Sales Tax APIThe same engine Zamp customers use.Maryland may have a single sales tax rate, but understanding the state’s exemption rules and deadlines can be more complicated than you think.
In this Maryland sales tax guide, we’ll address the most critical questions, such as how to collect sales tax and if services are taxable in the state.
We’ll also introduce you to a trusted solution to ensure sales tax compliance throughout your sales tax cycle.
Collecting Maryland Sales Tax from Customers
Let’s explore how you can collect Maryland sales tax.
Do I Have to Collect Maryland Sales Tax from Customers?
If you’re a retailer in Maryland and meet the following conditions, you’re liable to collect sales tax on sales revenue from your customers:
- You have sales tax nexus in Maryland.
- You sell taxable products or services in Maryland.
What Creates a Sales Tax Nexus in Maryland?
The following factors can create a sales tax nexus in Maryland:
- Economic Nexus: Out-of-state businesses with gross revenue exceeding $100,000 or with 200 or more transactions in the state.
- Physical Location: Businesses with a temporary or permanent office, sample room, distribution center, storage, warehouse, or other place to sell taxable goods and services in Maryland.
- Employees: Businesses with an agent, representative, solicitor, or salesman in the state for the purpose of delivering, selling, or taking orders for tangible personal property or a taxable service.
- Services: Businesses that enter the state on a regular basis to provide services or repairs for tangible personal property.
- Delivery: Businesses that use company vehicles regularly to sell or deliver tangible personal property or a taxable service for use in the State.
- Trade shows: Businesses participating in a one-time event or craft show involving the retail sale of tangible personal property in Maryland may not need to register with Maryland. However, you must apply for a Temporary Sales & Use Tax License.
Do I Have to Collect Sales Tax from Maryland Customers if I Sell on Amazon, Walmart, Ebay, or Etsy?
No.
Maryland has a marketplace facilitator law. This means that marketplaces like Amazon should collect sales tax on behalf of third-party sellers on their platforms.
But if you have a sales tax nexus in Maryland, you still need to collect sales tax on your other non-marketplace Maryland sales.
Taxable Products in Maryland
In Maryland, most tangible personal property, such as digital products and clothes, is usually subject to sales tax.
Although groceries and food consumed off-premises are exempt from sales tax, prepared food made to be consumed on the premises or packaged for carry-out has a 6% state tax.
Additionally, unlike most taxable goods and services, the sales and use tax for alcoholic beverages is 9% in the state.
Here’s a run-down of how products are taxed in Maryland:
Are Groceries Taxable in Maryland?
No. Grocery items are non-taxable in Maryland.
Is Clothing Taxable in Maryland?
Yes, clothing is subject to sales tax in Maryland.
Are Digital Products Taxable in Maryland?
Yes, digital products are taxable in Maryland.
Is Software-as-a-Service (SaaS) Taxable in Maryland?
SaaS is taxable at the general rate when sold to an individual user. This means SaaS B2C is taxable at the general rate. However, SaaS B2B is taxable at a reduced rate.
Are Services Taxable in Maryland?
Most services are generally non-taxable according to Maryland law. However, there are some taxable services, including:
- Cleaning and janitorial services (of commercial or industrial buildings)
- Credit reporting
- Dry cleaning
- Printing services
- Security services
Tax-exempt Items
A few items that qualify for Maryland sales tax exemption are:
- Items sold for agricultural purposes, like livestock, feed, farm vehicles, and machinery.
- Taxable goods that cost less than 75 cents sold through a bulk vending machine.
- Electricity, natural gas, or steam used in residential condominiums.
- Medicines or medical supplies, especially those sold by a physician or hospital.
- Medical devices like eyeglasses, wheelchairs, hearing aids, and more.
- Machinery used for manufacturing and research purposes.
However, you need a sales tax permit to collect sales tax. Let’s explore how to get one.
How to Register for a Maryland Seller’s Permit
You can register for a Maryland seller’s permit through the Comptroller of Maryland website. Other options include using an independent software provider or a professional tax preparer approved by the government.
Explore how sales tax registration works in every US state.
Do I Need a Maryland Seller’s Permit if I Only Sell Temporarily in the State?
Yes. You can request a temporary license for sales at events such as trade shows and craft fairs by calling either 410-767-1543 or 410-767-5462. However, this license is only valid for 30 days.
How to Collect Sales Tax in Maryland
Maryland has a uniform sales tax rate of 6%. So, whenever you make a taxable sale to a buyer within the state, you can just apply the 6% state sales tax rate.
Should You Collect Sales Tax on Shipping Charges in Maryland?
No. Shipping charges are not subject to sales tax in Maryland as long as they are separately stated from the price of the item(s) sold.
How to File and Pay Sales Tax in Maryland
File your Maryland sales tax returns at the Maryland Tax Connect Portal when your sales tax filing due date approaches.
Or, let Zamp take care of your Maryland sales tax filing and remittance so you can avoid dealing with sales tax returns entirely!
Learn how to file and pay sales tax in other US states here.
