News & Publications

Maryland Updates Tax Rules on Digital Products

Effective March 14, 2021, Maryland’s Comptroller expanded the sales and use tax to digital products and digital code. Previously these items were not taxable because they were not in a tangible medium. Now regardless of whether they are downloaded or streamed, many products will be required to have tax applied to them. This has also caused them to revise the section on computer hardware and software. The sale of canned or commercial off-the-shelf software obtained electronically is considered a digital good and is now subject to tax. The applicable rate will be the state sales and use tax rate of 6%. Although new legislation, this has been a potential for some time not just for Maryland but for many states due to the expansion of the digital market. This is an opportunity to make revenue on a growing market especially in a time where so many states are in need of funds.

What Types of Products are Covered?

The following is a non-exclusive list of digital products subject to sales and use tax if obtained or delivered by electronic means:

  • E-books
  • An online class, instruction, or similar product
  • Newspapers, magazines, periodicals, or any other publication
  • Access to a chat room, discussion, weblog, or any other venue that permits users to communicate electronically in real time
  • Digital download or stream of a motion picture, music video, news and entertainment program, live event, sporting event, tutorials, etc.
  • Access to or use of virtual items, such as skins, renders and in-app purchases, purchased for use in a video or online game
  • A digitized sound file that may be downloaded onto a device and may be used to alert the user to a communication or information
  • Audio or video greeting cards sent by email, text, or any other electronic means
  • A sale, subscription, or license to access content online
  • Customer lists, mailing lists, medical records, and similar products
  • A sale, subscription, or license to use a software application (software as a service)
  • Design files, models, and templates, such as 3D design files, 3D models, CNC templates, and virtual/alternate reality templates
  • Prerecorded or live music
  • Prerecorded or live performances
  • Access to or use of video or online games
  • Prerecorded or live speeches including commentaries, dissertations, and lectures
  • Photographs, artwork, illustrations, graphics, and similar products
  • Prerecorded or live audio books or other written materials


Who will this Impact?

This change will affect all sellers and purchasers. Remote sellers and marketplace facilitators will be impacted. It will now be your responsibility to collect and remit the appropriate tax to Maryland for digital goods electronically delivered within the state. If you meet the state’s economic nexus thresholds of $100,000 in sales or 200 transactions during the previous or current calendar year, then you need to prepare to remain compliant.

Tips for the Taxpayer

It is important that taxpayers review states where they do business for any changes in tax regulations. Changes such as these will require an update of your compliance processes. You will need to update your tax system to recognize the sales of digital products and codes, monitor sourcing locations, and apply the appropriate tax. This will also change potential use tax liabilities. It may be best to create a chart or matrix by state to know which purchases will need use tax accrued if the seller does not charge sales tax.

Reviewing new tax bulletins as they are released, in the states in which your organization conducts business, is a best practice. You may also wish to consult a tax professional for clarity and expertise.

How Can We Help?

Allyn’s tax team is staffed with seasoned tax professionals experienced in all aspects of Federal, multi-state and local tax compliance and consulting for large US and global corporations. We use that experience to your advantage.

Allyn has significant experience assisting businesses with reviews of their sales and purchases, tax relief applications, nexus, and registrations. As tax laws change, we can use our experience to help your business improve compliance, minimize costs, reduce liabilities, and increase profits.

We can help your business maintain compliance with federal and state tax responsibilities and put procedures in place to ensure future streamlining of processes and increased data accuracy for tax purposes.

Contact us and we can provide a customized cost-effective solution to meet your company’s needs. For further information on Allyn Tax services, please contact:

For More Information

If you are interested in learning more about this topic or other tax topics, please visit our Tax Publications under News & Publications at

Contributor: Racheal Wilkinson

About Allyn International

Allyn International is dedicated to providing high quality, customer centric services and solutions for the global marketplace. Allyn's core products include transportation management, logistics sourcing, freight forwarding, supply chain consulting, tax management and global trade compliance. Allyn clients range from small local businesses to Fortune 500 firms. Allyn conducts business in more than 20 languages and has extensive experience in both developed and emerging markets. Highly trained experts are positioned throughout North and South America, Europe and Asia. Allyn’s regional headquarters are strategically located in Fort Myers, Florida, U.S.A., Shanghai, P.R. China, Prague, Czech Republic, and Dubai, U.A.E. For more information, visit


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