Does Maryland Charge Sales Tax on Services?

by TaxJar January 5, 2023

The majority of U.S. states require merchants to charge sales tax on tangible personal property (TPP), otherwise known as physical goods. Many states also implement sales and use tax on digital goods and SaaS. Because the economy has shifted over time from a manufacturing economy to a service economy, states are now looking to generate revenue by taxing services.

Here’s what merchants need to know about taxing services in the state of Maryland, which has a state sales tax rate of 6%.

Does Maryland charge sales tax on services?

Services in Maryland are generally not taxable, with a few exceptions:

Admissions and amusements (note: this is a separate tax in addition to sales tax)
Use or rental of recreational or sports equipment
Lease or rental of tangible personal property
Fabrication, printing, or production of tangible personal property by special order
Commercial cleaning or laundering of textiles for a buyer who is engaged in a business that requires the recurring service of commercial cleaning or laundering of the textiles
Cleaning of a commercial or industrial building
Cellular telephone or other mobile telecommunications service
“900”, “976”, “915”, and other “900”-type telecommunications service
Custom calling service provided in connection with basic telephone service
Telephone answering service
Pay per view television service
Credit reporting
Security service, including a: detective, guard, or armored car service; and security systems service
Transportation service for transmission, distribution, or delivery of electricity or natural gas, if the sale or use of the electricity or natural gas is subject to the sales and use tax
Prepaid telephone calling arrangement
Privilege given to an individual to consume wine that is not purchased from or by a restaurant, club, or hotel
Charge for a mandatory gratuity or service charge in the nature of a tip for serving food or any type of beverage to a group of more than 10 individuals

Please keep in mind that this is a guideline, and you should consult with a sales tax professional to determine if the services your business provides should be subject to state sales tax. For an in-depth look at Maryland sales tax, TaxJar’s guide to sales tax in Maryland and the Comptroller of Maryland has more details.