MD Sales Tax 101 States

Maryland Sales Tax Guide for Business

by Mark Faggiano

Maryland Sales and Use Tax

This blog post may now be out of date. For our most up-to-date info on Maryland sales tax, check out our Maryland Sales Tax Guide for Businesses.”

We’re covering every state in order to answer questions about sales tax for merchants all over the country. We’re talking about Maryland in this post, which brings some good news: it’s very straightforward and simple! If you’ve sold something in this state and wondered about sales tax, you should be pleasantly surprised at what this destination-based state has to offer.

You’re a merchant living anywhere but Maryland

Does your business exist outside of Maryland and you otherwise have no sales tax nexus in the state? If so, you shouldn’t have to worry about sales tax compliance in Maryland.

You live and/or operate your business in Maryland

In this example, you and/or your business exist in Maryland. Your hair bow business has a very successful brick & mortar store in Catonsville, so you’re required collect and pay sales tax to the state.

The base rate for Maryland is 6% unless you’re selling certain vehicles or a mobile home. That’s fine and good, but what about local taxes? That’s where all the madness lies. But you’re in luck – Maryland doesn’t have local tax exceptions, so all you need to worry about is the 6%.

Easy enough, right? It’s nice to see states streamline this process for busy sellers.

You live out-of-state but use a 3rd party fulfillment service like FBA

Here, your business is located out of the state but you have nexus in Maryland from using FBA or another 3rd party service. Then you are required to collect sales tax from buyers and remit it to the state.  (FYI, there’s no Amazon Fulfillment Center in Maryland yet, but one has been announced for spring 2015 so stay tuned to the TaxJar blog for updates.) Again, Maryland is a destination based state, so that means your concern is where the customer lives within the state of Maryland, not where your business exists.

Normally this would cause a huge problem as you might have to worry about local rates and other nonsense. However, as stated above, Maryland only has the 6% state rate and no local rates. This means if you do have nexus and need to collect you only need to charge 6%.

Here’s what you need to know about nexus from the Comptroller of Maryland website:

Maryland sales and use tax

Filing sales tax in Maryland

If your business exists within Maryland or you have nexus, you must register your business with the state.

Maryland has a fairly simple setup for filing sales tax. Basically, every month on the 20th you have a due date, either monthly or quarterly. You have to file a tax return whether or not you actually have anything due. If the 20th falls on a weekend, simply pay on the next business day.

If you need to file a sales tax return in Maryland, TaxJar has your back. You can now enroll in AutoFile for the state of Maryland and we’ll automatically file your sales tax return for you! Find out more about AutoFile here.

Sales tax on shipping

According the Comptroller of Maryland website, separately stated shipping charges are not taxable. However, handling charges are part of the taxable price. If shipping and handling charges are combined, though, the shipping charge loses its exemption and the entire amount is subject to sales tax. At TaxJar, we tend to handle Maryland shipping charges as non-taxable.

Summary: Maryland manages to be straightforward

Maryland is a destination based state. If your business exists within the state, you’re required to collect and pay sales tax at a rate of 6%. If you’re outside of the state and have no nexus, you don’t have to do anything. If you have nexus, you must collect the 6% state rate. There are no local rates to worry about.

If you have to collect sales tax in MD, then you have to register your business with the state first. Luckily, the state then makes it easy to pay, with due dates every month on the 20th whether you are scheduled for quarterly or monthly sales tax filings. If the 20th is on a weekend, pay it on the first available business day.

  • Eric Johnson

    Didn’t BWI1 open in Maryland in 2014?

  • tedbatchelor

    Thank you this site is very helpful. I live in MD and am just getting started with Amazon FBA. So, just confirming, I must collect state tax on any sale in MD and any sale in a state where any of my items are warehoused. That’s all for sales tax, right? How about income tax? Do I have to register my business in MD, or could I register in DE and avoid income tax? Or that doesn’t matter because I am the employee and the employee lives in MD and must pay MD income tax on all income earned while living in MD? Thanks

  • Hi Ted,

    You are correct about sales tax. States require you to collect sales tax in any states where you have sales tax nexus. (More about it: http://taxjar.wpengine.com/sales-tax-nexus-definition/)

    If you sell on FBA, that includes your home state and usually includes states where your goods are housed.

    As for income tax, there are many schools of thought on that ranging from “No, you don’t have to pay income tax” to “yes, you pay income tax in every state.” We recommend you contact your accountant to make that business decision. Here’s a great list of accountants who are familiar with FBA: http://www.taxjar.com/sales-tax-accountant-directory/

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  • Roland Oehme

    I would like to know if one is an online retailer with nexus in Maryland, does one only charge sales tax to MD residents or to everyone in the US?
    Also, exactly what items are subject to sales tax in MD? I want to see a detailed list. For instance what about food, snacks, chocolate bars, kitchen appliances, kitchen tools, supplements, water, books, dental products, body care products, glue, etc.

  • Hi Roland,

    If you only have nexus in Maryland, you only charge sales tax to Maryland customers.

    Most tangible personal property in Maryland is taxable, though some items are tax exempt. You can find out more about that at the Comptroller of Maryland website:http://taxes.marylandtaxes.com/Business_Taxes/Business_Tax_Types/Sales_and_Use_Tax/default.shtml or give them a call 1-800-638-2937.

  • Hi Roland,

    If you only have nexus in Maryland, you only charge sales tax to Maryland customers.

    Most tangible personal property in Maryland is taxable, though some items are tax exempt. You can find out more about that at the Comptroller of Maryland website:http://taxes.marylandtaxes.com/Business_Taxes/Business_Tax_Types/Sales_and_Use_Tax/default.shtml or give them a call 1-800-638-2937.

  • Natalie

    I have a home business. I create accessories and sell on etsy. Do I need a sales tax permit in Maryland?

  • Jeff

    So I just want to make sure Im clear on this…I have online retail business with nexus in MD, someone in Utah buys my product, I do not charge the person in Utah a sales tax at all? or I charge them Utahs sales tax?

    • If you don’t have nexus in UT, you aren’t required to charge sales tax to buyers there. I hope this helps!

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