Sales and Use Tax

Every state that has a sales tax also has a use tax on the purchase of goods and services as defined by law. State sales taxes apply to purchases made in Maryland while the use tax refers to the tax on goods purchased out of state.

Businesses in Maryland are required to collect Maryland's 6 percent sales tax and or 9 percent alcoholic beverage tax from you whenever you make a taxable purchase.

Every time you purchase taxable tangible goods from businesses outside of Maryland, whether in person, over the phone, or on the Internet, the purchase is subject to Maryland's 6 percent use tax or 9 percent alcoholic beverage tax if you use the merchandise in Maryland. Maryland's use tax protects Maryland businesses from unfair competition. Local businesses would be at a competitive disadvantage if consumers were entitled to a 6 or 9 percent discount on items purchased from out of state businesses.

  • Get Sales and Use Tax Information for consumers, or get all the details in the business section.
  • File it! File a Use Tax Return or to get a credit for sales tax paid in another state.
  • Pay it! Submit your payment along with the return.
  • Get a refund! If you improperly paid sales tax and the merchant won't give you credit. File here.
  • Get help! For additional assistance, review the Frequently Asked Questions about Sales and Use Tax, Frequently Asked Questions about the Sales Tax on Alcoholic Beverages, Frequently Asked Questions about Sales By Parent-Teacher Organizations and Other Organizations or contact us.

Did you know that you can shop tax free in Maryland twice a year? Read about our Shop Maryland Programs for information about each opportunity!

If you will make sales in Maryland, you will need to obtain a sales and use tax license. To obtain one, complete a Combined Registration Application. The application provides a one-stop method for registering a variety of tax accounts, including the sales and use tax license.

For additional information about the specifics of certain types of sales rates, fees and exemptions, visit the following two sections in the sales and use tax section for businesses:

Special Situations

Tax Exemptions

Every time you purchase taxable tangible goods or alcoholic beverages, whether in person, over the phone, or on the Internet, the purchase is subject to Maryland's 6 percent sales and use tax on goods and 9 percent alcoholic beverages tax on alcohol if you use the merchandise in Maryland.

When you purchase goods from businesses located outside of Maryland, they are not required to collect Maryland's sales tax unless they have a physical location, or deliver services, in Maryland. Also, you are not required to pay the sales tax in the state where the business is located. However, you are required to pay the 6 percent use tax or the 9 percent alcoholic beverage tax directly to the Comptroller of Maryland by filing the consumer use tax return.

Individuals who do not have a permanent sales tax license are required to obtain a temporary license and collect a 6 percent or 9 percent sales and use tax for sales at various events such as craft shows and fairs. To obtain a temporary license call 410-767-1543 or 410-767-5462. The temporary license lasts for 30 days.

Effective January 3, 2008, the Maryland sales and use tax rate is 6 percent, as follows:
  • 1 cent on each sale where the taxable price is 20 cents.
  • 2 cents if the taxable price is at least 21 cents but less than 34 cents.
  • 3 cents if the taxable price is at least 34 cents but less than 51 cents.
  • 4 cents if the taxable price is at least 51 cents but less that 67 cents.
  • 5 cents if the taxable price is at least 67 cents but less than 84 cents.
  • 6 cents if the taxable price is at least 84 cents.
On each sale where the taxable price exceeds $1.00, the tax is 6 cents on each exact dollar, plus:
  • 1 cent if the excess over an exact dollar is at least 1 cent but less than 17 cents.
  • 2 cents if the excess over an exact dollar is at least 17 cents but less than 34 cents.
  • 3 cents if the excess over an exact dollar is at least 34 cents but less than 51 cents.
  • 4 cents if the excess over an exact dollar is at least 51 cents but less than 67 cents.
  • 5 cents if the excess over an exact dollar is at least 67 cents but less than 84 cents.
  • 6 cents if the excess over an exact dollar is at least 84 cents.

Download our sales and use tax rate chart.

