What is sales tax in Maryland?
Maryland doesn’t have a local sales tax. Instead, MD’s sales tax rate is 6% on taxable purchases. Maryland also has a higher state sales tax rate of 9% on alcoholic beverages.
- A base MD state sales tax rate of 6%
- Alcoholic beverage tax rate of 9%
- Short-term passenger vehicle rentals rate of 11.5%
There are, however, exemptions to sales tax in Maryland including things like some kinds of food and prescription drugs.
Here are some examples of the sales tax rate in different cities:
- What is the sales tax rate in Annapolis, MD? – 6%
- What is the sales tax rate in Baltimore, MD? – 6%
See Maryland’s sales tax rate page for more information about sales tax rates in Maryland.
What is the Maryland food tax rate?
Maryland’s food tax rate is actually a sales tax exemption on the purchase of food in certain circumstances. In order to be exempt from MD sales tax, the food purchase must fit the following criteria:
- Be purchased by a grocery or market business where the sales of grocery or market food items make up at least 10% of their sales of food.
- Food must be sold for consumption off the premises. Prepared food is taxable. Food items that would normally be consumed on the premises but are packed for takeout are taxed.
While Maryland exempts most food items sold under the above conditions from sales tax, there is a tax on food in Maryland on some types of food items. They include:
- Soft drinks
- Bottled water
- Alcoholic beverages
- Ice cream sold in a container of less than 1 pint
- Salad, soup, or dessert bars
- Party platters
See Maryland’s food tax page for more information about what kinds of food purchases are excluded from tax.
What is the restaurant tax in Maryland?
Maryland’s restaurant tax situation is somewhat complicated. In the state, most restaurants will have to charge 6% on the sale of all food and 9% on the sale of all alcohol. However, there are exemptions for some sales by restaurants that also sell grocery or food items for consumption off-premises.
In those cases, so long as at least 10% of the business’ sales of food are tax-exempt food items that aren’t consumed on site, then the restaurant doesn’t need to charge sales tax on any non-prepared food items they sell that aren’t for immediate consumption.
See Maryland’s restaurant tax page for more information.
What counts as taxable items in Maryland?
Maryland defines ‘taxable’ items to include sales, rentals, leases, and licenses of items. While Maryland does offer some sales tax exemptions, all other items must be charged at the normal MD state sales tax rate.
Here are a few examples of taxable items in Maryland:
- Tangible personal property, unless an exemption applies
- Certain services
- Food, unless a person operating a substantial grocery or market business sells the food for consumption off the premises
- Digital products and digital codes
- Leases and rentals of tangible personal property
- Software as a Service (SaaS)
What are non-taxable items or sales tax exemptions in Maryland?
MD sales tax doesn’t apply to a number of items that qualify for sales tax exemptions. Here’s a list of some of the exemptions on state sales tax in Maryland:
- Prescription drugs
- Certain services (ex. Installation and delivery charges)
- Non-prepared food items sold at a substantial grocery or market
- Sales or rentals of medical equipment
- Sales or rentals of mobility or prosthetic devices
- Farm equipment
For more information about what’s exempt from sales tax in Maryland, see the Maryland sales tax exemption guide.
When do I need to collect sales tax in Maryland?
Maryland has a number of ways that remote sellers could achieve nexus in the state. If your business achieves Maryland nexus, you will be required to collect and remit sales taxes.
You can achieve nexus in Maryland in two ways: Physical nexus or economic nexus.
- Physical nexus is achieved when businesses have some kind of physical presence in Maryland – even if their main headquarters is in another state.
- Maryland economic nexus is achieved when you have gross revenue of more than $100,000 in sales into Maryland OR
- More than 200 separate transactions in the previous or current calendar year in Maryland.
With Maryland economic nexus, your business could achieve nexus with no ties to the state. Below, we break down some criteria around achieving Maryland sales tax nexus.
What is the physical Maryland nexus threshold?
Certain kinds of business activities will create a physical nexus in Maryland even if you don’t have an office in the state.
