Maryland's Lower Eastern Shore--A Great Place to Do Business!

Business Environment

Sales Tax Exemptions

Major business-oriented exemptions from Maryland sales and use tax include the following:

Sales for resale and sales of tangible personal property to be incorporated in other tangible personal property manufactured for resale. In addition, there is an exemption for the sales of computer programs reproduced for sale or incorporated in whole or in part into another computer program intended for sale.
Sales of manufacturing machinery and equipment, including sales of equipment used for testing finished products and equipment used for pollution control.
Sales of tangible personal property consumed directly in manufacturing, testing of finished products, assembling, processing or refining, or in the generation of electricity. Starting FY '99 a credit will be offered for non-capitalized machinery which would be exempt if it were capitalized; certain property not consumed within one year if it is used to move a finished product. Production activity can also include providing for worker safety and quality control and maintaining machinery used in production.
Sales of fuels used in manufacturing, except those used to heat and light the manufacturing facility. All fuels through a particular meter are exempt if more than half are used directly in manufacturing.
Sales of equipment and materials used or consumed in research and development.
Sales of aircraft, vessels, railroad rolling stock, and motor vehicles which will be used principally in the movement of passengers or freight in interstate and foreign commerce. This includes sales of replacement part and other tangible personal property to be used physically in, on or by these vehicles.
Certain capital transactions, including transfers to newly formed corporations and transfers entitled to tax-free treatment under the Internal Revenue Code.
Sales of tangible personal property to a person under contract to incorporate such property into realty in another state where the purchase or use of such tangible personal property would not be subject to a sales, use, or similar tax in such jurisdiction.
Sales of certain end-item testing equipment used to perform a contract for the US Department of Defense and transferred to the federal government.
For additional information, please contact:
Comptroller of the Treasury
Revenue Administration Division
Taxpayer Services Section
80 Calvert Street
Annapolis, MD 21404
410/974-3021

Sources: Maryland: A Business Inventory of Major Locational Factors (Maryland Department of Business & Economic Development)
Maryland's Lower Eastern Shore Business Environment