Special rates and situations

An 11.5 percent tax is imposed on short-term passenger car and recreational vehicle rentals. Certain short-term truck rentals are subject to an 8 percent tax.

The 6 percent tax rate is applied to a portion of the sale of new mobile homes and modular buildings, as well as a portion of the gross receipts from vending machine sales.

The 9 percent tax rate is applied to sales of alcoholic beverages. Reference the Alcoholic Beverage Tax Rate Chart-9% for details.

See the Special Situations section for more information.

The Code of Maryland Regulations (COMAR) are maintained by the Division of State Documents (DSD) under the Office of the Secretary of State and can be accessed through the DSD Web site. To view the regulations, please visit COMAR Online.

Updated November 25, 2019

Maryland Law and Regulation on Out of State Vendors

Under Maryland law, a person who engages in the business of an out-of-state vendor must register with the Maryland Comptroller, collect and pay sales and use tax, and file Maryland sales and use tax returns. A person engages in the business of an out-of-state vendor if the person:

  1. Permanently or temporarily maintains, occupies, or uses any office, sales or sample room, or distribution, storage, warehouse, or other place for the sale of tangible personal property or a taxable service directly or indirectly through an agent or subsidiary;
  2. has an agent, canvasser, representative, salesman, or solicitor operating in the state for the purpose of delivering, selling, or taking orders for tangible personal property or a taxable service;
  3. Enters the state on a regular basis to provide service or repair for tangible personal property;
  4. Regularly uses the person's vehicles to sell or deliver tangible personal property or a taxable service for use in the State; or
  5. Sells tangible personal property or taxable services for delivery in the State, if, during the previous calendar year or the current calendar year, the person satisfies either of the following criteria:
    1. The person's gross revenue from the sale of tangible personal property or taxable services delivered in the State exceeds $100,000; or
    2. The person sold tangible personal property or taxable services for delivery into the State in 200 or more separate transactions.

See Md. Code Ann., Tax-Gen. §§ 11-701(b)(2)(i)-(b)(2)(iii) and COMAR 03.06.01.33(B)(4)-(5).

Engaging in the Business of an Out-of-State Vendor

The Comptroller's Office interprets Section 11-701(b) as broadly as is permitted under the United States Constitution.

The Comptroller considers the phrase "on a regular basis" as used in § 11-701(b)(2)(ii) to be met if a vendor, such as a furniture or appliance dealer, provides such service or repair as a customary, usual or normal course of business.

Section 11-701(b)(2)(ii) does not define the word "service" in the phrase "provide service or repair for tangible personal property." The Comptroller's Office, relying on a dictionary definition of "service," interprets the word to mean "installation, maintenance, or repairs provided or guaranteed by a dealer or manufacturer." See, for example, the American Heritage Dictionary, Second College Edition (1985).

A dealer or manufacturer that regularly installs, or who performs maintenance for, tangible personal property such as furniture or appliances is engaged in the business of an out-of-state vendor within the meaning of Section 11-701(b)(2)(iii).

No minimum number of service or repair visits is required to meet the definition. If it is the vendor's policy to provide service or repair for tangible personal property, and the vendor in fact provides such services or repairs during the audit period, these services or repairs will be regarded as regular. On the other hand, any services or repairs that are provided on a discretionary and infrequent basis will not be regarded as regular.

The Comptroller's Office will examine all relevant information in making a determination about whether a person engages in the business of an out-of-state vendor under § 11-701(b)(1-4). This information includes advertising materials, promotional literature, websites, representations made to prospective customers before sale, whether the vendor routinely employs service or repair personnel or regularly contracts for such services or repairs, and the vendor's description of its business operations as contained in business documents and submissions to government agencies.

Sales of Tangible Personal Property or Taxable Services for Delivery into Maryland

The nexus requirements contained in COMAR 03.06.01.33(B)(5) became effective October 1, 2018. Out-of-state vendors with more than $100,000 in sales or at least 200 separate transactions into Maryland must register and collect sales tax. The Comptroller's Office has published guidance for out-of-state vendors to determine if registration is required.

