The state of Maryland has included a three percent tax on data and information technology services in its fiscal year 2026 budget. Let’s discuss what that will entail and who it will directly impact.
Who will this tax affect?
Starting July 1, 2025, the three percent tax will apply to any purchases of data or IT services made in Maryland, including many of Innovative’s offerings, like flat rate support and other professional services. This tax applies to where services are used, not where the provider is located. For example, Innovative clients in Pennsylvania or West Virginia will be unaffected.
Some other services included in this tax are:
- Software development and support
- Data storage and processing
- IT consulting and integration services
- Cloud-based software platforms (SaaS)
Why is this tax being implemented?
The decision to implement a tax on IT services is part of a strategy by Governor Wes Moore and state legislators to address Maryland’s $3.3 billion deficit.
How can my business prepare for the new Maryland IT tax?
If this new tax affects your business, consult with your IT provider to discuss its impact, how it will be reflected on invoices and how you can budget accordingly. Starting July 1, Innovative clients in Maryland will begin seeing this tax on their invoices.
If your IT provider does not list this tax on invoices, your business will still need to pay it. For example, if your business is located in Maryland and your IT partner is in Pennsylvania, they may not include the tax on their invoices. In that case, your business will need to pay directly to the state.
Looking for the right partner?
Between tariffs, the end of support for Windows 10 and the new tax on IT services, this year has been quite a journey in the technology world. You need an IT provider who not only supports your technology needs but also acts as a trusted business partner, helping you navigate these challenges while ensuring you can leverage tech to achieve your goals. Don’t feel like you’re getting that? Give us a call!
