State of Maryland Flag

Maryland Sales Tax Guide for Businesses

Sales Tax Rate
6.0%
Local Taxes
None
Website
Comptroller of Maryland
Tax Line
1-800-638-2937

We wrote this guide for online sellers who want to know if they even have to bother with sales tax in Maryland, and if so, how best to tackle the sales tax situation in the Old Line State.

After reading this, you’ll know:

  • Do you or don’t you need to collect Maryland sales tax?
  • Which customers do you collect from?
  • How much do you collect?
  • What do you do with all the sales tax you’ve collected?
  • Way more than you probably ever wanted to know about Maryland sales tax

Do you have sales tax nexus in Maryland?

Good news! You only have to begin thinking about Maryland sales tax if you have sales tax nexus in Maryland.

“Sales tax nexus” is just a fancy way of saying “significant presence” in a state.

Maryland considers a seller to have sales tax nexus in the state if you have any of the following in the state:

  • An office or place of business
  • An employee present in the state
  • Goods in a warehouse
  • Ownership of real or personal property
  • Making repeat entries to the state for service or repair to tangible personal property

You can click here to read exactly what the Maryland Department of Revenue (Maryland’s taxing authority) has to say about what constitutes sales tax nexus in Maryland.

Do you have sales tax nexus in Maryland if you sell on FBA?

If you sell on Amazon FBA, you might soon have sales tax nexus in Maryland. Amazon is soon planning to open a Fulfillment Center in Baltimore.

Once this fulfillment center is open, you can do one of two things to determine whether or not you have items stored in an FBA warehouse in Maryland:

  1. Login to Amazon Seller Central and pull your inventory report
  2. Sign up for a 30-day free trial of TaxJar and find out from where your Amazon inventory ships with our Amazon badge feature

Once it is open, you may find that your inventory is stored in Maryland’s Amazon fulfillment center:

Warehouse Code Address County Tax Rate
BWI1 2010 Broening Hwy. Baltimore, MD 21224 Baltimore 6%
BWI2 5501 Holabird Avenue, Baltimore, MD 21224 Baltimore 6%

Read here for more about Amazon FBA and sales tax nexus. Here’s a list of all Amazon Fulfillment Centers in the country.

Is what you’re selling even taxable?

You’ve probably read this far because you realized you have sales tax nexus in Maryland. Your next step is to determine if what you’re selling is even taxable.

Services in Maryland are generally not taxable. So if you’re a freelance writer or a plumber, you’re in luck and you don’t have to worry about sales tax. But watch out – if the service you provide includes creating or manufacturing a product, you may have to deal with the sales tax.

Tangible products are taxable in Maryland , with a few exceptions. These exceptions include snack food, prescription medicine and medical devices, and farm equipment.

So if you sell toys, then charge sales tax to your Maryland customers.

But if you’re a graphic designer, don’t charge sales tax to your Maryland customers.

If you have sales tax nexus in Maryland and your products are taxable, your next step is to register for a sales tax permit.

How to Register for a Sales Tax Permit in Maryland

Sellers with sales tax nexus in Maryland must apply for a Maryland sales tax permit.

Don’t skip this step! Maryland considers it unlawful to collect sales tax in their name without a permit. Go here for more on how to register for a sales tax permit in Maryland.

How to Collect Sales Tax in Maryland

So you’ve determined that you have sales tax nexus in Maryland and what you’re selling is taxable. And you’re all set and registered for your Maryland sales tax permit.

The next step is to determine how much sales tax to collect.

The sales tax rate you collect in Maryland depends on whether you are based in Maryland or out-of-state.

How to Collect Sales Tax in Maryland if you are Based in Maryland

Maryland is a destination-based sales tax state. So if you live in Maryland, collecting sales tax is based on where your customer lives.

You can look up your local sales tax rate with TaxJar’s Sales Tax Calculator or by going to TaxJar.com/mobile on your mobile device.

Example: You live and run your business in Baltimore, MD in the 21117 zip code. You have a customer in Annapolis in the 21401 zip. You would charge your customer the rate for where they live which is the state sales tax rate of 6%, because Maryland doesn’t have local taxes.

How to Collect Sales Tax in Maryland if you are Not Based in Maryland (But Have Maryland Sales Tax Nexus)

Maryland wants sellers who made a sale into Maryland from outside the state to charge sales tax based on the destination of the buyer. Fortunately, this is easy because the sales tax rate across the board in Maryland is 6%.

Example: You live in Colorado, but have sales tax nexus in Maryland due to hiring your sister who lives there. If you sell a product to a customer in Annapolis, you would charge the state sales tax rate of 6%.

What are the Amazon sales tax settings for Maryland?

If you are an Amazon pro seller and use Amazon to collect sales tax, be sure you have your Maryland sales tax settings entered correctly. Find step-by-step instructions for setting up your Amazon sales tax settings here.

If you are a… State tax County tax City tax District tax Custom rate Is shipping taxable? Is gift wrapping taxable?
Seller living in Maryland X       N/A No No
Seller living outside of Maryland X       N/A No No

Should you collect sales tax on shipping charges in Maryland?

Separately stated shipping charges are not taxable. However, handling charges are and if the shipping and handling charges are combined, then the shipping charge loses its exemption.

