MD Maryland State sales tax rates
STATEWIDE SALES TAX RATE
ECONOMIC SALES THRESHOLD
Do you need to collect sales tax in Maryland?
You’ll need to collect sales tax in Maryland if you have nexus there. There are two ways that sellers can be tied to a state when it comes to nexus: physical or economic. Physical nexus means having enough tangible presence or activity in a state to merit paying sales tax in that state. Economic nexus means passing a states’ economic threshold for total revenue or the number of transactions in that state.
Do you have physical nexus in Maryland?
Maryland considers a seller to have physical nexus if you have any of the following in the state:
- An office or place of business
- An employee present in the state
- Goods in a warehouse
- Ownership of real or personal property
- Making repeat entries to the state for service or repair to tangible personal property
Do you have economic nexus in Maryland?
Effective October 1, 2018, Maryland law states that vendors who make more than $100,000 in sales annually in the state or more than 200 transactions in the state in the previous or current calendar year to have economic nexus. This means the state considers these vendors obligated to collect sales tax from buyers in the state in accordance with Maryland’s tax law.
Is what you’re selling taxable?
Services in Maryland are generally not taxable. However, if the service you provide includes creating or manufacturing a product, it may be considered a taxable service.
Tangible products are taxable in Maryland, with a few tax exemptions. These exemptions include snack food, prescription medicine and medical devices, and farm equipment.
Is SaaS taxable in Maryland?
SaaS is taxable in Maryland.
Collecting Sales Tax
The sales tax rate you collect in Maryland depends on whether you are based in Maryland or out-of-state.
How to Collect Sales Tax in Maryland if you are Based in Maryland
Maryland is a destination-based sales tax state. So if you live in Maryland, collecting sales tax is based on where your customer lives. Luckily, Maryland is one of the few states with no local tax rates, so you would only charge the state sales tax rate of 6%.
How to Collect Sales Tax in Maryland if you are Not Based in Maryland (But Have Maryland Sales Tax Nexus)
Maryland wants sellers who made a sale into Maryland from outside the state to charge sales tax based on the destination of the buyer. Fortunately, this is easy because the sales tax rate across the board in Maryland is 6%, and no local tax rate to worry about.
Should you collect sales tax on shipping charges in Maryland?
Separately stated shipping charges are not taxable. However, handling charges are and if the shipping and handling charges are combined, then the shipping charge loses its exemption.
When are Returns Due?
When you file and pay Maryland sales tax depends on two things: your assigned filing frequency and your state’s due dates.
How often will you file sales tax returns in Maryland?
States assign you a filing frequency when you register for your sales tax permit. In most states, how often you file sales tax is based on the amount of sales tax you collect from buyers in the state.
In Maryland, you will be required to file and remit sales tax either monthly, quarterly, semiannually or annually.
Maryland sales tax returns are always due the 20th of the month following the reporting period. If the filing due date falls on a weekend or holiday, sales tax is generally due the next business day.