meet the other federal criteria. Employees who are eligible for the federal EITC are eligible for the Maryland EITC.

If you have questions about employment taxes, please reach out to a member of the Withum SALT Team.

The RELIEF credit is automatic on the bFile site for eligible taxpayers starting May 17^th, 2021. If a return for the periods eligible has already been filed by an eligible business, the return can be amended to take the RELIEF credit. In order to amend the sales and use tax return for the credit, the taxpayer must email [email protected] and must include the following information:

The business name and CR number;
A statement that you wish to claim the RELIEF credit in lieu of the standard vendor discount;
The amount of discount being claimed (ie. The lesser of $3,000 or the sales and use tax due on the return, so long as the sales and use tax due is less than $3,000).

For monthly and quarterly filers, return periods ending March, April, and May 2021 have an extended deadline of July 15th, 2021. You may take advantage of the relief credit and the extended deadline.

Please see the bulletin for more information.

Disclaimer: Please note this is the information that is readily available at this time, it is subject to change so please consult your Withum tax advisor.