New 2025 Maryland Business Tax Rules Every Owner Should Know Stay compliant and maintain strong profits with Yabi Tax and Accounting.

Maryland rolled out major business tax updates effective July 1, 2025, including a brand new 3% sales and use tax on digital and IT services. Whether you run a tech firm, consulting company, or service-based business, these changes could affect your pricing, billing, and record-keeping.

1. New 3% Sales & Use Tax on Services The new Maryland law now taxes:

• Data hosting and cloud services
• Information processing and software publishing
• Computer system design and IT consulting

If your business provides these services — or even resells them — you may need to register to collect and remit Maryland sales tax through the MD Tax Connect portal. 

Yabi Tip: Update your contracts, invoices, and software to ensure taxes are billed properly. Our team can help review your service categories to determine tax exposure.

2. Higher Income Brackets and Capital Gains Surcharge. Maryland also added two new personal income tax brackets:

• 6.25% for incomes above $500,000
• 6.5% for incomes above $1 million

If you own S-Corp, LLC, or partnership, your personal income may now fall under these rates. A 2% capital gains surcharge also applies to higher earners.    

3. Excise and Industry-Specific Taxes

• Vehicle excise tax: 6% → 6.5%
• Cannabis sales tax: 9% → 12%
• Sports betting tax: 15% → 20%
• Vending machine sales are now taxable at 6%
  

How Yabi Tax Can Help
Our Maryland CPAs and business tax specialists will help you:

• Identify newly taxable services
• Register and stay compliant
•  Update your pricing to account for tax changes
•  Prepare quarterly filings and sales tax returns