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.
The ruling orders Maryland to refund digital advertising tax payments already collected from Apple, Google and NBCUniversal-owned Peacock TV. AP did not report the amounts each company is expected to recover.
The latest decision follows an earlier legal setback for the tax.
In August 2025, the U.S. Court of Appeals for the Fourth Circuit ruled that a provision preventing companies from explicitly telling customers when costs were being passed on because of the tax violated the First Amendment.
Maryland lawmakers are not abandoning the policy.
State Senate President Bill Ferguson and House Speaker Joseline Peña-Melnyk said they disagreed with the Tax Court’s decision and expect the legal process to continue. They argued that Maryland’s tax system needs to reflect an economy in which an increasing share of advertising revenue is generated online.
The case is being watched outside Maryland because other governments have considered ways of taxing revenue generated by global technology platforms.
For the advertising industry, the ruling also reaches beyond a state tax dispute. It raises a broader question governments are increasingly confronting: whether digital advertising should be taxed differently from television, print, outdoor and other forms of advertising simply because the transaction takes place online.
For now, Maryland’s digital advertising tax has suffered its most significant legal setback yet, although further appeals could determine whether the law is ultimately eliminated or revived.
