Maryland Income & Tax for eCommerce Businesses

At Tall Oak Advisors, Maryland frequently comes up in multi-state reviews as a state where sellers have gaps — particularly around the broader-than-expected threshold calculation and the state's expanding digital product tax rules.

💡 Broadest Threshold in This Series: Maryland's $100,000 sales tax threshold includes taxable sales, exempt sales, wholesale transactions, AND marketplace-facilitated sales — all combined. Even if Amazon collects all the tax on your marketplace sales, those sales still count toward your $100,000 threshold for determining whether you need to register for direct sales. This is one of the most expansive threshold calculations in the country.

Part 1: Maryland Corporate Income Tax

Maryland imposes a flat 8.25% corporate income tax on C corporations with nexus in the state — one of the highest corporate income tax rates in the country. The tax is administered by the Comptroller of Maryland and applies to net income apportioned to Maryland.

S corporations, partnerships, and LLCs taxed as partnerships are generally not subject to Maryland corporate income tax at the entity level. Their income passes through to individual owners, who pay Maryland's graduated individual income tax rates.

What Creates Maryland Corporate Income Tax Nexus?

Maryland corporate income tax nexus is broadly construed. A business can have nexus based on any of the following:

• Physical presence: offices, warehouses, employees, or property in Maryland — including FBA inventory

• Economic presence: any Maryland-source income — even regular ongoing sales delivered into Maryland can trigger a nexus determination

• Affiliate relationships with Maryland-based entities that support your sales or operations

• Remote employees working from Maryland addresses

PL 86-272 in Maryland

Federal Public Law 86-272 protects C corporations from Maryland corporate income tax if their only Maryland activity is soliciting orders for tangible goods approved and shipped from outside Maryland. FBA inventory stored in Maryland and employees performing activities beyond order solicitation remove this protection. Maryland also follows the broader interpretation that certain online activities — such as maintaining interactive web features that go beyond simple solicitation — can erode PL 86-272 protection.

Part 2: Maryland Sales Tax

The Broad Threshold Calculation

Maryland's economic nexus threshold is $100,000 in gross revenue from sales delivered into Maryland in the previous or current calendar year. But what makes Maryland stand out is what counts toward that $100,000:

• Taxable sales — included

• Tax-exempt sales — included

• Wholesale transactions — included

• Marketplace-facilitated sales (Amazon FBA, Etsy, etc.) — included, even though the marketplace collects and remits the tax

• Only direct-to-customer sales are your collection responsibility — but all of the above count toward determining whether you're obligated to register for those direct sales

Example: You have $75,000 in Amazon FBA sales into Maryland (Amazon collected the tax) and $30,000 in Shopify sales. Your combined $105,000 exceeds the threshold — you must register to collect on your $30,000 in Shopify sales, even though you're under $100K on direct sales alone.

Transaction Threshold Eliminated

Effective July 1, 2024, Maryland eliminated its 200-transaction threshold for economic nexus. Sales tax nexus is now determined solely by the $100,000 revenue threshold. This was part of a broader national trend and simplifies compliance for Maryland — only the dollar amount matters now.

When Collection Begins

Once you exceed the $100,000 threshold, Maryland requires registration by the first day of the month following the threshold breach. Unlike Massachusetts, which has a two-month delay, Maryland's collection obligations kick in much faster.

Maryland Sales Tax Rate

Maryland has a flat statewide rate of 6% with no local sales taxes. Like Indiana and New Jersey, the single-rate structure makes Maryland straightforward to administer for remote sellers — every delivery into Maryland is taxed at 6%.

Maryland is a destination-based state for remote sellers.

Maryland's Digital Economy: SaaS and Digital Advertising

Maryland is one of the most aggressive states in taxing the digital economy:

• SaaS taxable at 3% effective July 1, 2025 (a new, reduced rate specifically for SaaS and other specified digital products)

• Downloadable software and digital goods are generally subject to the standard 6% rate

• Digital Advertising Tax: Maryland imposes a tax on annual gross revenues from digital advertising services for large tech companies with global revenues exceeding $100 million. This is separate from sales tax and is not relevant for most eCommerce sellers, but worth knowing if you operate at scale

FBA Sellers in Maryland

Amazon operates fulfillment centers in Maryland, including facilities in the Baltimore area. FBA inventory in Maryland creates immediate physical nexus for both sales tax and corporate income tax. Because Maryland includes marketplace sales in the nexus threshold calculation, FBA sellers should be especially proactive about reviewing their Maryland position — even sellers who only sell through Amazon may find they have direct-sales obligations if they also run a Shopify store.

What About Sales Tax?

Maryland's 6% flat rate (no local taxes) is seller-friendly, but its broad threshold calculation — which includes marketplace and wholesale sales — is a real compliance trap for multi-channel sellers.

At Tall Oak Advisors, we put together this guide as a resource for our eCommerce community. Tax rules vary significantly from state to state, and we want sellers to have the information they need to make informed decisions. More info at talloakadvisors.com

Disclaimer: This article is for general informational purposes only and does not constitute legal or tax advice. Tax laws change frequently. Consult a qualified tax advisor or CPA regarding your specific situation.

Sources: Md. Code Ann., Tax-Gen. § 10-101 et seq. (Corporate Income Tax); Md. Code Ann., Tax-Gen. § 11-701 et seq. (Sales Tax); Maryland Economic Nexus (eff. Oct. 1, 2018; 200-transaction threshold removed July 1, 2024); SaaS 3% rate (eff. July 1, 2025); Pub. L. No. 86-272.