Examples of business activities that can create Maryland nexus include:
- Permanently or temporarily maintains, occupies, or uses any office, sales or sample room, or distribution, storage, warehouse, or other place for the sale of tangible personal property or a taxable service directly or indirectly through an agent or subsidiary.
has an agent, canvasser, representative, salesman, or solicitor operating in the state for the purpose of delivering, selling, or taking orders for tangible personal property or a taxable service.
- Enters the state on a regular basis to provide service or repair for tangible personal property.
- Regularly uses the person’s vehicles to sell or deliver tangible personal property or a taxable service for use in the State.
For more information on physical Maryland nexus, see the State of Maryland’s info page.
What is the economic nexus threshold in Maryland?
Remote businesses who sell into Maryland can achieve sales tax nexus in Maryland via economic nexus. This is triggered when they have gross revenue of more than $100,000 or more than 200 separate transactions in the state in a calendar year.
This is how transactions are counted towards that threshold:
- Gross revenue means the gross revenue from the sale of tangible personal property or taxable services delivered into Maryland. That includes non-taxable sales and transactions.
- Sales transactions means the sale of tangible personal property or taxable services for delivery into Maryland in separate transactions.
- Registration is required by the first day of the following month in which either of the thresholds was met.
Learn more about Maryland economic nexus.
How does Maryland nexus work with marketplaces?
Maryland nexus similarly applies when you’re working with marketplaces as either a facilitator or a seller. However, here are some special considerations around economic Maryland nexus and sales tax collection if you use or run a marketplace:
- A marketplace facilitator selling into Maryland is required to register for sales tax in Maryland and collect sales tax on behalf of their sellers.
- Marketplace sellers do not have to register and remit sales tax for their marketplace sales. They only need to register and collect sales tax if they achieve Maryland economic nexus through direct sales.
Learn more about Maryland economic nexus and marketplaces.
Selling online in Maryland?
Stay on top of your Maryland tax filing with TaxCloud. We’ll help you track your progress towards Maryland economic nexus, alert you when you need to register for a Maryland sales tax license, and ensure you charge the right Maryland sales tax rate on every purchase.
Contact us to get started with TaxCloud today!
Are there sales tax holidays in Maryland?
In 2024, there will be two Maryland sales tax holidays:
Annual Back-to-School Sales Tax Holiday
- Beginning at 12:01 a.m. on the second Sunday in August through midnight on the following Sunday
- Qualifying clothing and footwear priced $100 or less are exempt
- The first $40 of backpack and bookbag sales are exempt
Learn more about Maryland’s Back-to-school sales tax holiday.
Maryland Energy Star Sales Tax Holiday
- Begins 12:01 a.m. on the Saturday immediately preceding the third Monday in February and 11:59 p.m. on the third Monday of February
- Qualifying Energy Star products are exempt
Learn more about Maryland’s Energy Star sales tax holiday.
Is Maryland a member of the SST (Streamlined Sales Tax)?
Currently, Maryland is not a full or associate member of the Streamlined Sales Tax Governing Board (SSTGB). That means you can’t register and pay for sales tax in Maryland via the Streamlined Sales Tax site.
How do I register for a sales tax permit in Maryland?
If you’ve met the criteria for physical or economic nexus in Maryland, you’ll have to register for sales tax in Maryland and start collecting and remitting sales tax.
There are a few different options for Maryland sales tax registration:
- Maryland Combined Registration Online Application: This is one application that allows you to register for a variety of different types of tax accounts in the State of Maryland. That includes sales tax. In order to register, you’ll need a federal employer identification number (FEIN).
- Maryland sales tax registration – Paper: You can also fill out a paper application for your Maryland sales tax license. All you have to do is download the paper version of the application. If you already have a Maryland account but are applying for a Sales and Use Tax Account or to consolidate your accounts, you’ll have to use a paper application for that.
Learn more about obtaining a Maryland sales tax license here.
Sales Tax Guides by State
Our sales tax guides provide an overview of sales tax rates, nexus thresholds, taxable and nontaxable items, along with other valuable tax knowledge for every U.S. state.
- New Hampshire
- New Jersey
- New Mexico
- New York
- North Carolina
- North Dakota
- Rhode Island
- South Carolina
- South Dakota
- West Virginia