Guidance on Sales of Tangible Personal Property or Taxable Services for Delivery into Maryland

Sales and Use Tax Alert - Issued September 2018

Registration

If you are required to register with the Maryland Comptroller's Office, a Maryland Combined Registration Application can be found here.

One-Time Events or Shows

If you are going to participate in a one-time event or craft show involving the sale of tangible personal property in Maryland, you may not need to register with Maryland. However, you will need to obtain a Temporary Sales & Use Tax License. Information on obtaining a Temporary Sales & Use Tax License can be found here.

Closing a Sales and Use Tax Account

If you have determined that you no longer have nexus with the State of Maryland, are not required to file Maryland sales and use tax returns, and do not need to retain your account to claim a resale exemption, you can close your Maryland sales and use tax account by filing the Maryland Sales and Use Tax Final Return Form. Form 202FR is available here.

Contact Us

If you have any questions on Maryland's law and regulations on out-of-state vendors, please contact the Comptroller's Office at remotesellers@marylandtaxes.gov.

Find answers to questions regarding Maryland's sales and use tax with regard to out of state purchases, flea markets, alcoholic beverages and more.

Below you will find frequently asked questions concerning the Sales and Use tax.

Yes. Every time you purchase taxable tangible goods, whether in person, over the phone, or on the Internet, the purchase is subject to Maryland's 6 percent sales and use tax if you use the merchandise in Maryland. If you make a tax-free purchase out of state and need to pay Maryland's 6 percent use tax, you should file the Consumer Use Tax Return.

When you purchase goods from out-of-state businesses, they are not required to collect Maryland's sales and use tax unless they have a physical location, or deliver services, in Maryland. For more information, see Maryland's Sales and Use Tax

No. A store coupon is not included in the taxable price unless the vendor can get reimbursement from another source. Manufacturers' coupons are included in the taxable price since a store can obtain a reimbursement from the manufacturer.

For example, if you had a Mars grocery store coupon that was redeemable only at a Mars store - and not Food Lion, Giant or any other food store - the coupon would not be included in the taxable price. On the other hand, if you had a Welch's Grape Juice coupon that you could use in any store, then that coupon would be included in the taxable price.

No. Energy Star-rated clothes washers, refrigerators and air conditioners sold in Maryland are not exempt from the Maryland sales and use tax.

There is a tax-free three-day weekend during which the state sales tax will not apply to the sale of any Energy Star Product listed below, or solar water heater. The tax-free weekend for 2013 will occur the weekend of February 16, 2013, through February 18, 2013.

Energy Star Product means an air conditioner, clothes washer or dryer, furnace, heat pump, standard size refrigerator, compact fluorescent light bulb, dehumidifier, or programmable thermostat that has been designated as meeting or exceeding the applicable Energy Star Efficiency requirements developed by the U.S. Environmental Protection Agency and the U.S. Department of Energy.

In general, food sales are subject to Maryland's 6 percent sales and use tax unless a person operating a substantial grocery or market business sells the food for consumption off the premises and the food is not a taxable prepared food. A grocery or market business is considered to be "substantial" if the sales of grocery or market food items total at least 10 percent of all food sales.

For more information, see Sales of Food

No. The Maryland sales and use tax does not apply to the sales of cars or boats since those items are already subject to titling taxes. Sales of motor vehicles are subject to the Maryland motor vehicle titling tax which is administered by the Maryland Motor Vehicle Administration. Boat sales are subject to a boat titling tax which is administered by the Maryland Department of Natural Resources. On the other hand, the sales and use tax does apply to car and boat rentals, under different tax rates. An 11.5 percent tax is imposed on short-term passenger car and recreational vehicle rentals. Certain short-term truck rentals are subject to an 8 percent tax.

It depends. Charges for warranties, maintenance, service agreements and insurance are taxable if the buyer is required to purchase them or they are already included in the price of the merchandise. However, if the sale could be completed without paying these charges, then the charges are not taxable.

