EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTIN G LAW.
[Brackets] indicate matter deleted from existing law.
*sb1045*
SENATE BILL 1045
Q4 5lr3654
CF HB 1554
By: Senator Hettleman
Introduced and read first time: February 15, 2025
Assigned to: Rules
A BILL ENTITLED
AN ACT concerning 1
Sales and Use Tax – Taxable Business Services – Alterations 2
FOR the purpose of altering the definitions of “taxable price” and “taxable service” for the 3
purposes of certain provisions of law governing the sales and use tax to impose the 4
tax on certain labor and services; specifying the rate of the sales and use tax for 5
certain labor and services; and generally relating to the sales and use tax. 6
BY repealing and reenacting, without amendments, 7
Article – Tax – General 8
Section 11–101(a) and (l)(1) 9
Annotated Code of Maryland 10
(2022 Replacement Volume and 2024 Supplement) 11
BY adding to 12
Article – Tax – General 13
Section 11–101(c–12) and 11–104(l) 14
Annotated Code of Maryland 15
(2022 Replacement Volume and 2024 Supplement) 16
BY repealing and reenacting, with amendments, 17
Article – Tax – General 18
Section 11–101(c–12), (l)(3), and (m) 19
Annotated Code of Maryland 20
(2022 Replacement Volume and 2024 Supplement) 21
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 22
That the Laws of Maryland read as follows: 23
Article – Tax – General 24
11–101. 25 2 SENATE BILL 1045
(a) In this title the following words have the meanings indicated. 1
(C–12) “NAICS” MEANS THE NORTH AMERICAN INDUSTRIAL 2
CLASSIFICATION SYSTEM, UNITED STATES MANUAL, 2022 EDITION, PUBLISHED BY 3
THE UNITED STATES OFFICE OF MANAGEMENT AND BUDGET. 4
[(c–12)] (C–13) “Permanent” means perpetual or for an indefinite or unspecified 5
length of time. 6
(l) (1) “Taxable price” means the value, in money, of the consideration of any 7
kind that is paid, delivered, payable, or deliverable by a buyer to a vendor in the 8
consummation and complete performance of a sale without deduction for any expense or 9
cost, including the cost of: 10
(i) any labor or service rendered; 11
(ii) any material used; or 12
(iii) any property, digital code, or digital product sold. 13
(3) “Taxable price” does not include: 14
(i) a charge that is made in connection with a sale and is stated as 15
a separate item of the consideration for: 16
1. a delivery, freight, or other transportation service for 17
delivery directly to the buyer by the vendor or by another person acting for the vendor, 18
unless the transportation service is a taxable service; 19
2. a finance charge, interest, or similar charge for credit 20
extended to the buyer; 21
3. a labor or service for application or installation UNLESS 22
THE LABOR OR SERVICE IS A TAXABLE SERVICE ; 23
4. a mandatory gratuity or service charge in the nature of a 24
tip for serving food or beverage to a group of 10 or fewer individuals for consumption on the 25
premises of the vendor; 26
5. a professional service UNLESS THE SERVICE I S A 27
TAXABLE SERVICE ; 28
6. a tax: 29
SENATE BILL 1045 3
A. imposed by a county on the sale of coal, electricity, oil, 1
nuclear fuel assemblies, steam, or artificial or natural gas; 2
B. imposed under § 3–302(a) of the Natural Resources 3
Article, as a surcharge on electricity, and added to an electric bill; 4
C. imposed under §§ 6–201 through 6–203 of the Tax – 5
Property Article, on tangible personal property subject to a lease that is for an initial period 6
that exceeds 1 year and is noncancellable except for cause; or 7
D. imposed under § 4–102 of this article on the gross receipts 8
derived from an admissions and amusement charge; 9
7. any service for the operation of equipment used for the 10
production of audio, video, or film recordings UNLESS THE SERVICE I S A TAXABLE 11
SERVICE; or 12
8. reimbursement of incidental expenses paid to a third party 13
and incurred in connection with providing a taxable detective service; 14
(ii) the value of a used component or part (core value) received from 15
a purchaser of the following remanufactured truck parts: 16
1. an air brake system; 17
2. an engine; 18
3. a rear axle carrier; or 19
4. a transmission; 20
(iii) a charge for a nontaxable service that is made in connection with 21
