Software titan Zoom Communications Inc. is warning its Maryland customers about the state’s new 3% sales tax on technology services, which takes effect Tuesday.

A June 24 letter from Zoom explains the changes to Maryland’s tax code — which Gov. Wes Moore signed into law — that will impact services for its customers with a “sold-to” address in the state. Lawmakers passed the 3% tax against opposition in the final weeks of this year’s General Assembly session to help close a $3.3 billion deficit.

According to the letter, “video and audio conferencing services” such as Standard Pro, Webinars, and Meetings on the platform will be subject to the tax. Costs for “Software as a Service” (SaaS) Zoom products and bundles for enterprise customers will also be passed on; however, the company says that there will be no change to the existing 6% sales tax on SaaS for individual use.

Maryland organizations eligible for a tax exemption from buying Zoom products can upload their state-issued exemption certificate and verify their status with the company, according to the letter. Organizations exempt from state taxes generally include nonprofits, government agencies, credit unions and more.

In a statement to The Baltimore Sun, Moore’s office did not directly address specific questions about Zoom’s letter. Carter Elliott, the governor’s senior press secretary, defended the state’s fiscal 2026 budget as necessary for economic growth and said 94% of Maryland residents will receive “a tax cut or no change in their income taxes” this year.

Moore’s claims of a tax cut for Maryland residents have been heavily disputed by Republicans, who’ve pointed to the largest tax and fee increases in state history.

Maryland House Minority Leader Jason Buckel, an Allegany County Republican who also practices law, told The Baltimore Sun he relies on Zoom’s services for “teleconferences” with clients. He believes that the company passing on costs to pay the tech tax is an indirect way for the state to collect revenue, thereby negating tax benefits for the middle class.

“They just came out yesterday and said effective July 1, we’re gonna be imposing a 3% monthly sales tax on your Zoom subscription,” Buckel said of the letter. “So far, [for] a lot of individuals, that may eat up any alleged middle-class tax cut. It’s pretty obvious that we didn’t really lower taxes on the middle class.”

According to the Maryland Chamber of Commerce, the tech tax is expected to impact more than 15,000 employers and 99,000 jobs across the state. It is projected to generate about $482 million in revenue this fiscal year, according to a report from the General Assembly’s Conference Committee.

Business impacts

Maryland Senate Minority Whip Justin Ready, a Republican who represents Carroll and Frederick counties, says he’s spoken to “multiple” small business owners in the information technology (IT) industry who oppose the tech tax. They are concerned they “don’t have a choice” and will be forced to pass on costs to their customers to stay in business, Ready said.

“These guys who are little small businesses are like, ‘I hate it, because my business is built on [being] a little cheaper than you going to some big corporate entity,’” Ready told The Baltimore Sun. “[Corporate] guys can eat some of that 3%, whereas a little one-guy, two-person computer services shop is gonna probably have to pass it on because they can’t eat 3%.”

St. Mary’s County Del. Brian Crosby, who also owns an IT business that subcontracts on defense projects, was one of 13 Democrats statewide — five in the House and eight in the Senate — to vote against the proposal. Seeing the writing on the wall when Moore and other leaders announced a budget deal that included the tech tax, Crosby moved his company from Maryland to more business-friendly Virginia.

“We know the numbers. All I can say is that within a year, we’d file for bankruptcy,” Crosby said in March when asked how the change would impact businesses similar to his own.

Crosby declined to comment for this story, referring The Sun to his previous statements.

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