Private vendors or franchisees selling on military bases, or other United States Government properties, must charge the sales tax on all sales of tangible personal property and taxable services statutorily subject to the tax. The tax must be charged on sales to military and other Government personnel as well as civilians. There is an exemption from the tax for sales made at a vending machine facility operated under the Maryland Vending Program for the Blind that is located on property on military bases.

Sales made by the United States Government, or any of its agencies, on Government property are exempt from the sales and use tax, regardless of whether the purchasers are military and Government personnel or civilians.

For example, sales of food by a fast food vendor on a military base are subject to the tax if the vendor or franchisee is ABC Company. The same sales made on a military base where the vendor or franchisee is the United States Government, or an agency of the Government, are not subject to the tax.

Below you will find frequently asked tax questions concerning out of state purchases.

Basically, yes. Maryland does, however, grant a credit for the sales tax paid to another state up to the amount of the Maryland tax. In addition, a 10 percent depreciation allowance may be taken for each full year the property is used by the purchaser before being brought to Maryland.

Maryland grants a credit for sales tax paid to another state up to the amount of Maryland's six (6%) percent sales and use tax liability.

For example, if you paid a four (4%) percent sales tax to another state, you would be liable only for the difference, or two (2%) percent Maryland sales and use tax when you brought the property into Maryland. If you paid a six (6) or higher percent sales tax to another state, you would not be liable for Maryland sales and use tax when you brought the property into Maryland.

Yes. However, you may claim a ten (10%) percent depreciation allowance for each full year you used the property before you brought it to Maryland. Only the depreciated value is subject to tax.

The tax applies only to the cost of materials and purchased fabrication services, not to the full market value of the goods. The value of your labor is not taxed.

Below you will find frequently asked tax questions concerning flea markets.

Yes. Maryland law requires that vendors display their licenses at any location where sales are made. This will save you valuable selling time because representatives of the Comptroller's Office do not have to ask for your registration number.

The tax is on the transaction or sale and not on the property sold. The same item will generate tax each time it is sold unless it is specifically sold for resale.

Yes. Nonprofit organizations must collect tax on merchandise they sell, even if the goods are donated to them. Private individuals must also collect tax even if they plan to donate the proceeds to a nonprofit organization. Private individuals are not eligible for a sales and use tax exemption certificate. Sales by religious organizations and sales of food by volunteer fire companies and veterans' organizations are exempt.

Always collect tax on sales to other dealers unless they present you with a resale certificate bearing their Maryland sales tax registration number. However, out-of-state dealers who are not required to collect the Maryland tax may use their out-of-state sales tax registration number on a resale certificate to purchase antiques and used collectibles. Dealers from states that do not impose a sales tax may provide a valid trader's license or comparable document. Resale certificates are not valid for cash, check or credit card sales of less than $200 unless the product is delivered to the customer's place of business.

Yes. Effective January 3, 2008, a vendor may assume and absorb all or any part of the sales and use tax on a retail sale and pay that tax on behalf of the buyer. The vendor must, however, continue to separately state the tax from the sales price at the time of sale to the purchaser. If the vendor absorbs all or any part of the tax on the sale, the vendor shall pay the tax with the return that covers the period in which the vendor makes the sale.

Below you will find frequently asked tax questions concerning food and beverages.

Yes. However, when calculating if a business meets the 10 percent threshold for a substantial grocery or market business, you may not include sales of single servings, heated or prepared food or sales to be consumed on the premises.

Yes. A caterer serving food at a customer's premises must collect the tax on the food sold. A caterer must collect the tax in this situation even if the caterer also conducts a substantial grocery or market business.

Yes. Sales of food to patients in a hospital when the food charges are included in the regular room rate are exempt. Sales of food and beverages on vehicles operating in interstate commerce are exempt. In addition, the tax does not apply to a sale of crabs for consumption off the premises where sold. Sales of seafood to be consumed off the premises where sold are also exempt if the seafood is not prepared for immediate consumption.

