Article
Texas and Maryland pass sales tax changes for specific technology services
June 25, 2025 · Authored by Shannon Bonner, Shannan Gilmartin Cuddy, Jim Byrnes
Generally, when sales and use tax statutes and regulations were originally enacted, the sale of tangible personal property was the focus. However, as businesses continue to grow and evolve, states have started to expand the application of sales tax to technology products and services.
This expansion has been slow but steady as states attempt to keep pace with the ever-growing sales of technology products and services by businesses to serve their customers. These updates include both enacted and proposed changes across multiple states concerning various technology sales, including data processing services, digital products and computer software and services.
Outlined below are examples of recent technology changes that may significantly impact the taxability of a business's sales in a particular state.
Texas: Data processing and marketplace facilitators changes
Effective April 2, 2025, Texas made significant changes to its data processing guidance found at 34 Tex. Admin. Code Sec. 3.330 (the Data Processing Rule). Specifically, the Texas Comptroller of Public Accounts (Comptroller) proposed amendments to the Data Processing Rule in September 2024, and upon review of written and public hearing comments in response to the proposed changes, the Comptroller adopted the final version of the rule changes on March 28, 2025. The changes include clarification of existing definitions, addition of new definitions and examples of taxable and non-taxable data processing services.
The adopted version of the Data Processing Rule includes an updated definition of data processing services with specific services excluded from the data process services definition including, internet access services, the transcription of medical dictation by a medical transcriptionist, the display of a classified advertisement or link on an internet website owned by another person and payment processing. Taxable data processing services now include internet hosting, streaming video subscriptions and website creation, repair and maintenance when they involve the storage, manipulation, compilation and entry of data.
Additional changes, among other items, included added provisions related to marketplace facilitators and ancillary data processing services. Specifically:
