As digital subscriptions and streaming services become increasingly popular, understanding Maryland’s tax policies on these services is essential. Whether you’re binge-watching your favorite show or using an online software tool, you may notice a small addition to your bill: sales tax. Here’s what you need to know about Maryland’s tax rules for digital subscriptions.
Yes, digital subscriptions are taxable in Maryland. This includes a wide range of services, such as:
These services are considered taxable under Maryland’s laws because they provide access to digital content, which is categorized similarly to tangible goods or traditional services.
In 2021, Maryland expanded its sales tax laws to include digital products and services. This change was part of a broader effort to modernize the state’s tax system and reflect the shift toward digital consumption. By taxing digital subscriptions, Maryland aims to capture revenue from the growing digital economy.
For consumers, this means that streaming your favorite show or subscribing to an online tool now comes with a small additional cost in the form of sales tax.
Maryland’s sales tax on digital products applies to:
It’s important to note that this tax applies regardless of whether the subscription is billed monthly, annually, or as a one-time purchase.
Certain digital goods may qualify for exemptions under specific conditions. For example, if a digital product is part of a package that includes tax-exempt services, it may not be taxed. However, these situations are relatively rare, and most standalone digital subscriptions are subject to Maryland’s sales tax.
While the additional cost may seem minor, it can add up over time, especially for those with multiple digital subscriptions. Businesses offering these services must also ensure they comply with Maryland’s tax laws by properly collecting and remitting sales tax.