No. For sales and use tax purposes, soft drinks, bottled water, alcoholic beverages, candy and confectionery are not "food." The sale of any of these items is, therefore, not entitled to any of the exemptions for sales of food, including the exemptions for sales of food by volunteer fire companies and veterans organizations. Neither water nor ice is food, although they may be treated as food when sold as components of food.

The tax does not apply to eligible food purchased with federal food stamps. Food stamp eligible food encompasses everything that is considered food for sales and use tax purposes, plus soft drinks, candy, confectionery, water, ice and otherwise taxable and prepared foods.

If a customer purchases both taxable and nontaxable food stamp eligible food with a combination of food stamps and cash, credit card or debit card, the vendor must apply the food stamps to the eligible taxable items first, and then any remaining food stamps to the eligible nontaxable items. After application of the food stamps, the balance of the eligible taxable items paid for with cash, credit card, or debit card is subject to tax.

Your sales and use tax registration number is an eight-digit number that has been assigned to your business. You'll find your registration number on each sales and use tax return we send you and on your sales and use tax license.

You must clearly document the reason for all tax-exempt sales. Otherwise you will be held responsible for uncollected tax, plus penalty and interest. You should establish procedures to obtain valid resale certificates at the point of sale, and review your files periodically for accuracy and completeness.

Make certain that you do not allow resale exclusions on cash, check or credit card sales of less than $200 when you do not deliver the goods sold directly to the buyer's retail place of business.

You should keep resale certificates on file as part of your business records. You must be able to match your sales records with the appropriate resale certificates for audit purposes.

No. Retailers licensed and remitting taxes in other states may apply to the Maryland Comptroller's Office for a refund.

However, an out-of-state vendor who has been issued a temporary permit to collect the Maryland tax may use the number on that permit to make tax-free purchases for resale at the show for which the permit was issued. Temporary permits bear six-digit numbers and are issued by the comptroller's Special Events Section.

No. If you frequently deal with the same supplier, you may provide that supplier with a blanket resale certificate stating that all purchases are for resale. Then all you have to do is give the supplier your sales and use tax registration number.

No. Exemption certificates are issued by the Comptroller of Maryland to qualifying nonprofit organizations and government agencies to make purchases for their own use. The exemption certificate is a wallet-sized card bearing the holder's eight-digit exemption number. Certificates issued to nonprofit organizations have a specific expiration date, presently September 30, 2017 for religious, educational and charitable organizations, cemeteries, credit unions, and volunteer fire companies or rescue squads and September 30, 2017 for certain veterans organizations and their auxiliaries and units. Certificates issued to government agencies have no expiration date. Organizations and government agencies presenting exemption certificates are exempt from the sales and use tax on purchases of materials and supplies to carry out their work. On the other hand, a resale certificate allows a person to make tax-free purchases for resale, not for use.

Although there is no specific form for a resale certificate, it must include a signed statement that the purchase is intended for resale, the purchaser's name and address, and the purchaser's Maryland sales and use tax registration number.

In a typical transaction, you would sell merchandise to a vendor who is not registered to collect Maryland sales and use tax. The unregistered vendor asks you to deliver the merchandise to a customer in Maryland. In this case, you must:

  • Require the vendor to obtain a Maryland sales and use tax license and provide a valid resale certificate; OR
  • Charge the vendor the tax based on the amount of the sale. You are responsible for collecting or documenting the tax on your sale to the vendor.

Twice a year Maryland holds special shopping events when the state sales tax on certain purchases is waived. These events help consumers stretch their dollar just a bit more, and help business owners generate more foot traffic.

Shop Maryland Energy and Shop Maryland Tax-free Week occur in February and August every year thanks to legislation passed in the 2007 special session of the Maryland General Assembly.

Shop Maryland Energy takes place in the month of February for qualified Energy Star products or a solar water heater. The tax-free period for these products begins on the Saturday immediately preceding the third Monday in February.

