Notification of Upcoming Tax Changes
New 3% Sales and Use Tax on Data and IT Services
Effective July 1, 2025, a 3% sales and use tax will be applied to a wide range of digital and information technology services, including cloud computing, hosting, and custom software development. These services fall under NAICS codes 518, 519, 5415, and 5132 (2022 definition.
Certain businesses, such as cybersecurity firms and qualified University of Maryland Discovery District tenants, are exempt.
Emergency Regulations to Support Implementation
To ensure a smooth rollout, the Comptroller’s Office has issued emergency regulations that clarify vendor thresholds, exemption procedures, and tax collection responsibilities.
Clarification on Gambling Winnings
A new tax alert states that gambling winnings, including those from casinos, online betting platforms, and the lottery, are subject to Maryland income tax and must be reported.
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