Maryland Court Strikes Down Digital Ad Tax as Unconstitutional

A Maryland state tax court has ruled that the state's digital ad tax is unconstitutional and ordered refunds to Apple, Google, and Peacock TV. The tax, which was enacted in 2021, taxed revenue from digital advertisements shown in Maryland and raised an estimated $250 million annually.

The tax court found that the law violates the federal Internet Tax Freedom Act as well as the First Amendment and the commerce and due process clauses of the U.S. Constitution. The court also ruled that Congress, not the state legislature, is tasked with regulating interstate commerce.

Supporters of the law argued that it was necessary to overhaul Maryland's tax methods in response to significant changes in how businesses advertise. However, Big Tech companies including Meta and Amazon challenged the law in multiple legal venues, arguing that they were unfairly targeted.