SaaS Sales Tax in Maryland
Maryland taxes SaaS as a digital product under its sales tax and also imposes a separate Digital Advertising Tax.
If you sell SaaS products to customers in Maryland, you may need to collect and remit sales tax at 6% (plus any applicable local taxes). This applies whether your business is based in Maryland or elsewhere — what matters is whether you have economic nexus in the state.
Economic Nexus in Maryland
Following the 2018 South Dakota v. Wayfair Supreme Court decision, Maryland can require out-of-state sellers to collect sales tax if they meet certain thresholds. The most common thresholds are $100,000 in sales or 200 transactions per year in the state, though Maryland's specific rules may vary.
This means even if your business is in Ireland, Germany, or another country entirely, you may need to register for sales tax in Maryland if your sales exceed the nexus threshold.
How to Comply
1. Determine nexus: Track your sales volume to Maryland customers
2. Register: Apply for a sales tax permit with Maryland's tax authority
3. Collect: Add 6% to invoices for Maryland customers
4. File & remit: Submit periodic returns (monthly, quarterly, or annually depending on volume)
International Sellers
If you're selling from outside the US (EU, UK, or elsewhere) to customers in Maryland:
You may still need to register and collect Maryland sales tax if you exceed the economic nexus thresholds. Being a foreign company does not exempt you from US state sales tax obligations.
Frequently Asked Questions
Does Maryland charge sales tax on SaaS?
Yes. Maryland taxes SaaS (Software as a Service) at a state rate of 6%. Maryland taxes SaaS as a digital product under its sales tax and also imposes a separate Digital Advertising Tax.
What is the sales tax rate in Maryland?
The state sales tax rate in Maryland is 6%. Local taxes may apply on top of this, varying by county and city.
Do I need economic nexus in Maryland to charge sales tax?
Yes. Most states, including Maryland, follow economic nexus rules established by the 2018 South Dakota v. Wayfair Supreme Court decision. Typically, you establish nexus if you exceed $100,000 in sales or 200 transactions in the state per year. Check Maryland's specific thresholds.
How do I invoice a customer in Maryland?
Include 6% sales tax on your invoice for SaaS products sold to customers in Maryland. Show the tax as a separate line item. Use our free invoice generator at paytaxfa.st to create compliant invoices.
I'm an EU/UK seller — do I need to charge Maryland sales tax?
Potentially, yes. If you have economic nexus in Maryland (typically $100K+ in sales), you may need to register, collect, and remit Maryland sales tax even as a foreign seller. Consult a US tax professional for your specific situation.