Maryland has passed legislation that will impose a new 3% sales tax on data and information technology services, effective July 1, 2025. This measure is part of a broader budget agreement reached by Governor Wes Moore and legislative leaders.
Taxable services will include data processing, hosting, IT services, web search portals, online directories, digital libraries, research databases, computer systems design, software design, development, and publishing.
The tax will apply to a range of services, including:
- Data Processing, Hosting, and Related Services (NAICS 518)
- Web Search Portals, Libraries, Archives, and Other Information Services (NAICS 519)
- Computer Systems Design and Related Services (NAICS 5415)
- Software Publishers (NAICS 5132)
- Media and Intellectual Property Licensing Transactions.
The 3% rate is lower than Maryland’s general 6% sales tax rate, but if a service could be taxed under multiple definitions, the higher rate would apply. This proposal follows the abandonment of an earlier measure that would have imposed a 2.5% tax on many business-to-business services, which faced significant opposition from the business community
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