Is Shipping Taxable in Maryland? Maryland Sales Tax Rules for Shipping and Handling Charges
In Maryland, separately stated shipping charges are generally not taxable. However, handling charges are part of the taxable price. When shipping and handling charges are combined, the shipping charge loses its exemption and the entire combined amount is subject to Maryland sales tax. This article explains Maryland shipping sales tax rules for ecommerce sellers.
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Is Shipping Taxable in Maryland?
In Maryland, separately stated shipping charges are generally not taxable. However, handling charges are part of the taxable price. If shipping and handling charges are combined, the shipping charge loses its exemption and the entire combined amount is subject to Maryland sales tax.
This makes invoice presentation especially important for ecommerce sellers. A separately stated shipping charge may be non-taxable, but a combined “shipping and handling” charge is generally taxable.
Source: Maryland Comptroller, Business Taxpayers FAQs https://services.marylandcomptroller.gov/taxes/en/business-taxpayers-faqs?id=kb_article_view&sysparm_article=KB0010112
General Rule: Separately Stated Shipping Is Non-Taxable
Maryland generally treats separately stated shipping charges as non-taxable. Sellers should clearly show the shipping charge as a separate line item on the invoice, receipt, bill of sale, or checkout summary.
For example:
Product price: USD 100 Shipping charge: USD 8 Total: USD 108
In this case, the USD 8 shipping charge is generally not subject to Maryland sales tax.
Handling Charges Are Taxable
Maryland treats handling charges as part of the taxable price. This means handling charges should be tracked and taxed separately from shipping charges.
For example:
Product price: USD 100 Shipping charge: USD 8 Handling charge: USD 3 Total: USD 111
In this example, the USD 8 shipping charge may be non-taxable if separately stated, but the USD 3 handling charge is generally taxable.
Combined Shipping and Handling Charges Are Taxable
If shipping and handling are combined into one line item, the shipping charge loses its exemption and the entire combined amount is subject to tax.
For example:
Product price: USD 100 Shipping and handling: USD 11 Total: USD 111
In this case, the full USD 11 combined charge is generally taxable in Maryland.
Common Compliance Issues for Ecommerce Sellers
Combining shipping and handling
A single “shipping and handling” charge is generally taxable in Maryland because the shipping portion loses its exemption when combined with handling.
Treating handling as shipping
Handling charges are part of the taxable price. Sellers should not hide handling, packing, processing, or service fees inside a shipping line item.
Using default platform labels
Some ecommerce platforms and invoice templates use “shipping and handling” by default. Sellers should review their Maryland setup and separate shipping from handling where possible.
Using free shipping or shipping included pricing
If shipping is included in the product price or advertised as free shipping, there is no separately stated shipping charge to exclude from the taxable price.
Applying one state’s rule across all states
Shipping taxability varies by state. Maryland’s rule is specific and should be configured separately from states with different rules.
Practical Tips for Sellers Shipping to Maryland
Sellers shipping taxable products to Maryland customers should review invoice format, checkout settings, and platform tax configuration. Shipping charges should be separately stated if the seller intends to treat them as non-taxable.
Handling fees should be separately identified and treated as taxable. Sellers should avoid combined “shipping and handling” line items. They should also retain invoices, checkout screenshots, order details, fee breakdowns, marketplace reports, and sales tax filing records.
Conclusion
In Maryland, separately stated shipping charges are generally not taxable, but handling charges are part of the taxable price. When shipping and handling charges are combined, the shipping charge loses its exemption and the entire combined amount is subject to tax.
For ecommerce sellers, the key takeaway is simple: Maryland shipping can be non-taxable only when it is clearly separated from handling and other taxable charges.
Source: Maryland Comptroller, Business Taxpayers FAQs https://services.marylandcomptroller.gov/taxes/en/business-taxpayers-faqs?id=kb_article_view&sysparm_article=KB0010112