a sale of a taxable communication service, even if the nontaxable charges are aggregated 22
with and not separately stated from the taxable charges for communications services, if the 23
vendor can reasonably identify charges not subject to tax from its books and records that 24
are kept in the regular course of business; or 25
(iv) a transportation network company impact fee imposed under § 26
10–408 of the Public Utilities Article. 27
(m) “Taxable service” means: 28
(1) fabrication, printing, or production of tangible personal property or a 29
digital product by special order; 30
4 SENATE BILL 1045
(2) commercial cleaning or laundering of textiles for a buyer who is engaged 1
in a business that requires the recurring service of commercial cleaning or laundering of 2
the textiles; 3
(3) cleaning of a commercial or industrial building; 4
(4) cellular telephone or other mobile telecommunications service; 5
(5) “900”, “976”, “915”, and other “900”–type telecommunications service; 6
(6) custom calling service provided in connection with basic telephone 7
service; 8
(7) a telephone answering service; 9
(8) pay per view television service; 10
(9) credit reporting; 11
(10) a security service, including: 12
(i) a detective, guard, or armored car service; and 13
(ii) a security systems service; 14
(11) a transportation service for transmission, distribution, or delivery of 15
electricity or natural gas, if the sale or use of the electricity or natural gas is subject to the 16
sales and use tax; 17
(12) a prepaid telephone calling arrangement; [or] 18
(13) the privilege given to an individual under § 4–1102 of the Alcoholic 19
Beverages and Cannabis Article to consume wine that is not purchased from or provided 20
by a restaurant, club, or hotel; OR 21
(14) THE FOLLOWING SERVICES I F BOTH THE PROVIDER OF THE 22
SERVICE AND THE BUYE R ARE BUSINESS ENTIT IES: 23
(I) AN ACCOUNTING , BOOKKEEPING , BILLING, OR PAYROLL 24
SERVICE DESCRIBED UN DER NAICS SECTOR 5412; 25
(II) AN OFFICE SUPPORT SE RVICE, INCLUDING A SERVICE 26
DESCRIBED UNDER NAICS SECTOR 561110, 5614, OR 561910, OTHER THAN A 27
SERVICE DESCRIBED UN DER ITEM (6), (7), OR (9) OF THIS SUBSECTION ; 28
SENATE BILL 1045 5
(III) A PERMANENT OR TEMPO RARY EMPLOYEE OR CON TRACTOR 1
PLACEMENT , INCLUDING A SERVICE DESCRIBED UNDER NAICS SECTOR 5613; 2
(IV) A DATA OR INFORMATIO N TECHNOLOGY SERVICE 3
DESCRIBED UNDER NAICS SECTOR 518, 519, OR 5415; 4
(V) A SYSTEM SOFTWARE OR APPLICATION SOFTWARE 5
PUBLISHING SERVICE D ESCRIBED UNDER NAICS SECTOR 5415; 6
(VI) A CONSULTING SERVICE DESCRIBED UNDER NAICS 7
SECTOR 5416; 8
(VII) AN EXPERIMENTAL DEVE LOPMENT SERVICE DESC RIBED 9
UNDER NAICS SECTOR 5417; 10
(VIII) A PHOTOGRAPHY , DESIGN, OR PRINTING SERVICE , 11
INCLUDING A SERVICE DESCRIBED UNDER NAICS SECTOR 541420, 541430, OR 12
541490; 13
(IX) A LOBBYING, PUBLIC RELATIONS , OR MARKETING SERVICE 14
DESCRIBED UNDER NAICS SECTOR 5418; 15
(X) A LANDSCAPING AND NO NRESIDENTIAL BUILDIN G OR 16
PROPERTY MAINTENANCE SERVICE, INCLUDING A SERVICE DESCRIBED UNDER 17
NAICS SECTOR 561210, 5616, OR 5617, OTHER THAN A SERVICE DESCRIBED 18
UNDER ITEM (3) OR (10) OF THIS SUBSECTION ; 19
(XI) A HEAVY TRUCK OR BUS REPAIR SERVICE DESCR IBED 20
UNDER NAICS SECTOR 8111; 21
(XII) A REPAIR SERVICE DES CRIBED UNDER NAICS SECTOR 22
8112 OR 8113; 23
(XIII) A FINANCIAL PLANNING OR TAX PREPARATION S ERVICE 24
DESCRIBED UNDER NAICS SECTOR 5239 OR 5412; 25
(XIV) AN APPRAISAL SERVICE DESCRIBED UNDER NAICS 26
SECTOR 541990; 27
(XV) A SPORTS OR PERFORMI NG ARTS ADVERTISING SERVICE; 28
OR 29
6 SENATE BILL 1045
(XVI) A VALET OR PARK ING SERVICE DESCRIBE D UNDER NAICS 1
SECTOR 812930, OTHER THAN A PUBLIC PARKING GARAGE . 2
11–104. 3
(L) (1) THE SALES AND USE TAX FOR A SALE OF A TAXA BLE SERVICE 4
DESCRIBED UNDER § 11–101(M)(14) OF THIS SUBTITLE IS 2.5% OF THE TAXABLE 5
PRICE. 6
(2) IF A DIFFERE NT RATE FROM THE RAT E SPECIFIED UNDER 7
PARAGRAPH (1) OF THIS SUBSECTION C OULD BE APPLIED TO A SALE OR USE OF 8
TANGIBLE PERSONAL PR OPERTY, A DIGITAL CODE , A DIGITAL PRODUCT , OR A 9
TAXABLE SERVICE , THE HIGHER RATE SHAL L APPLY TO THE SALE . 10
SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect July 11
1, 2025. 12