By Tinashe Chingarande
Baltimore Sun
(TNS)
Maryland is appealing a court ruling that struck down the state’s digital advertising tax, a levy that lawmakers enacted in 2021 to help fund the state’s K-12 education reform effort.
The state comptroller’s office said Monday that the Maryland Attorney General’s office officially filed an appeal in Anne Arundel County Circuit Court, asking a judge to review Maryland Tax Court rulings that found the tax, which charges big tech companies that run internet ads a 2.5% tax on their gross global revenue, violated the federal Internet Tax Freedom Act. Apple, Google and Peacock TV brought cases against the state last month.
Maryland lawmakers enacted the nation’s first tax on digital advertising revenue in 2021, directing the money toward the state’s education initiatives. Other states, such as Washington and Utah, have also enacted a digital advertising tax. The Illinois state legislature also passed a tax on providers of targeted advertising, which the governor has said he would sign. The Pennsylvania House of Representatives passed its digital advertising tax law in June.
The state has collected more than $500 million under the tax since 2022, but the money remains unspent pending the outcome of legal challenges. For this year, roughly $88 million has been collected as of July, according to the comptroller’s office.
The revenue was designated for the Blueprint for Maryland’s Future, the state’s K-12 education reform program.
In a statement to The Baltimore Sun, the comptroller’s office said an appeal is necessary because Maryland lawmakers want “to ensure that the biggest tech companies doing business in Maryland pay their fair share and to provide essential support to Maryland’s public schools.”
The Maryland attorney general’s office didn’t respond to a request for comment by publication deadline.
But tax law analysts criticized the state’s actions, noting that fighting for a tax that the state judiciary has said violates federal law is a waste of state resources.
“Maryland had a perfectly reasonable corporate income tax that was reaching the profits of these companies,” said Richard Pomp, a law professor at the University of Connecticut’s School of Law. “And if it was not, if there was a defect for whatever reason, the state would have been much better off putting its efforts into correcting that problem rather than embarking on this path, which is not yet over and won’t be over for years to come.
The Maryland Chamber of Commerce also opposes the tax, saying taxing businesses can discourage investment in the state.
“Instead of devoting additional resources to an unconstitutional tax, Maryland should be focused on generating meaningful economic growth by controlling state spending, identifying meaningful budget reductions, and creating a more predictable economic environment,” the group said in a statement.
Photo credit: Famartin/Wikimedia Commons
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©2026 Baltimore Sun. Visit baltimoresun.com. Distributed by Tribune Content Agency LLC.
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Tags: digital advertising tax, Maryland, Taxes, Technology
