On the 14th of August 2026, Maryland’s Tax Court ruled that the nation’s first tax on digital advertising is unconstitutional under both federal law and the U.S. Constitution. Maryland now faces direct court orders to refund the collected money back to tech platforms with interest.
Why Maryland's Tax Was Struck Down
The court found the tax violated the Internet Tax Freedom Act (ITFA) because it taxed digital advertising while excluding traditional analog advertising like billboards.
The court also struck down the law under the Commerce Clause of the U.S. Constitution. This is largely due to lawsuits from Apple, Google, and Peacock TV proving that they were wrongly calculating tax tiers using a company's global revenue rather than local Maryland activity.
Tying state tax rates to worldwide income creates an unconstitutional tax on out-of-state business operations.
Impact on Other States
States like Washington, Illinois, and Utah recently passed or proposed similar digital ad taxes. However, due to this ruling in Maryland, those state tax models are on extremely shaky ground, and these states might hold off before proposing a similar digital advertising tax.
What You Can Do Next
For businesses that had implemented a tax on digital advertising, it's best to make sure your system is no longer set up to calculate, withhold, or set aside capital for Maryland's digital advertising tax, effective immediately.
You may be eligible for a refund, but you’ll need to wait as Maryland's Comptroller Lierman appeals the Tax Court's decision. If the appeal is denied, you have 2 options.
If you bought digital ads on major platforms:
- Review your ad platform invoices from 2021 through 2026 across networks like Google, Apple, and Amazon.
- Flag any line-item surcharges labeled specifically for the Maryland digital ad tax.
- With a clear picture of how much sales tax you paid, contact your ad networks to learn how they will go about refunding your portion.
If your company paid the tax directly to Maryland:
- File protective refund claims with the Maryland Comptroller right away to secure your return.
How TaxValet Helps
Sales tax is tricky for many reasons. Changing tax laws, like digital advertising, is one of those reasons.
As your fractional sales tax department, we take over your end-to-end multi-state sales tax compliance, handling every calculation, filing, state update, and state inquiry so you don’t have to deal with sales tax at all.
Book a call with our team to learn more.