Full Breakdown
Maryland Tax Court Strikes Down State Digital Advertising Tax
8/15/2026, 8:20:51 AM
Court Decision
Maryland’s Tax Court ruled that the Digital Advertising Gross Revenues Tax violates the federal Internet Tax Freedom Act, the dormant Commerce Clause, and the First Amendment. The decision, issued on a Friday, ordered the state to refund all taxes collected from the targeted companies, plus interest. The court’s finding follows earlier challenges that had already led a federal appeals court to strike down portions of the law for First-Amendment concerns.
Background of the Tax
Enacted in 2021 over a gubernatorial veto, the tax applied a 2.5 % increment to digital advertisers with global revenues of at least $100 million, capping at 10 % for firms earning over $15 billion. Lawmakers projected annual collections of up to $250 million, earmarking the revenue for the Blueprint for Maryland’s Future—a K-12 education initiative intended to address the state’s multibillion-dollar structural budget gaps. By October of the previous year, the comptroller’s office reported that more than $400 million had been collected.
Official Statements & Responses
The Comptroller’s Office spokesperson indicated that the agency is reviewing the court’s order.
Criticism & Opposition
Steve Hershey, Senate Minority Leader, argued the decision validates Republican warnings that the tax was “unconstitutional from day one.”
Verbatim Quote
- “When the Maryland General Assembly was considering this tax, we told them it was unlawful and unconstitutional — and they passed it anyway,” — Steve DelBianco, President and CEO of NetChoice — Steve DelBianco, President and CEO of NetChoice
These reactions underscore the contention that the tax’s design singled out digital services, prompting legal challenges from industry groups such as NetChoice, the U.S. Chamber of Commerce, and the Computer & Communications Industry Association. The court’s order now requires Maryland to return the collected sums, reshaping the state’s fiscal strategy for funding its education blueprint.
