Maryland to Implement New 3% Tax on IT Services Starting July 1

Baltimore, MD — Beginning July 1, Maryland will require certain businesses to collect a new 3% sales tax on select information technology (IT) services, marking a notable shift in the state’s tax structure. The new policy expands Maryland’s sales tax beyond traditional goods and into portions of the service economy—specifically targeting IT-related services. This includes areas such as software support, data processing, and other technology-driven business services, depending on how they are classified under the law. State officials say the move is designed to modernize Maryland’s tax system as the economy becomes increasingly digital. By applying a modest tax to IT services, lawmakers aim to generate additional revenue while aligning tax policy with current business trends. For businesses, the change means preparing for new compliance requirements. Companies that provide covered IT services will need to update billing systems, ensure proper tax collection, and clearly communicate any pricing changes to clients ahead of the July 1 start date. Some business groups have expressed concern about the potential impact, particularly for small and mid-sized firms that rely heavily on IT services. They argue the added cost could be passed down to customers or make Maryland-based companies less competitive compared to neighboring states without similar taxes. On the other hand, supporters of the measure say the 3% rate is relatively modest and helps broaden the tax base without significantly increasing the burden on any single industry. For residents and businesses considering a move to Maryland, the new tax highlights both the state’s evolving economy and its efforts to adapt to a technology-driven marketplace. While it may introduce slight cost increases for certain services, it also reflects Maryland’s continued investment in maintaining a modern and sustainable revenue system. As the July rollout approaches, businesses across the state are preparing for the transition, with more detailed guidance expected to help clarify exactly which services will be affected.