Maryland’s Big Tech Tax Collapses

Lady Justice statue with gavel and book before a colorful flag backdrop — Photo: Mehaniq / Shutterstock

A Maryland court just ordered the state to hand back millions of dollars to Apple, Google and Peacock TV after wiping out the nation’s first tax on digital ads.

Story Snapshot

The Maryland Tax Court struck down the state’s 2021 Digital Advertising Gross Revenues Tax and ordered refunds to Apple, Google and Peacock TV.
Maryland had projected the tax would raise about $250 million a year for public schools, but actual collections landed closer to $90 million.
Courts have now found the tax broken on multiple fronts, including the Commerce Clause, the federal Internet Tax Freedom Act, and the First Amendment.
Refunds could come with 9% yearly interest, adding to the state’s financial hit.
Roughly 20 companies filed similar refund claims, showing this fight reaches far beyond three big names.

A Landmark Tax Falls After Years of Legal Battles

Maryland lawmakers passed the digital advertising tax in 2021 by overriding a governor’s veto, making it the first state law of its kind. The tax targeted companies earning at least $100 million a year worldwide, charging rates up to 10% on ad revenue tied to Maryland. State officials sold it as a way to make Big Tech help pay for a major public education plan known as the Blueprint for Maryland’s Future.

That promise has now collapsed. On August 14, 2026, the Maryland Tax Court voided the entire tax and ordered the state to repay money already collected from Apple, Google and Peacock TV. Reporting shows the state had hoped for $250 million a year but actually pulled in far less, and now must return what it did collect.

Years of Court Losses Piled Up Before the Final Blow

This ruling did not come out of nowhere. Back in 2022, a circuit court in Anne Arundel County already found the tax unconstitutional and said it broke the federal Internet Tax Freedom Act, a law that bars states from unfairly taxing electronic commerce. That early defeat set the tone for years of legal fights that followed.

In 2024, a federal district court refused to strike down the tax’s ban on companies telling customers about the charge, but that decision did not last. In August 2025, the Fourth Circuit Court of Appeals reversed course, ruling that banning companies from listing the tax as a separate fee violated their free speech rights.

Companies argued the tax broke the law in several ways at once. They said it unfairly targeted out-of-state firms based on global revenue, a violation of the Commerce Clause. Peacock TV told the court directly that the tax singled out electronic commerce, breaking the Internet Tax Freedom Act.

Refund Fight Involves Far More Than Three Companies

Apple, Google and Peacock TV are not the only ones seeking money back. Roughly 20 taxpayers have filed similar refund lawsuits in Maryland Tax Court, and the court heard arguments on many of these claims back in November 2024. That means this ruling could open the door for a much wider wave of refund demands.

Money owed back to companies may also grow. Legal commentary notes that refund claims in Maryland can carry interest at a rate of 9% a year, a very steep rate compared to typical bank interest. That means every month the state takes to pay up, the bill climbs higher for taxpayers.

Maryland sold its digital ad tax as a way to make Big Tech help pay for the Blueprint.

Now the tax has been struck down, roughly $535 million already collected could have to be refunded — plus interest — and Annapolis is headed back to court.

The bill for six years of tax…

— MDBayNews (@MDBayNews) August 15, 2026

The core money question stings the most for a state that built its education funding plan around this tax. Maryland’s own numbers show a huge gap between hopes and reality, collecting closer to $90 million a year instead of the promised $250 million. Now, even that smaller amount may need to go back out the door.

A Broader Pattern of States Testing Big Tech Taxes

Maryland’s fight fits a bigger pattern. States across the country have looked at gross-receipts taxes on tech giants as a way to raise money without directly taxing residents. But when these taxes single out specific companies by size or target revenue earned outside the state, they often run into the same walls: the Commerce Clause, free speech protections, and federal internet commerce law.

For everyday Marylanders, the outcome raises hard questions that go beyond legal technicalities. A tax built to fund schools has instead spent years tied up in court, cost the state legal fees, and may now force officials to pay money back with interest. Whether lawmakers try again with a redesigned tax, or walk away from the idea altogether, remains to be seen.