Sales Tax and Reverse Sales Tax Calculator Maryland

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Maryland – MD Sales Tax Calculator: User Guide

Maryland is a state located in the Mid-Atlantic region of the United States. It shares its borders with Pennsylvania to the north, Delaware and the Atlantic Ocean to the east, District of Columbia, Virginia, and West Virginia, to its south and west.

Dubbed as "America in Miniature," the Maryland state has a diverse culture, varied geography, rich history, flouring economy, favorable business environment, and a cornucopia of opportunities. Consequently, attracting numerous people to settle in here throughout the year.

So, are you planning to start, expand, or relocate your business in Maryland? You must be aware of plenty of factors, including Maryland Sales Tax, for which our experts have compiled a fantastic Maryland Sales Tax Guide along with a sales tax calculator to educate you with essential facts and laws about Maryland sales tax. Besides, you will also learn to calculate Maryland Sales Tax like a Pro.

So let's get started!

Maryland Sales Tax Facts:

• 6% of Sales Tax is charged in Maryland on state-level. Fortunately, no county, city, or ZIP code in the state levy additional sales tax, so no matter what the buyer's location is within the state, the sales tax rate would remain the same.
• Meanwhile, no special sales tax rate is levied in Maryland.
• Good purchased outside of Maryland, but used within the state are supposed to be subjected to Maryland Use Tax at the rate similar to Maryland Sales Tax of 6%.
• Most raw groceries, residential energy, and prescription drugs are exempted from sales tax in the state.
• The sales tax rate in MD is higher than 71.2% of states in the US.
• Most services accept internet purchases and mail orders such as magazines, are not charged with Maryland Sales Tax.
• Some products like Alcohol are subjected to a selective sales tax rate of 9%.
• Maryland has a whole week as Tax-Free Holiday (August 11th - August 17^th), where various products under clothing and footwear, as well as few back-to-school items including backpacks and a stapler, can be bought without MD Sales Tax. You also check the complete list of products on the State's website. The state also has a Sales Tax Holiday (February 16th - February 18^th) for Energy Star items every year.
• Individuals and companies can fill out a Maryland Sales Tax Exemption Form to buy goods for resale, improvement, or as raw materials without paying sales tax.

How to calculate Sales Tax in Maryland?

Businesses and Sellers engaged in the retail sale or lease of tangible personal property (TPP), and specific services, and have Nexus in Maryland are required to pay MD Sales tax. However, purchases used for production by manufacturers, resales by distributors are not subjected to MD Sales Tax. Moreover, separately stated charges on delivery service, professional services, installation, and interest are also not applicable.

Businesses and Sellers are required to register, collect, manage, and transfers the sales tax to the Maryland Tax Department while staying in compliance with state laws and avoid penalties and interest.

The sales tax determined on four factors:

1. Nexus: It is a connection of business with a state. The business is only liable to pay taxes to the states with Nexus.
2. Out of State Seller's Eligibility: Out of State Seller is only required to register, collect, and remit the sales tax to the state's authorities if it falls under the criteria provided by the state.
3. Location and Products or Services: The sales tax rate varies from product to product and location to location. However, no sales tax is charged locally in Maryland so that the sales tax rate would remain the same in MD, regardless of location.
4. Exemptions: Almost all goods are eligible for sales tax regulation. However, groceries, residential energy prescription drugs, and maybe a few more are exempted under Maryland Law. So you should check with Maryland state government as to which goods and services sold in Maryland are subject to sales tax.