Shop Maryland Tax-free Week occurs every year beginning the second Sunday of August through the following Saturday. Each qualifying article of clothing or footwear selling for $100 or less is exempt from sales tax, regardless of how many items are purchased at the same time. For example, two $60 sweaters purchased at the same time are both exempt even though the total of the purchase is greater than $100.Additionally, the first $40 of a backpack or bookbag purchase is also tax-free. Accessory items, except for backpacks, are not included.

Unlike previous tax-free periods, businesses selling other items not eligible for inclusion in the tax-free week can participate in Shop Maryland. Under regulations dubbed Sellers Privilege, other merchandise besides apparel and backpacks can be sold tax free but with the retailer paying the sales tax.

These tax-free events will continue until the legislature decides to revisit the issue.

Seller's Privilege

Unlike in previous tax-free periods, businesses selling other items not eligible for inclusion in the tax-free week can participate in Shop Maryland. Legislation passed in 2007, dubbed Sellers Privilege, allows other merchandise besides apparel to be sold tax free but with the retailer absorbing the sales tax.

A vendor may assume or absorb all or any part of the sales and use tax on a retail sale and pay that tax on behalf of the buyer. The vendor must, however, continue to separately state the tax from the sales price at the time of the sale to the purchaser. If the vendor absorbs all or any part of the tax on the sale, the vendor shall pay the tax with the return that covers the period in which the vendor makes the sale.

Shop Maryland Tax Free
Shop Maryland Energy

ENERGY STAR

By law, you are required to make your business records available for inspection by an auditor from the Comptroller's Office at any time during business hours. The burden of proof is on you to demonstrate that you collected and paid the sales and use tax correctly. Your records must adequately distinguish taxable sales and purchases from non-taxable sales and purchases. If you do not have adequate records, the Comptroller's Office may compute a liability by projection from available records, by a survey of similar businesses or on any other reasonable basis.

You must keep all records pertaining to sales and purchases for four years. You should keep the kinds of general business records that are appropriate for your type of business. These general business records might include a general ledger, subsidiary ledgers, journal entries, bank statements, check stubs, and federal and state income tax returns. An auditor must be able to follow the flow of each transaction and match up all documents pertaining to that transaction. Documents or books of records that are incomplete, missing or illegible are not adequate records.

You will also need to keep, where appropriate:

  • Original invoices
  • Resale certificates
  • Bills of lading
  • Sales slips
  • Receipts for purchases
  • Purchase orders
  • Mailing or shipping documentation for out-of-state deliveries
  • Cash register tapes
  • Documentation for exempt sales

Reproductions of records made in the regular course of business, as well as computerized records are permissible if you follow certain guidelines.

Out-of-State-Deliveries

You are not required to collect tax on articles that you have delivered to an address outside the state of Maryland if you have no reason to believe the articles are intended for use in Maryland. Your records should clearly state that an item was delivered out-of-state.

A few large corporations have Direct Payment Permits, which authorize them to pay the tax directly to the comptroller. If you make a sale to one of these corporations, you must record the Direct Payment Permit number with your records of the sale.

The Maryland sales and use tax does not apply to sales of machinery and equipment used in production activities, sales of tangible personal property for consumption in production activities, or sales of tangible personal property for resale or incorporation as a material or part of other tangible personal property produced for sale.

The Tangible Personal Property Used or Consumed in a Production Activity citations are from COMAR 03.06.01.32-2 and COMAR 03.06.01.24.

Exempt activities

Tax-exempt production activities include:

  • Assembling, manufacturing, processing, or refining tangible personal property for sale or resale (except for processing food or beverages by a food vendor);
  • Generating electricity for sale or for use in production activity;
  • Establishing or maintaining clean rooms or clean zones required by federal laws pertaining to manufacturing drugs, medical devices, or biologics;
  • Producing, maintaining, and repairing production machinery or equipment;
  • Laundering, maintaining or preparing textiles in providing the taxable service of commercial cleaning or laundering of textiles for a buyer engaged in a business that requires this service on a recurring basis of a commercial cleaning or laundering of the textiles;
  • Providing for the safety of employees, including safety glasses, hard hats and breathing apparatus; or,
  • Providing for quality control.

