Tax & Accounting Blog

Maryland: Sales Tax on Alcohol to Ease Financial Headaches

Indirect Tax, Sales and Use Tax May 27, 2011

Hosting a summer barbecue in Maryland is about to get a little more expensive if beer is on the menu. Effective July 1 the sales tax rate on alcoholic beverages in Maryland will increase to 9%. The higher rate will replace the 6% sales tax rate that will still apply to sales of other types of tangible personal property and taxable services.

The new rate applies to sales of alcoholic beverages as defined in Md. Code Ann. Tax-Gen. ยง 5-101(b) and will be applicable to beer, distilled spirits, and wine, as well as any beverage or cocktail that may contain a mixture of both alcoholic and nonalcoholic components, including alcoholic mixed drinks, frozen alcoholic cocktails, alcoholic coffee drinks, and even jello shots containing alcohol. Non-alcoholic mixers will still be taxed at 6%.

The tax charged on sales of alcoholic beverages will be required to be separately reported from the tax imposed on sales of other items. Maryland will be updating the sales and use tax return to include separate lines for tax imposed on sales at the 6% rate and tax imposed on sales at the 9% rate.

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