Maryland Sales Tax Rates

Total Range for 2024

6%

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Why do you need to collect sales tax in Maryland?

If you’re selling goods and services in Maryland then sales tax might apply! To determine your obligation, you need to understand “nexus,” which ties businesses to states for tax purposes.

Two types of nexus exist:

  1. Physical Nexus: Having a physical presence, like an office, warehouse, or employees in Maryland, triggers this type. If you do, you likely need to collect sales tax.
  2. Economic Nexus: This kicks in when your sales within Maryland exceed a certain economic threshold. Even without a physical presence, surpassing this threshold requires collecting sales tax.

In Maryland, there is also a transaction threshold of 200, which means that even if your sales aren’t over $100,000 if you’ve sold more than 200 items then you still need to pay sales tax.

Is what you’re selling taxable in Maryland?

Now that you’ve grasped the basics of Maryland’s sales tax and nexus thresholds, let’s delve into whether your specific products or services are taxable.

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How to register for sales tax in Maryland

In Maryland, registering for sales tax involves obtaining a sales and use tax license. There are two main methods to do this:

  1. Online Combined Registration Application:
  • This is the recommended method for new businesses applying for their first sales tax license.
  • It acts as a one-stop shop for registering various Maryland tax accounts.
  • Access the application here: [Maryland Combined Registration Application ON Maryland.gov interactive.marylandtaxes.gov]
  1. Paper Combined Registration Application:

How to collect sales tax in Maryland

Here’s how to collect sales tax in Maryland:

  • Register: Get a sales tax license (free) online or by mail.
  • Charge tax: Apply the 6% sales tax at checkout.
  • Keep records: Track sales and collected tax.
  • File & Pay: File returns (monthly or quarterly) and pay collected tax online or by mail.
Example:
  • Buying a $60 jacket in Maryland with a 6% sales tax adds ($60 x 6%) = $3.60 in tax.
  • You’d pay $60 + $3.60 = $63.60 total.

FAQs

Do you have a physical nexus in Maryland?

A physical nexus in Maryland means your business has a sufficient physical presence in the state to be required to collect and pay sales tax. Here’s how to know if you have one:

  • Physical Presence Examples:
    • Owning an office or warehouse in Maryland.
    • Having employees who regularly work in Maryland (even if remotely).
    • Storing inventory in Maryland for sales.
    • Regularly sending salespeople or representatives into Maryland.
Do you have an economic nexus in Maryland?

Maryland uses economic nexus to determine sales tax filing requirements, regardless of physical presence in the state. Here’s what you need to know about economic nexus in Maryland:

  • Thresholds: You have economic nexus if your business exceeds EITHER of the following thresholds in the previous or current calendar year:
    • Sales: $100,000 or more in total sales of goods or services delivered into Maryland.
    • Transactions: 200 or more separate transactions in Maryland.
What is use tax in Maryland?

In Maryland, use tax applies to purchases you make of taxable goods outside the state that you then use, store, or consume within Maryland.

Here’s a breakdown of use tax in Maryland:

  • Rate: The use tax rate is the same as the Maryland sales tax rate, which is generally 6%. However, some specific goods like alcoholic beverages have a higher tax rate (9%).
  • Who Pays It: You, the consumer, are responsible for paying use tax on out-of-state purchases you use in Maryland.
  • Exceptions: There are some exceptions to use tax, similar to sales tax exemptions. Examples include groceries, prescription drugs, and certain clothing items.
Do you need a seller/reseller permit?

In Maryland, there isn’t a separate seller/reseller permit.  What you need is a sales and use tax license. This single license covers both collecting sales tax on taxable goods you sell and obtaining a resale certificate to avoid paying sales tax on purchases you make for resale.

Here’s a quick breakdown:

  • Sales Tax Collection: If you have a physical nexus or economic nexus in Maryland (see previous explanations for details), you need this license to collect and pay sales tax on taxable goods you sell to Maryland customers.
  • Resale Certificate: This license allows you to obtain a resale certificate from your suppliers. With a valid resale certificate, you can avoid paying sales tax on purchases you make for resale (not for personal use).
How to get a sales tax permit/license in Maryland?

To get a sales tax permit (aka sales and use tax license) in Maryland:

  1. Apply online for free at Maryland Combined Registration Application
  2. Alternatively, download a paper application, fill it out, and mail/fax it in.
  3. Allow two weeks for processing and contact them for your tax return filing schedule (not on the application).
When are Maryland's Returns Due?

The filing frequency depends on your annual sales tax liability:

  • Over $15,000 annually: File monthly (due by the 20th of the month).
  • Under $15,000 annually: File quarterly (due by the 20th of the month following the quarter).
How to file sales tax in Maryland
  1. File and Pay Electronically (Recommended):
  • Maryland prefers electronic filing through their bFile online portal: [Maryland bFile ON Marylandtaxes.gov marylandtaxes.gov]
  • This method is faster, more secure, and allows for easier payment options.
  • You’ll need to set up a bFile account if you haven’t already.
  1. Paper Filing (Alternative):
  • Paper forms are still available, but it’s a less convenient option.
  • You can request paper forms by calling the Comptroller’s Office
  • Mail the completed forms with your payment to the address provided on the form.
Is anyone exempt from sales tax in Maryland?

In Maryland, certain people and organizations are exempt from paying sales tax on their purchases. Here’s a breakdown:

  • Non-Profits and Qualifying Organizations:
    • Non-profit charitable, educational, and religious organizations can obtain a sales tax exemption certificate from the Comptroller’s Office. This allows them to purchase specific goods without paying sales tax.
    • Examples include volunteer fire companies, volunteer ambulance or rescue squads, and qualifying veterans organizations.
  • Government Agencies: All levels of government (federal, state, and local) are exempt from paying sales tax.
  • Credit Unions: Federally chartered credit unions are exempt from paying sales tax on their purchases.

Contact Yonda Tax Today

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