Important Update for Frederick County Employers: New Tax on IT Services
On July 1, 2025, Maryland implemented a new 3% sales and use tax on certain digital and IT-related services, as outlined in the 2025 Budget Reconciliation and Financing Act. If your business provides services such as software development, cloud hosting, data processing, or IT support, you may be required to register, collect, and remit this new tax.
What You Should Do:
Review your services to determine if they fall under the taxable categories.
Register with Maryland Tax Connect to obtain a Sales & Use Tax license.
Adjust billing and accounting systems to ensure proper tax collection and remittance starting July 1.
What This Means for All Businesses:
Even if your company doesn't sell IT services, you may be impacted as a purchaser. Businesses that rely on cloud services, managed IT, software subscriptions, or tech consulting may see price increases or changes in service billing. Understanding how your vendors apply this tax is essential for budgeting and compliance.
For full details, examples of taxable services, and compliance guidance, please visit: Sales and Use Tax on Data or Information Technology Services and Software Publishing Services: Questions and Answers: