News Release
Maryland Business Community Opposes Proposed $500 Million Tech Services Tax
Mar 20, 2025
Proposed 3% Tax on Data and IT Services Would Harm Innovation Economy and Set Dangerous Precedent
Annapolis, Md. — The Maryland business community is deeply concerned by the announcement of a 3% services tax on tech services that would apply to both businesses and consumers, expected to generate approximately $500 million in new tax revenue.
This proposal comes after weeks of advocacy against a broader business-to-business (B2B) services tax. While we appreciated the legislature’s and Governor’s decision to reconsider the original B2B tax, this tech-focused version still poses a serious threat to Maryland’s competitiveness and would hurt our fastest-growing sectors in technology and innovation.
Every Tax Proposal Must Be Evaluated Through a Competitiveness Lens
The Maryland business community has consistently opposed expanding sales taxes to professional services because they increase costs for both businesses and consumers and hurt our competitiveness. Like this year’s broad B2B services tax and last year’s proposal to expand the sales tax to services, we must ask: Will this make Maryland more competitive for business? This proposal fails that test.
While we appreciate the Governor's commitment to making Maryland a hub for technology and innovation, the tech tax would undermine Maryland’s efforts to strengthen this sector. As partners in Maryland's economic development, we urge alignment between tax policy and growth initiatives to ensure Maryland remains competitive for investment and talent. Adding new costs to technology services will challenge the very industry we collectively aim to strengthen as Maryland competes with neighboring states for investment and talent.
Business Growth: The Only Sustainable Solution
The effects of this proposed tax extend far beyond the tech industry. In today’s interconnected economy, tech services are a fundamental infrastructure component for businesses across all sectors.
- Technology and IT companies face direct taxation on their core services
- Defense contractors face increased costs affecting their ability to compete for federal contracts
- Small businesses without in-house tech teams bear disproportionate burdens
- All Maryland businesses face incentives to relocate operations to more tax-friendly states
These higher costs won’t just stay with businesses — they’ll be passed down to consumers. In a world where IT services are essential for everything from work to school to healthcare, this tax could price everyday Marylanders out of critical services and widen the digital divide.
A Precedent We Cannot Afford to Set
One of the biggest concerns here is the precedent this sets. Once we start taxing services — whether it’s tech, legal, marketing, or accounting — it becomes easier to expand these taxes to other sectors down the line. Today it’s tech services; tomorrow it could be any other service upon which Maryland businesses and consumers depend.
Business Growth: The Only Sustainable Path Forward
We continue to emphasize that a thriving business community is not just one path forward — it is the only sustainable solution to Maryland's long-term fiscal challenges. Businesses drive job creation, economic growth and innovation.
The proposed $500 million tech tax will not make Maryland more business-friendly or competitive — in fact, it will undermine those qualities and the desired growth in key sectors like technology and innovation. Instead of imposing new taxes that increase costs and hinder investment, Maryland needs policies that foster a competitive environment, attract business investment and support continued growth. These are the steps that will make Maryland more attractive to businesses, helping them thrive and ensuring a prosperous future for the state.
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About the Maryland Chamber of Commerce
The Maryland Chamber of Commerce is the only statewide business advocacy organization and the leading voice for business in the state. Together with their 7,000+ members, they form a statewide coalition that is committed to ensuring that Maryland is attracting and retaining quality jobs, developing vibrant, sustainable communities and staying at the forefront of global competitiveness and economic prosperity.