Servicing, maintaining, or repairing tangible personal property other than production machinery or equipment, or providing for the health and comfort of employees are not production activities.

Exempt items

Tax-exempt items include:

  • any tangible personal property used directly and predominantly in a production activity in any stage of operation on the production activity site - from handling raw materials or components to moving finished product;
  • foundations to support other machinery and equipment or an item required to conform to air or water pollution laws and normally considered part of real property;
  • safety equipment used in production activity;
  • quality control machinery and equipment used in a production activity site;
  • equipment and supplies used to remove finished goods on a production activity site;
  • machinery used to produce bituminous concrete; and
  • certain specified equipment used in aluminum production.

"Direct" and "predominant" use

Tangible personal property is considered to be used "directly" when the use of the property is integral and essential to the production activity; the use occurs where the production activity is carried on and occurs during the production activity.

The property is considered to be used "predominantly" when the property is used directly in production activities more than 50 percent of the time.

Lease payments

Lease payments of production activity equipment also qualify for the exemption. If machinery or equipment is used both in a production activity and administrative, managerial, sales or any other non-operational activity, the exemption applies if it is used at least 50 percent of the time in a production activity.

Food preparation by restaurants and food retailers

Generally, food processed for sale by grocery stores, bakeries and other food retailers does not qualify for exemption. However, there is a specific exemption for the sale of equipment to be used by a retail food vendor to manufacture or process bread or bakery goods for resale. To qualify for the exemption, the vendor must operate a substantial grocery or market business (as defined in Section 11-206(a) of the Tax-General Article) at the same location where the food is sold. The taxable price of each piece of exempt equipment must be at least $2,000.

Utilities and fuel

Sales of utilities and fuel qualify for exemption under the same terms as other consumables. However, the use of these items in operating administrative, commercial and storage facilities and in providing plant heating and air conditioning is not exempt. When utilities are sold through a single meter for both taxable and exempt uses, taxability is controlled by majority usage. The taxability of oil and coal is also controlled by majority usage where it is impractical to segregate qualifying and non-qualifying usage. To claim the exemption for utilities and fuel, contact Taxpayer Service to obtain Form ST206 and send the completed form to the vendor.

Research and development

The sales tax does not apply to purchases of tangible personal property for use or consumption in research and development. Research and development means basic and applied research in the sciences and engineering and the design, development and governmentally mandated pre-market testing of prototypes and processes. Market research, research in the social sciences or psychology, and other nontechnical activities, routine product testing, sales services or technical and nontechnical services are not included.

No special forms are required to claim the research and development exemption. If entitlement to exemption is not evident from the documents of sale, the vendor should obtain a certificate from the purchaser stating that the property will qualify.

Resale and incorporation exclusions

Vendors may not recognize the resale and incorporation exclusions unless you provide them with a resale certificate with a signed statement that the purchases are for resale and including the buyer's name, address and Maryland sales and use tax registration number. For more information on the use of resale certificates, contact Taxpayer Service and request Business Tax Tip #4, If you Make Purchases for Resale.

Printing industry

The sales tax does not apply to the sale of photographic materials used to produce an item (such as a photographic plate) used in composing, printing or producing another item used in printing. Sales of artwork, electrodes, electrotypes, composition, litho-graphic plates or negatives, mats, photo engravings, stereotypes or typographies for direct use by a person engaged in printing tangible personal property for sale are also exempt. A person selling the items, other than those that are photographic in nature, must pay the tax on all materials used to produce them. A printer who produces these items for self use also must pay tax on all materials.

