Maryland Sales Tax on Software and Digital Products Maryland: Sales Tax Handbook

Maryland:

Are Software and Digital Products subject to sales tax?

While Maryland's sales tax generally applies to most transactions, certain items have special treatment in many states when it comes to sales taxes. This page describes the taxability of software and digital products in Maryland, including canned software - delivered on tangible media, canned software - downloaded, custom software - delivered on tangible media, custom software - downloaded, customization of canned software and digital products. To learn more, see a full list of taxable and tax-exempt items in Maryland.


Canned Software - Delivered on Tangible Media
TAXABLE
Sales of canned software - delivered on tangible media are subject to sales tax in Maryland.

Canned Software - Downloaded
EXEMPT
In the state of Maryland, the software is considered to be exempt so long as all of the transaction does not include the transfer of any tangible personal property.

Custom Software - Delivered on Tangible Media
EXEMPT
Sales of custom software - delivered on tangible media are exempt from the sales tax in Maryland.

Custom Software - Downloaded
EXEMPT
Sales of custom software - downloaded are exempt from the sales tax in Maryland.

Customization of Canned Software
EXEMPT
In the state of Maryland, it is considered to be exempt so long as the service part of the transaction predominates over sale of canned software.

Digital Products
EXEMPT
Sales of digital products are exempt from the sales tax in Maryland.



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