Maryland Sales Tax Rate 2025: Rules, Penalties & Filing Guide

Maryland’s sales tax system plays a crucial role in the state’s economy, providing revenue for public services and infrastructure. If you’re a business owner or consumer in Maryland, understanding how Maryland sales tax works is essential. This comprehensive guide will walk you through the state’s sales tax rates, rules, penalties, and filing requirements for 2025. Whether you’re just starting your business or are an experienced company aiming to grow in Maryland, this guide will provide you with information to handle your sales tax responsibilities efficiently.

What is the Sales Tax Rate in Maryland?

As of 2025, the state-wide sales tax rate in Maryland is 6%. This rate applies uniformly across the state, as Maryland does not impose additional local (city or county) sales tax rates. This makes Maryland’s tax system straightforward compared to other states that have variable local tax rates.

Key Points:

• State-wide rate: 6%
• No additional local taxes: Unlike states such as California or Texas, where local jurisdictions can add their own taxes, Maryland maintains a single, uniform tax rate across the entire state.
• Recent changes: While the 6% rate has been consistent for several years, businesses should stay informed about any legislative updates that might impact the rate or exemptions. The Maryland Comptroller’s Office is a reliable resource for checking recent changes.

Maryland Sales Tax Calculator

A Maryland Sales Tax Calculator can help businesses and consumers determine the exact amount of sales tax owed on a purchase. This tool simplifies tax compliance for retailers, consumers, and accountants by automating calculations.

This tool is particularly useful for:

1. Retailers and Online Sellers: Ensures they charge the correct sales tax amount at the point of sale. 
2. Consumers: Helps with understanding the total cost of taxable goods before completing a purchase. 
3. Business Accountants: Accurately calculates sales tax liabilities for reporting and filing.

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By using an automated sales tax calculator, businesses can minimize errors and streamline tax compliance. Many accounting software solutions and online tax platforms integrate Maryland sales tax calculations for easy application. Book  a call with Commenda to know more.

Maryland Sales Tax & Use Tax Overview

The Maryland sales and use tax system ensures that businesses collect and remit taxes on taxable goods and services. The sales tax applies to retail sales, while the use tax is imposed on out-of-state purchases used within Maryland. Sales tax is levied on the sale of goods and certain services. Use tax is imposed on goods acquired when sales tax was not paid at the point of purchase. For further information on Maryland’s Use Tax, please refer to the Comptroller of Maryland website.

Taxable Items:

• Tangible personal property
• Certain services (e.g., short-term rentals)

Exempt Items:

• Groceries
• Prescription medications
• Medical devices

To determine which goods are exempt and the specific conditions that apply, visit the official state website. Additionally, businesses can refer to this ultimate guide to sales tax to gain a deeper understanding of tax rules across multiple states.

When Do Businesses Need to Collect Maryland Sales Tax?

Businesses must collect Maryland sales tax if they establish a “nexus” within the state. Nexus is the connection that obligates a business to comply with tax laws. Learn how sales tax nexus impacts businesses and what triggers compliance obligations.

The concept of nexus is critical because it determines whether a business has sufficient presence or activity in Maryland to be subject to its sales tax regulations.

Triggers for Nexus:

• Physical Presence: A business establishes a physical nexus when it has a tangible presence in Maryland. Examples include maintaining offices, warehouses, inventory, or retail stores within the state. Additionally, hiring employees or contractors to work in Maryland also creates a physical nexus.

For example, a company with a warehouse in Baltimore where inventory is stored must collect sales tax on sales made to Maryland customers.

• Economic Nexus: Even without a physical presence, businesses can establish an economic nexus in Maryland if they meet specific sales thresholds. As of 2025, this includes:
  • Sales exceeding $100,000 annually in Maryland
  • 200 or more separate transactions in Maryland annually

For instance, an online retailer based in another state but making frequent shipments to Maryland residents would need to collect sales tax if they surpass these thresholds. 

Read more about the economic nexus and how it affects online sellers.

Why Nexus Matters:

• Establishing a nexus triggers the requirement to register with the Maryland Comptroller’s Office for a seller’s permit, enabling businesses to collect and remit sales tax.
• Failing to comply with nexus rules can result in penalties, audits, and back taxes, creating significant financial risks for businesses.

Additional Considerations for Remote Sellers:

• Marketplace Facilitators: Platforms like Amazon, eBay, and Etsy are required to collect and remit sales tax on behalf of sellers who use their services. But sellers should ensure compliance for sales made outside these platforms.
• Temporary Nexus: Temporary nexus can occur if a business participates in trade shows, pop-up shops, or events in Maryland. Even short-term activities may trigger the obligation to collect sales tax.

