Signed into law on May 12, 2026, Maryland’s H.B. 898 includes an exemption for certain sales of data and IT services, software publishing services, digital codes, and digital products when both the buyer and seller are members of the same affiliated group. This change is in response to Maryland’s 2025 expansion of its sales tax base, which imposed a 3% sales tax on many data and IT services and continued applying the state’s 6% sales tax to digital products and digital codes. Consequently, certain technology-related services and digital transactions became taxable for the first time.
Under the new law, sales of these taxable services and digital products are exempt when the transaction occurs between affiliated companies. An affiliated group generally consists of related corporations that are part of the same parent-subsidiary corporate structure under federal tax rules.
The exemption addresses concerns that the 2025 law could tax internal transactions between related entities, such as when one company in a corporate group provides IT, software, data, or digital services to another company within the same group. By removing tax on these intercompany transactions, the new law helps reduce compliance burdens and avoids taxing costs that remain within the same corporate family. (Maryland General Assembly, HB 898, May 12, 2026)