Maryland residents and businesses should apply use tax to out-of-state purchases when sales tax was not paid at the time of purchase for taxable goods or certain services used within the state. The use tax rate matches Maryland’s state sales tax rate of 6%.

When to Apply:

• Purchasing goods online or from out-of-state sellers who do not collect Maryland sales tax.

• Bringing goods purchased out-of-state into Maryland for use.

How to Apply:

1. Identify Taxable Purchases: Determine which out-of-state purchases are subject to use tax, excluding exempt items like groceries and prescription medicines.

2. Calculate Use Tax: Multiply the purchase price by the 6% use tax rate.

3. Report and Pay:

4. Individuals: Report use tax on their Maryland income tax return using the appropriate form.

5. Businesses: Report on their sales tax return or through a separate use tax filing if required.

6. Maintain Documentation: Keep records of purchases and tax calculations for potential audits.

7. Timely Payment: Ensure use tax is reported and paid by the deadlines to avoid penalties and interest.

Proper application of use tax ensures compliance with Maryland tax laws, avoiding potential penalties for non-payment.