Rank City Population County Total SalesTax
1 Baltimore 621,849 Baltimore City 6.000%
2 Columbia 103,055 Howard 6.000%
3 Germantown 89,826 Montgomery 6.000%
4 Silver Spring 77,460 Montgomery 6.000%
5 Waldorf 71,399 Charles 6.000%
6 Frederick 69,479 Frederick 6.000%
7 Glen Burnie 68,550 Anne Arundel 6.000%
8 Ellicott City 68,513 Howard 6.000%
9 Gaithersburg 67,456 Montgomery 6.000%
10 Rockville 66,980 Montgomery 6.000%
11 Dundalk 62,349 Baltimore 6.000%
12 Bethesda 62,102 Montgomery 6.000%
13 Bowie 58,025 Prince Georges 6.000%
14 Towson 57,725 Baltimore 6.000%
15 Aspen Hill 52,607 Montgomery 6.000%
16 Wheaton 50,688 Montgomery 6.000%
17 North Bethesda 48,818 Montgomery 6.000%
18 Severn 47,432 Anne Arundel 6.000%
19 Bel Air South 46,955 Harford 6.000%
20 Potomac 45,945 Montgomery 6.000%

Caption: The Top 20 Most Populous Cities in Maryland and their Sales Tax Rates (June 2017)

When are Maryland Sales Tax Returns Due?

When you file and pay Maryland sales tax depends on two things: your assigned filing frequency and your state’s due dates.

How often will you file sales tax returns in Maryland?

States assign you a filing frequency when you register for your sales tax permit. In most states, how often you file sales tax is based on the amount of sales tax you collect from buyers in the state.

In Maryland, you will be required to file and remit sales tax either monthly, quarterly, semiannually or annually.

How often you are required to file sales tax in Maryland follows this general rule:

Average Monthly Tax Liability Filing Frequency
$700.01 and up Monthly
$0 to $700.00 Quarterly
Only in special cases Annually or Semiannually

Maryland sales tax returns are always due the 20th of the month following the reporting period. If the filing due date falls on a weekend or holiday, sales tax is generally due the next business day.

2017 Maryland Monthly Sales Tax Filing Due Dates

Taxable Period Due Date
*January February 21, 2017*
February March 20, 2017
March April 20, 2017
*April May 22, 2017*
May June 20, 2017
June July 20, 2017
*July August 21, 2017*
August September 20, 2017
September October 20, 2017
October November 20, 2017
November December 20, 2017
* December January 22, 2018*

*indicates a due date pushed back due to a weekend or holiday

2017 Maryland Quarterly Sales Tax Filing Due Dates

Taxable Period Due Date
Q1 (Jan - Mar) April 20, 2017
Q2 (Apr-Jun) July 20, 2017
Q3 (Jul-Sep) October 20, 2017
*Q4 (Oct-Dec) January 22, 2018*

*indicates a due date pushed back due to a weekend or holiday

2017 Maryland Semi-Annual Sales Tax Filing Due Dates

Taxable Period Due Date
Semiannual (Jan-June) July 20, 2017
*Semiannual (July- Dec) January 22, 2018*

*indicates a due date pushed back due to a weekend or holiday

2017 Maryland Annual Sales Tax Filing Due Dates

Taxable Period Due Date
*Year 2017 January 22, 2018*

*indicates a due date pushed back due to a weekend or holiday

Click here for a chart of Maryland sales tax filing due dates in 2017.

How to File Sales Tax in Maryland

When it comes time to file sales tax in Maryland you must do two things:

  1. Calculate how much sales tax you owe
  2. File a sales tax return
  3. Make a payment

We’ll walk you through these steps.

How to Calculate How Much Sales Tax You Owe in Maryland

Calculating how much sales tax you should remit to the state of Maryland is easy with TaxJar’s Maryland sales tax report.

All you do is connect the channels through which you sell – including Amazon, eBay, Shopify, Square and more – and we’ll calculate exactly how much sales tax you collected. All the information you need to file your Maryland sales tax return will be waiting for you in TaxJar. All you have to do is login!

How to File and Pay Sales Tax in Maryland

You have three options for filing and paying your Maryland sales tax:

Other Facts You Should Know about Maryland Sales Tax Filing

There are a few more things you should know about sales tax in Maryland:

Penalties:

  • Late Filing Penalty 10% penalty and interest at no less than 1% per month

If you do not file a missing return after receiving a notice, an estimated assessment may be levied and additional penalty applied. Additionally, a $30 service charge is applied for bad checks.

“Zero returns”:

Maryland requires that any seller with a sales tax permit file a sales tax return on your due date even if you don’t have any sales tax to report or pay.

Discounts:

Many states understand that collecting sales tax is a difficult burden on merchants, and will provide a discount to help alleviate some of this burden. In Maryland, as long as the sales tax is paid on time, a discount is available. The allowable discount for timely filing and paying is 1.2% of the first $6,000 collected and 0.9% for the amount above $6,000. The discount is capped at $500 for each return. If you are filing a consolidated return, or are eligible to file a consolidated return, the total maximum discount allowed for all returns for any one period is $500.

Maryland Sales Tax Holidays

Maryland has 2 sales tax holidays in 2017:

February 18-20, 2017: Energy Efficient Appliances Sales Tax Holiday August 13-19, 2017: Back to School Sales Tax Holiday

Check here for more information about Maryland’s sales tax holidays including how to handle sales tax holidays as an online seller.

And that’s it. You’ve mastered Maryland sales tax filing! Now that sales tax is out of the way, you can get back to what you do best – running your business.

Maryland Sales Tax Resources

For more about Maryland sales tax, check out the Maryland section of the TaxJar blog.

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