State ad tax bills
A heat table that lists seven state digital advertising tax bills. Maryland’s HB 732 was enacted in 2021 and struck down in 2026. Utah and Illinois enacted taxes in 2026, effective 2027. Washington’s law took effect in 2025. Pennsylvania, Minnesota and Tennessee remain proposed or pending.
| State | Bill number | Key date |
|---|---|---|
| Maryland: 2.5% to 10% on Maryland digital ad revenue, with rates based on company’s global annual revenue | HB 732 | Enacted 2021; struck down 2026 |
| Utah: Taxes targeted advertising and uses the share of ad impressions delivered in Utah to attribute revenue to the state | SB 287 | Enacted 2026; effective 2027 |
| Pennsylvania: 5% tax on gross revenue from digital advertising services; passed the House but was left out of the latest budget | HB 1678 | Introduced 2025; House action 2026 |
| Illinois: 10% tax on gross receipts from targeted advertising for providers with more than $1 million in qualifying Illinois receipts | SB 3019 | Enacted 2026; effective 2027 |
| Washington: Makes a broad range of advertising and marketing services subject to retail sales tax, with exemptions for certain traditional advertising | ESSB 5814 | Enacted 2025; effective 2025 |
| Minnesota: Proposed a monthly excise tax on social media platforms based on the number of Minnesota users whose data they collect | SF 3550 | Introduced 2026 |
| Tennessee: Would apply sales and use tax to advertising services purchased by or for businesses with at least $100 million in annual revenue | SB 2568 | Introduced 2026 |
A state court struck down Maryland’s digital advertising tax last week, marking a major victory for tech platforms facing increasing tax pressure from a slew of states around the country.
Why it matters: The ruling could force other state lawmakers to reconsider or reconstruct similar measures out of fear that they may not hold up in court.
Catch up quick: Maryland became the first U.S. state to enact a tax specifically on digital advertising in 2021.
The tax applies to companies with more than $100 million in global annual gross revenue and at least $1 million in digital advertising revenue attributable to Maryland. Rates range from 2.5% to 10% of Maryland digital ad revenue.
Zoom in: The bill drew swift blowback from media and tech firms. NBCUniversal’s streaming service Peacock, Google and Apple were among the companies that challenged the tax.
Maryland lawmakers argued the tax was necessary to fund state initiatives, such as education reforms. Tech companies argued the taxes would pose a burden on consumers and small businesses that use their platforms to advertise.
State of play: In striking down the levy last week, a state tax court ordered Maryland to refund taxes paid by Apple, Google and Peacock, plus interest.
The court found the measure violated the federal Internet Tax Freedom Act, which prohibits discriminatory taxes on electronic commerce, as well as the Commerce Clause and Due Process Clause.
Among their concerns was that Maryland taxes digital advertising, while nondigital advertising — including print, radio and television ads — is not subject to the same statewide tax.
The court also took issue with Maryland’s use of companies’ global revenue to determine whether they are subject to the tax and the rate they pay.
Zoom out: Over the past few years, lawmakers in several states have introduced various advertising tax bills in a bid to generate more state income.
Utah and Illinois enacted targeted advertising taxes this year that take effect in 2027. Utah uses the share of ad impressions delivered in the state to determine how much advertising revenue is attributable to Utah, while Illinois imposes a 10% tax on qualifying targeted advertising receipts. A state advocacy group has already filed a challenge to Utah’s ad tax measure.
Other bills are pending elsewhere. Pennsylvania’s House passed a 5% gross receipts tax on digital advertising services. Tennessee proposed applying sales and use taxes to advertising services more broadly for businesses with at least $100 million in annual revenue.
The big picture: Internet for Growth — a lobbying coalition from the Interactive Advertising Bureau, which counts ad giants such as Meta and Google among its biggest members — has long argued that such tax measures violate federal tax and constitutional protections.
- Executive director Brendan Thomas told Axios the Maryland tax court’s decision could spell trouble for other states, and that the economic consequences could extend beyond the large tech platforms.
- He expects challenges to other ad tax laws based on the Internet Tax Freedom Act, the Constitution’s Commerce Clause and the First Amendment, citing arguments that they discriminate against digital commerce, use out-of-state revenues to calculate charges, and require states to categorize companies based on speech, respectively.