Maryland Enacts 3% Tax on Tech and Data Services

As of July 1,2025, a new Maryland law has taken effect, taxing 3% sales and use on certain technology and data services. This tax applies to the sale of data services, information technology (IT) services, and software publishing services as defined by specific North American Industry Classification System (NAICS) codes: sectors 518 (data processing, hosting, and related services), 519 (other information services), subsector 5415 (computer systems design and related services), and subsector 5132 (software publishing).

A detailed list of taxable services under each sector can be found in the Comptroller’s Technical Bulletin No. 56.  The tax covers services including:  cloud computing, cloud storage, web hosting, data processing, computer systems integration, custom software programming, and software publishing.

Details on the tax

The applicable rate is 3% of the taxable price of the covered services. Vendors must register, collect, and remit the tax.  The 3% tax must be collected by all in-state vendors and out-of-state vendors with more than $100,000 in sales to Maryland customers or 200 or more transactions.

Certain exemptions apply, including sales to nonprofit organizations with a valid exemption certificate, sales of cloud computing to qualified cybersecurity businesses, or sales to or by qualified companies in the University of Maryland’s Discovery District for specific research purposes.

Tech tax is an expansion of Maryland sales and use tax base

Maryland’s new 3% tax on technology and data services is an expansion of the state’s sales and use tax base, targeting a broad array of IT and data-related services. If you have any questions, please contact your UHY professional in your local office. To locate a UHY office near you, please visit the locations page of our website.