Maryland Court Strikes Down Digital Ad Tax, Orders Refunds to Apple, Google and Peacock
A Maryland tax court has struck down the state’s first-in-the-nation tax on digital advertising, ordering refunds to companies including Apple, Google and Peacock TV in a closely watched case with implications for how governments tax the online advertising economy.
The Maryland Tax Court ruled on August 14, 2026, that the levy violates the federal Internet Tax Freedom Act as well as constitutional protections involving free speech, interstate commerce and due process.
Maryland introduced the tax in 2021 as advertising spending continued moving from traditional media toward large internet platforms.
The system applies to businesses generating at least $100 million in annual global revenue and earning taxable digital advertising revenue in Maryland. Rates begin at 2.5% and rise to 10% for companies with more than $15 billion in global annual revenue. Maryland’s own tax guidance continues to describe the levy using that structure.
The state had estimated that the tax could raise approximately $250 million annually to help finance public education.
Technology companies and industry groups have challenged the law for years, arguing that it unfairly singles out digital advertising while comparable advertising through other media is treated differently.
In its latest ruling, the Maryland Tax Court concluded that the difference was significant enough to conflict with the federal Internet Tax Freedom Act, which generally prevents discriminatory taxation of electronic commerce.
The court also objected to the way the tax was calculated partly according to companies’ global revenues rather than solely by revenue generated inside Maryland, finding problems under interstate-commerce and due-process protections.
