Maryland Digital Ad Tax Law Declared Unconstitutional

A Maryland court has ruled that part of the state's digital ad tax law is unconstitutional. The law, which imposes a tax on digital advertising companies based on their gross revenues, has been challenged by Meta Platforms, Inc. and other tech giants. The court's decision is expected to have significant implications for the tech industry in Maryland.

A Maryland court has ruled that part of the state's digital ad tax law is unconstitutional, a decision that will have significant implications for the tech industry operating in the state. The ruling, which came from the Fourth Circuit Court of Appeals, invalidates a provision that restricts how businesses can communicate the tax to their customers.

The law, which imposes a tax on digital advertising companies based on their gross revenues, has been challenged by Meta Platforms, Inc., and other tech giants. The court's decision, which was issued on July 2, 2025, stated that the restriction is unconstitutional because it infringes on businesses' free speech rights.

The ruling is expected to have a substantial impact on the tech industry in Maryland. The state has been grappling with a budget gap and has implemented a series of measures, including a new "tech tax," to address its financial challenges. However, the tech industry has expressed concerns that the tax could drive businesses out of the state and hurt its emerging tech sector [2].

Meta Platforms, Inc., one of the companies challenging the law, has been involved in several antitrust disputes with the European Union. The company was recently fined €798 million for bundling its Facebook Marketplace service with its social network, which is the first time the American tech giant has been fined for violating EU antitrust laws [1].

The court's decision may also have implications for other states considering similar digital ad tax laws. Maryland's digital ad tax law has been the subject of ongoing legal challenges, with the US Chamber of Commerce and tech trade groups arguing that the law infringes on businesses' free speech rights [3].

The ruling underscores the ongoing debate over the regulation of the tech industry and the balance between government intervention and free market principles. As states continue to grapple with budget shortfalls, the effectiveness and constitutionality of digital ad tax laws will remain a contentious issue.

References:
[1] https://www.moomoo.com/news/post/35536592/record-tr4cking-news-trump-says-the-fed-should-cut-interest-rates-bessent-says
[2] https://www.aol.com/news/marylands-3-percent-tax-chill-103009161.html
[3] https://news.bloomberglaw.com/daily-tax-report-state/maryland-ad-tax-provision-falls-to-first-amendment-challenge