Claim procedure

No special forms are needed to claim the machinery and consumable exemptions, other than Form ST206 for utilities and fuel. If a vendor requires documentation to support a claim for the machinery exemption, a signed form certifying use in production activities may be provided. The consumables exclusion may be supported by a statement in the form of a resale certificate stating that the property will qualify.

Certain qualified nonprofit organizations are exempt from paying tax on the purchase of items which will be used in carrying out the business of the organization.

The state of Maryland issues exemption certificates to properly qualified organizations. You should record the eight-digit number from this certificate on your copy of the receipt or sales slip.

If you are presented with an exemption certificate, you may use our online service to verify its validity.

Materials that will be incorporated in property to be produced for sale are not subject to tax. You should keep a resale certificate, signed by the buyer and bearing the buyer's Maryland registration number, on file to document the tax-free sales of exempt materials. If you are presented with a resale certificate, you may use our online services to verify its validity.

Reproductions of records made in the regular course of business, as well as computerized records, are permissible if you follow the guidelines outlined below.

Microfilm and Microfiche

You must offer suitable facilities for viewing microfilm and microfiche records. You must also provide any copies which may be required for tax verification purposes.

Computerized Tax Accounting

  • Produce visible records necessary to verify tax liabilities.
  • Permit a transaction to be traced back to the original source or forward to the totals.
  • Make available a description of the system, including flow charts and procedures.
  • Have controls to insure accuracy.

The U.S. Department of State issues a white plastic tax exemption card to qualified diplomats. You must record the tax-exempt number from the back of the card onto the sales slip. Please be aware that the certificates may not be valid for all purposes.

Blue stripes

Cards with BLUE stripes entitle the holder to an exemption from the tax on all purchases.

Green stripes

Cards with GREEN stripes entitle the holder to an exemption from the tax on all purchases except the tax on transient accommodations.

Red stripes

Cards with RED stripes entitle the holder to an exemption from the tax on purchases of taxable items, which exceed the $50, $100 or $200 levels printed on the reverse side of the cards.

Online verification

You may use our online service to verify the validity of a diplomatic tax exemption card.

A resale certificate is a written statement that you provide stating that the merchandise or taxable service you buy will be resold in a taxable sale or that it will be incorporated into tangible personal property or used in a service that will be taxed when it is sold. Although there is no specific form for a resale certificate, it must include:
  • a signed statement that the purchase is intended for resale,
  • the purchaser's name and address; and,
  • the purchaser's Maryland sales and use tax registration number.
    Note: Your sales and use tax registration number is an eight-digit number that has been assigned to your business. You'll find your registration number on each sales and use tax return we send you and on your sales and use tax license.

If you frequently deal with the same vendor, you may provide that vendor with a blanket resale certificate stating that all purchases are for resale. However it is important to note that your vendor retains the right to ask for a resale certificate for each transaction. If the vendor agrees to receive your blanket resale certificate then all you have to do is give the supplier your sales and use tax registration number.

Record Keeping

Vendors must clearly document the reason for all tax-exempt sales and should keep resale certificates on file as part of your business records. You must be able to match your sales records with the appropriate resale certificates for audit purposes. You can be held liable for uncollected taxes if you accept resale certificates for sales that you know or should know are not for resale.

Purchases under $200

Resale certificates may not be used to make tax-free purchases for resale if the purchase is less than $200 and payment is by cash, check or credit card unless the seller delivers the goods directly to the buyer's retail place of business. However, you may present a resale certificate to make a tax-free purchase of goods for less than $200 if you are purchasing goods: (1) on credit by the seller; (2) which would be exempt even if not sold for resale; or (3) which are alcoholic beverages regulated by Article 2B of the Annotated Code of Maryland. View a Sample Blanket Resale Certificate.

The following report(s) are part of a collection of monthly revenue reports published by the Comptroller's Office. For a full listing of monthly and annual reports, see Spotlight on Maryland Money.

Sales and Use Tax Monthly Comparative Revenue Statement: Comparative statement of sales and use tax receipts.