Maryland’s Digital Ad Tax Is Overturned

The Permanent Internet Tax Freedom Act (PITFA) made permanent the moratorium on state and local internet access taxes and on multiple or discriminatory taxes on electronic commerce.  The legislation, which was signed into law on February 24, 2016, continues to protect consumers from taxation on their internet services and taxes on internet advertising that could be passed along to them through higher prices.

On  August 14, 2026, the Maryland Tax Court considered three cases related to the constitutionality of the 2021 Maryland Digital Advertising Gross Revenues Tax, which imposed a tax on annual gross revenues that came from digital ads in Maryland.  The court determined that PITFA’s prohibition against discriminatory taxes in the three cases, Apple Inc. v. Comptroller of Maryland; Google LLC v. Comptroller of Maryland; and, Peacock TV, LLC v. Comptroller of Maryland, was sufficient to overturn the 2021 digital tax law.  The court found that the tax also violated the fair apportionment requirement under the Commerce Clause and the prohibition against discriminatory taxes under the Due Process Clause of the Constitution.

The Council for Citizens Against Government Waste (CCAGW) supported PITFA’s enactment.  CCAGW President Tom Schatz stated that its passage “is a tremendous win for the American people.  To finally have the prospect of taxes on their internet access eliminated permanently will provide tremendous economic certainty for the future.”

This decision sets a precedent for other states, including Illinois and Utah, which enacted digital ad taxes in 2026 and any others that are considering similar laws.