Practical Steps for Compliance:

1. Determine if your business activities create a nexus in Maryland by reviewing physical and economic presence.
2. Register for a Maryland seller’s permit before starting taxable sales.
3. Regularly review sales thresholds to ensure continued compliance.

By understanding and adhering to these nexus rules, businesses can avoid penalties and ensure smooth operations in Maryland.

The Impact of Failing to Collect Maryland Sales Tax

Failing to collect Maryland sales tax can lead to severe financial and legal consequences for businesses. Learn why sales tax is important for businesses to avoid compliance risks.. 

Non-compliance not only affects cash flow but can also result in significant penalties, interest, and audits from the Maryland Comptroller’s Office. Below are the key risks associated with failing to collect and remit sales tax:

• Penalties: Businesses may face substantial financial fines based on the amount of unpaid taxes. These penalties can escalate quickly, especially if the non-compliance is deemed intentional or fraudulent.
• Interest: The state imposes interest charges on overdue sales tax payments, increasing the financial burden on businesses that fail to meet their obligations.
• Audits: The Maryland Comptroller’s Office may conduct audits to examine business records and transactions, ensuring compliance. An audit can be time-consuming and may lead to further penalties if discrepancies are found.
• Legal Consequences: In severe cases, businesses that repeatedly fail to collect and remit sales tax may face legal action, which could result in additional fines or restrictions on business operations.
• Reputational Damage: Non-compliance with tax laws can damage a business’s reputation, affecting relationships with customers and suppliers and leading to potential loss of business opportunities.

To avoid these consequences, businesses should ensure they accurately track and collect sales tax, file returns on time, and stay updated on Maryland tax laws and requirements. Leveraging automated tax compliance tools can help streamline the process and minimize the risk of errors.

Book a call with Commenda today for hassle free compliances.

Sales Tax Considerations for Out-of-State Sellers

Out-of-state businesses selling into Maryland must adhere to economic nexus rules. Remote sellers, including those using online platforms, must:

• Register for a Maryland Seller’s Permit: Businesses meeting the economic nexus threshold must obtain a seller’s permit through the Maryland Comptroller’s Office.
• Collect and remit the 6% State Sales Tax: Once registered, out-of-state sellers must apply the Maryland state sales tax to all taxable transactions.
• Track Sales Volume and Transactions: Maryland’s economic nexus threshold is $100,000 in gross revenue or 200 separate transactions annually. Businesses should monitor their sales activity to determine if they exceed this threshold.
• Comply with Marketplace Facilitator Rules: Online marketplaces, such as Amazon and eBay, may be responsible for collecting and remitting sales tax on behalf of sellers. However, businesses selling through multiple channels must ensure compliance with Maryland tax laws.
• File Sales Tax Returns Promptly: Even if no sales tax is due, registered remote sellers must file periodic sales tax returns to remain compliant and avoid penalties.

Out-of-state sellers should stay informed about Maryland’s evolving tax regulations and consider using automated tax software to ensure accuracy and efficiency in sales tax compliance.

Sales and Use Tax Obligations: Fulfillment by Amazon (FBA) and Other Sales Channels

Businesses using Amazon FBA or similar services often establish a nexus due to inventory storage in Maryland. Other sales channels, such as personal websites and marketplaces, must comply with the same tax obligations.

Registering for a Maryland Seller’s Permit

Registering for a Maryland sales tax permit is a crucial step for businesses operating in the state. Below are the steps to successfully register:

• Obtain an Employer Identification Number (EIN): Before applying for a sales tax permit, businesses must secure an EIN from the IRS. This unique number is required for tax reporting and identification purposes.
• Gather Business Information: Businesses need to collect essential details, including legal business name, physical location, mailing address, and ownership structure. Accurate information ensures a smooth registration process. If you’re unsure about the process, check out our guide on how to obtain a sales tax permit.
• Register Online: Visit the Maryland Comptroller’s Office website and complete the registration form through the Maryland Business Express portal. This platform streamlines the application process and provides confirmation once approved.

Collecting Sales Tax in Maryland

Businesses in Maryland must collect the state’s 6% sales tax at the point of sale for taxable goods and services. 

Proper documentation is crucial to ensure compliance and avoid errors. Retailers must clearly display sales tax charges on receipts and keep accurate records for filing returns. 

