Maryland tax court voids digital ad tax, orders refunds to Apple, Google
and Peacock TV
[August 15, 2026] ANNAPOLIS,
Md. (AP) — A Maryland state tax court has struck down the state’s
first-in-the-nation tax on digital advertising and ordered state
officials to repay the tax money already collected from big tech firms.
The Maryland Tax Court said the tax violates the federal Internet Tax
Freedom Act as well as the First Amendment and the commerce and due
process clauses of the U.S. Constitution.
The legal fight has been watched by other states that are considering
taxes for online ads. Maryland estimated the tax, approved in 2021,
could raise about $250 million a year to help pay for a sweeping K-12
education measure.
In Friday's decision, the tax court ordered the state to repay the tax
money already collected by Apple, Google and Peacock TV.
The law taxed revenue that large companies make on digital
advertisements shown in Maryland. Companies making more than $100
million in global annual gross revenues were taxed at a 2.5% rate. The
rate increased for companies with larger revenues, topping out at a 10%
rate for companies making $15 billion or more in global gross annual
revenues.
Supporters of the law contended that Maryland needed to overhaul its tax
methods in response to significant changes in how businesses advertise.
But attorneys representing Big Tech companies including Meta and Amazon
challenged the law in multiple legal venues, arguing in part that they
were unfairly targeted.
Last year, 4th U.S. Circuit Court of Appeals ruled part of the law
violated the Constitution because it blocked Big Tech companies from
telling customers about the tax. That, Judge Julius Richardson said,
violated the right to free speech.
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People talk near a Meta sign outside of the company's headquarters
in Menlo Park, Calif., March 7, 2023. (AP Photo/Jeff Chiu, File)
 Maryland Senate President Bill
Ferguson and House Speaker Joseline Pena-Melnyk, both Democrats,
issued a statement saying they “respectfully disagree” with the tax
court ruling and expect the legal process to continue.
They said the tax was enacted to keep the state's tax system in pace
with a changing economy.
“We remain committed to ensuring that Maryland’s tax system is fair,
sustainable, and reflects today’s economy,” they said. “We will
continue working with the Attorney General and Comptroller as this
matter proceeds through the courts.”
The tax court said Congress — not the state legislature — is tasked
with regulating interstate commerce, and that the tax law was
inappropriately based on global revenue rather than revenue from
in-state advertising.
The federal Internet Tax Freedom Act bars the taxation of e-commerce
if similar services are not taxed. At least for now, the tax court
found, there isn't much of a difference between digital advertising
and print or billboard ads, which means the bar on taxation applies.
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