Maryland taxes data, IT and software publishing services at 3% from 1 July 2025

What changed in detail

Maryland House Bill 352, the Budget Reconciliation and Financing Act of 2025, was enacted as Chapter 604 of the Acts of 2025 and approved by the Governor on 20 May 2025. Section 4 adds two services to the list of taxable services in Tax-General Article § 11-101(m):

• (14) a data or information technology service described under NAICS sector 518, 519 or 5415. These cover computing infrastructure, data processing and web hosting; other information services; and computer systems design and related services.
• (15) a system software or application software publishing service described under NAICS sector 5132.

A third item in the bill as introduced, the licensing of media, software and other intellectual property rights, was struck before enactment.

The new § 11-104(l) sets the rate for these services at 3% of the taxable price. Where a different rate could also apply to the sale, the higher rate applies. Under the amended § 11-103(c), sales of these services are presumed to be made in the state where the customer’s tax address is located.

Section 33 of the Act brings Sections 2 and 4 into effect on 1 July 2025.

What it means

The 3% tax is in force. It is a separate rate for these services, and the higher-rate rule means it does not lower the tax on a sale that another Maryland rate already reaches.

Classification is the main exposure. The base is defined by NAICS codes, so it turns on what kind of service the seller provides, not on how it describes its contracts.

Maryland has since changed how multi-state buyers handle the tax. Chapters 197 and 198 of the Acts of 2026 rework the multiple-points-of-use certificate for these services from 1 January 2027. They add Comptroller authorisation, renewal every two years, and a certificate for each vendor.

The base has also narrowed. Chapters 351 and 352 of the Acts of 2026 (SB 388 and HB 898, the DECADE Act), approved on 12 May 2026, add Tax-General § 11-247. From 1 July 2026, the 3% tax does not apply to these services when the vendor and the buyer are members of the same affiliated group. The 3% rate still applies to other sales.