To ensure seamless remittance, check out this step-by-step guide on how to remit sales tax.

Tax-Exempt Customers

Certain customers and transactions are exempt from Maryland sales tax. Businesses must obtain valid exemption certificates to substantiate these exemptions. To ensure proper documentation, refer to our guide on sales tax exemption certificates.

• Non-Profit Organizations: Qualifying charities and non-profit entities may be exempt from sales tax, provided they present a valid exemption certificate.
• Resale Transactions: Businesses purchasing goods for resale can avoid paying sales tax at the time of purchase by providing a Maryland resale certificate.
• Government Entities: Federal, state, and local government agencies are generally exempt from Maryland sales tax.

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Filing Sales Tax Returns in Maryland

Filing Frequency:

• Monthly: For businesses with high tax liability
• Quarterly or Annually: For smaller businesses

Deadlines:

• Returns are typically due on the 20th of the month following the reporting period. To avoid errors and late filings, businesses should follow these sales tax compliance best practices.

Penalties and Interest:

• Late filings incur penalties of up to 10% of the tax due
• Interest accrues on unpaid balances

Products That Are Generally Exempt/Non-Taxable

• Groceries
• Prescription drugs
• Certain agricultural products

Understanding these exemptions can help businesses correctly categorize sales and avoid overcharging customers.

Services Taxability in Maryland

While most services in Maryland are exempt from sales tax, there are notable exceptions. Businesses providing taxable services must collect and remit sales tax accordingly. Below are key taxable service categories:

• Lodging and Room Rentals: Charges for hotel rooms, motels, and other short-term accommodations are subject to Maryland sales tax. 

• Fabrication and Manufacturing Services: If a business modifies or creates tangible personal property for a customer, the service may be taxable. 

• Certain Repair and Maintenance Services: Some repair and installation services related to tangible personal property are taxable under Maryland law.

Businesses should carefully review their service offerings and consult Maryland tax regulations to determine taxability. Ensuring compliance helps avoid penalties and unexpected tax liabilities.

Preparing for Maryland Sales Tax Audits and Appeals

The Maryland Comptroller’s Office conducts sales tax audits to ensure businesses comply with tax laws. Being prepared can help minimize disruptions and avoid penalties.

Steps to Prepare:

• Keep Detailed Records: Maintain accurate records of all sales, tax exemptions, and filed returns for at least four years. Proper documentation, such as exemption certificates and invoices, can support your case in an audit.
• Understand Audit Triggers: Common triggers for audits include reporting inconsistencies, excessive exemptions, or failing to file tax returns. Businesses with frequent cash transactions or significant online sales should be extra cautious.
• Review Notices Promptly: If selected for an audit, respond to notices from the Maryland Comptroller’s Office promptly. Delays can lead to penalties or an expanded audit scope.
• Familiarize Yourself with the Appeals Process: If you disagree with an audit assessment, you can file an appeal. This typically involves requesting an informal review or submitting a formal appeal to the Maryland Tax Court.
• Consult a Tax Professional: Seeking advice from a tax expert can help ensure compliance, reduce errors, and provide guidance if an audit occurs.

By following these steps, businesses can stay compliant and reduce the risk of costly disputes.

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Maryland Sales Tax Rates by City

Since Maryland does not impose additional local sales taxes, the state-wide rate of 6% applies universally. For a broader comparison, check out this guide on U.S. sales tax rates by state to see how Maryland compares.

How to Use a Sales Tax Automation Tool for Maryland

Commenda’s solutions are tailored to assist businesses in automating sales tax calculations, enabling them to handle their tax responsibilities efficiently and reduce common errors. By adopting modern technology, companies can access advanced tools that streamline complex processes and ensure smooth integration with their current systems.

Sales tax automation tools can help:

• Automate tax calculations
• Streamline reporting and filing
• Reduce errors and save time

Visit the Commenda Sales Tax Platform to learn more.

FAQs

What triggers the sales tax nexus in Maryland?

What should I include in my Maryland sales tax compliance checklist?

How do I register for a Maryland seller’s permit?

What is Maryland’s economic nexus rule for remote sellers?

What happens if I don’t collect sales tax in Maryland?

Are there special taxes or excise charges in Maryland?

Do I need a Maryland seller’s permit if I’m only a wholesaler?

Do I need a Maryland seller’s permit if I only sell temporarily in the state?

What is the penalty for filing and/or paying Maryland sales tax late?

Is software-as-a-service (SaaS) taxable in Maryland?