On August 14, 2026, the Maryland Tax Court struck down the state’s Digital Advertising Gross Revenues Tax (DAGR) in cases involving Apple, Google and Peacock TV.
The court found that the tax violated the federal Internet Tax Freedom Act, the dormant Commerce Clause and the Due Process Clause. It reversed the Comptroller’s denial of the companies’ refund claims and ordered refunds with interest.
If your business has paid Maryland digital advertising tax, this decision could create an important refund opportunity. However, businesses should not assume refunds will happen automatically. Maryland may appeal, and taxpayers should review their own filing history and refund deadlines.
What Happened to Maryland’s Digital Advertising Tax?
Maryland became the first US state to impose a specific tax on revenue from digital advertising services. The Digital Advertising Gross Revenues Tax began applying for tax year 2022 and targeted large businesses earning revenue from digital advertising shown to Maryland users.
The tax has faced legal challenges almost from the beginning.
On August 14, 2026, the Maryland Tax Court issued decisions in cases brought by:
- Apple
- Peacock TV
The companies had paid the tax and subsequently sought refunds. When the Maryland Comptroller denied those refund claims, the companies challenged the denials. The Tax Court sided with the taxpayers and ordered their 2022 tax payments to be refunded with interest.
Maryland’s Digital Advertising Gross Revenues Tax has been ruled unlawful and unconstitutional by the Maryland Tax Court, creating potential refund opportunities for other businesses that have paid the tax. However, affected businesses may need to file their own refund claims and should monitor any appeal by the state.
Why Was Maryland’s Digital Advertising Tax Struck Down?
One of the central problems identified by the court was the difference between the taxation of digital advertising and traditional advertising. Maryland imposed the tax on digital advertising while comparable non-digital advertising services were not subject to the same statewide tax.
The Tax Court concluded that the DAGR tax violated the federal Internet Tax Freedom Act (ITFA), which prohibits certain discriminatory taxes on electronic commerce.
It also found violations of the:
- Dormant Commerce Clause
- Due Process Clause
In one of the three decisions, the court additionally found a First Amendment issue connected with the law’s broadcast news media exemption.
Which Businesses Were Subject to Maryland’s Digital Advertising Tax?
The DAGR tax was aimed primarily at large businesses rather than small advertisers. Under Maryland’s rules, the tax applies to businesses with at least $100 million in global annual gross revenues, with tax imposed on qualifying digital advertising revenue derived from Maryland.
Businesses with at least $1 million of annual Maryland digital advertising revenue are required to file a DAGR return. The tax rates ranged according to the company’s global annual gross revenue.
This meant the businesses most likely to be affected included:
- Large advertising platforms
- Technology companies
- Streaming businesses
- Major online publishers
- Other companies generating substantial digital advertising revenue
Who May Be Able to Claim a Maryland Digital Advertising Tax Refund?
This is now the most important practical question. Businesses that previously paid Maryland DAGR tax should review whether they have potential refund claims.
The three Tax Court cases directly ordered refunds for the taxpayers involved. They do not necessarily mean that every other company that paid DAGR tax will automatically receive its money back. Other taxpayers may therefore need to preserve their own refund rights.
Maryland’s own guidance already provides a mechanism for requesting refunds of overpaid DAGR tax.
How Do You Claim a Maryland DAGR Tax Refund?
According to Maryland Comptroller guidance, a taxpayer seeking a refund for a year where a return has already been filed can generally file an amended Form 600, checking the “Amended Return” box.
The amended return requires an explanation for the amendment and supporting documentation where appropriate.
Maryland’s guidance also states that a DAGR refund claim generally cannot be filed more than three years after the tax was paid.
That deadline makes the current court decision particularly important. Businesses shouldn’t assume they can simply wait for the litigation to finish and then decide whether to claim. Depending on when tax was paid, waiting could put refund rights at risk.
Example: Business That Paid Maryland DAGR Tax
Imagine a technology company paid:
$150,000 in Maryland digital advertising tax.
Following the August 2026 Tax Court decisions, the company reviews its previous DAGR returns.
Rather than assuming Maryland will automatically refund the $150,000, the company checks:
- When each tax payment was made
- Which returns were filed
- Whether amended returns are required
- Applicable refund limitation periods
- Supporting documentation
It can then determine whether a protective or formal refund claim should be filed to preserve its rights while the litigation continues.
Is the Maryland Digital Advertising Tax Gone for Good?
Not necessarily. This is where businesses need to be careful with headlines saying the tax has simply “ended.” The Maryland Tax Court has ruled against the state, but Maryland officials have indicated that they disagree with the decision and intend to continue defending the law.
An appeal could therefore follow.
The Maryland Comptroller’s website also continues, at present, to provide DAGR filing information and 2026 estimated tax forms. For businesses currently subject to the tax, that means you should not simply stop filing or paying based solely on the headline without reviewing the current position and any further guidance from the Comptroller.
What Should Businesses Do Now?
If your company has paid Maryland’s Digital Advertising Gross Revenues Tax, now is a good time to review your position.
1. Identify how much DAGR tax you have paid
Review payments from 2022 onwards.
2. Check when each payment was made
This is important because Maryland generally applies a three-year refund limitation period.
3. Review previously filed Form 600 returns
Determine whether amended returns or refund claims may be appropriate.
4. Preserve your refund rights
Don’t assume the state will automatically refund every taxpayer if the decision ultimately stands.
5. Monitor the appeal
The legal position could continue to change, so affected businesses should monitor further court decisions and Maryland Comptroller guidance.
Why This Case Matters Outside Maryland
The decision could have consequences beyond a single state. Maryland was the first state to introduce this type of standalone digital advertising tax, but other states have explored ways of taxing digital advertising and the wider digital economy.
The Maryland Tax Court’s findings, particularly its conclusions under the Internet Tax Freedom Act and Commerce Clause, could influence future challenges to similar taxes elsewhere. For online businesses, this makes digital tax legislation an increasingly important area to monitor.
FAQs
Has Maryland’s digital advertising tax been struck down?
Yes, on August 14, 2026, the Maryland Tax Court ruled against the DAGR tax in cases involving Apple, Google and Peacock TV. However, further appeals may follow.
Why was Maryland’s digital advertising tax ruled invalid?
The Tax Court found that it violated the federal Internet Tax Freedom Act, dormant Commerce Clause and Due Process Clause.
Can businesses claim refunds?
Businesses that paid Maryland DAGR tax should review whether they have refund rights. The Tax Court specifically ordered refunds with interest for the three taxpayers involved in the cases.
Is there a deadline for claiming a refund?
Maryland’s current guidance states that a DAGR tax refund claim generally cannot be filed more than three years after the tax was paid.
Should businesses stop paying Maryland digital advertising tax?
Don’t automatically stop filing or paying based solely on the Tax Court decision. The state may appeal, and businesses should check current Maryland guidance and their individual circumstances before changing their compliance position.
Final Thoughts
The Maryland Tax Court’s August 2026 decisions represent a major development for businesses that have paid the state’s controversial Digital Advertising Gross Revenues Tax.
The most important takeaway is if your business has paid Maryland digital advertising tax, don’t assume a refund will arrive automatically. Review your historical payments, refund deadlines and filing position now so that potential refund rights are protected. With the possibility of further appeals, businesses should also continue monitoring the case before changing current filing or payment practices.
RJM Tax Exemption can help businesses review their Maryland tax position, identify potential refund opportunities, and navigate state tax registration and compliance requirements.
