This afternoon, the Maryland Senate voted 29-17 to override Governor Larry Hogan’s veto of House Bill 732, which creates an entirely new gross revenues tax on digital advertising services – display ads, search engine ads, mobile application ads, and ads within a piece of software.

Yesterday, the Maryland House of Delegates voted 88-48 to override the veto of House Bill 732.  The bill has now received the required three-fifths vote by both chambers of the Maryland Legislature to override the veto and enact the nation’s first gross receipt tax on digital advertising. As mandated by the Maryland Constitution, the tax will take effect in 30 days. The first estimated quarterly payment – at least 25% of the “reasonably estimated” tax based on 2021 Maryland digital ad tax revenues – is due to the Comptroller by April 15th.

The tax has drawn scrutiny as violating federal law, including the Permanent Internet Freedom Act and the dormant Commerce Clause.  Thus, legal challenges to the new tax will inevitably follow.