To calculate Sales Tax in Maryland, follow the steps below:

Step 1 – Determine your Nexus:

As a business owner, you are only required to collect sales tax if you are eligible for collecting sales tax and have Sales Tax Nexus in the Maryland State. And to determine your Nexus in Maryland, you must have any of the following:

• Selling a tangible personal property (TPP) or taxable service in the state directly or indirectly through an agent or subsidiary;
• Maintaining a business location like office, warehouse, sample room, distribution, storage, and repair facility in Maryland;
• Having employees or representatives who request and accept orders, as well as involved in selling, delivering tangible personal property (TPP) or taxable service in the state;
• Visiting the state regularly to provide service or repair for TTP;
• Regular use of person's vehicles to sell or deliver tangible personal property or a taxable service in the state;

Step 2 – Determine the eligibility to collect sales tax as an out-of-state seller:

Out of State Seller is eligible to register, collect and remit sales tax under Maryland Law, if:

1. The out of state seller has a gross revenue exceeding $100,000 into Maryland by selling delivering tangible personal property (TPP) or taxable service;
2. OR, Makes 200 or more sales of delivering tangible personal property (TPP) or taxable service in Maryland.

Step 3 – Determine the Sales Tax Rate:

Once you have determined that your Nexus is with Maryland, next is to deduce the Sales Tax rate (State) applicable to your product. As no city or county in Maryland levy local sales tax, so sales tax rate remains the same throughout Maryland. However, sales rate may vary according to a type of product like alcoholic beverages are charged at 9%, whereas most other taxable tangible goods are charged at 6%.

Step 4 – Calculate Sales Tax:

After determining the sales tax rate according to the location and type of purchases, it is easy to calculate the sales tax amount charged on the product and gross price (amount after tax) of a product.

Example # 1:

For instance, you are selling an Alcoholic Beverage on your store in Annapolis, Maryland, having a net price tag of $25. The amount that a buyer has to pay (including sales tax) on a check out would be:

Manual Method:

Net Price (amount before Tax) of an Alcoholic Beverage: $25

Total Sales Tax rate: 0.00% (Annapolis) + 0.00% (Anne Arundel County) + 9.0% (Maryland State) = 9.00%

Total Sales Tax amount = $25 x 9.00% = $2.25

Gross Price (Amount after Tax) = 25 + 2.25 = $27.25

It means the amount the buyer has to pay for an Alcoholic Beverage on a cash counter would be $27.25.

Using our Sales Tax Calculator:

All of the steps mentioned above can be skipped to get an instant result using our Sales Tax Calculator. All you need is:

1. Input the $25 Net Price of an Alcoholic Beverage as Amount Before Tax
2. Input or select 00% of the combined Sales Tax rate on the Tax Rate menu.

Our calculator will automatically calculate the result, and represents it in 3 different forms, as shown in the image below:

Reverse Sales Tax Calculation

In the example above, we have explained to you to calculate the Sales Tax amount payable in a product, and the Gross Price of the Product.

But there are also instances when you are required to deduce how much sales tax buyer has actually paid on a product or you may want to check the accuracy of the sales tax indicated on your item's receipt.

This is where the Reverse Sales Tax Calculation Kicks in. And luckily, our Maryland Sales Tax Calculator can perform this calculation like a Pro.

Example:

Your buyer has paid $255 for an E-Bike at your store in Hanover, Maryland. Now the buyer is inquiring how much an E-Bike actually cost before the sales tax was added. So you need to follow the steps below to determine the amount before tax (net price) of an E-Bike:

Gross Price (Amount after Tax) of E-Bike: $255

Total Sales Tax rate: 0.00% (Hanover) + 0.00% (Anne Arundel County) + 6.00% (Maryland State) = 6.00%

Manual Method:

Gross Price with sales tax = [Net Price × (tax rate in decimal form + 1)]

255 = [Net Price x ((6.00/100) + 1)]

255 = Net Price x 1.06

$240.6 = Net Price

So the original Price (net price) of the E-Bike was $240.6.

Using our Sales Tax Calculator:

You can also use our Sales Tax Calculator for Reverse Sales Tax calculation to skip the aforementioned manual method. All you need is:

1. Input the $255 Gross Price of E-Bike as Amount after Tax
2. Input or select 6.00% of the combined Sales Tax Rate on the Tax Rate

Our calculator will automatically calculate the result and represents it in 3 different forms.

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