Maryland Sales Tax Exemption: Who Qualifies, How to Apply, and Renewal

A Maryland sales tax exemption lets qualifying buyers purchase goods without paying the state’s 6% sales and use tax. Eligibility falls into two tracks: certain buyers (nonprofits, government agencies, volunteer fire and rescue companies, and businesses buying goods for resale) can be exempt on qualifying purchases, and certain goods (groceries, medicine, farming supplies, and production equipment) are exempt no matter who buys them. Nonprofits and similar organizations must apply for a Sales and Use Tax Exemption Certificate through the Comptroller of Maryland; resellers simply give the vendor a resale certificate at the point of sale.

Who Qualifies as an Exempt Buyer

The list of buyers eligible for exemption is set out in the Maryland Tax-General Article, Title 11, Subtitle 2.

Nonprofit Charitable, Educational, and Religious Organizations

Under Section 11-204, a nonprofit can buy goods free of sales tax if it meets three conditions: it is a charitable, educational, or religious organization; it holds an IRS determination letter confirming tax-exempt status under Section 501(c)(3); and the purchase supports the organization’s work.¹ The organization must be located in Maryland or in an adjacent state that either doesn’t tax nonprofit purchases or offers a reciprocal exemption to Maryland nonprofits.

Section 11-204 also reaches beyond 501(c)(3) charities. Credit unions organized under Maryland or federal law, cemetery companies described in Section 501(c)(13), and nonprofit senior citizens’ organizations that receive state or local funding also qualify, though exempt purchases by the senior citizens’ groups are capped at $500 per transaction.¹

Volunteer Fire Companies and Rescue Squads

Volunteer fire departments, ambulance companies, and rescue squads located in Maryland qualify under Section 11-204(a)(5) when the purchase supports their operations. Because they have their own provision, they don’t need to satisfy the 501(c)(3) requirements imposed on charitable organizations.¹

Government Buyers

Section 11-220 exempts sales to the State of Maryland and its political subdivisions, including counties, municipalities, and school districts.² Federal agencies are exempt under federal law. Government buyers typically hand the vendor a purchase order or other official document so the vendor can record the exempt sale.

One boundary matters here: the exemption does not extend to private contractors buying materials for government construction projects. Those materials are taxable even when the finished project belongs to the state.²

Businesses Buying for Resale

Retailers and wholesalers who buy inventory strictly to resell it are exempt on those purchases when they give the vendor a resale certificate. Details on the certificate itself appear further down.

Purchases That Are Exempt Regardless of Buyer

Maryland also exempts certain categories of goods no matter who is buying them.

Groceries. Most grocery items sold for off-premises consumption by a “substantial grocery or market business” (a store where at least 10% of food sales come from grocery items) are exempt. That covers staples like bread, meat, dairy, produce, coffee, and eggs, along with snack foods like chips, pretzels, and popcorn. Candy, carbonated beverages, soft drinks, and food sold for immediate consumption remain taxable at 6%. Alcoholic beverages and edible cannabis products are taxed at 9%.

Medicine and medical supplies. Section 11-211 exempts prescription drugs, over-the-counter medications, and disposable medical supplies. It specifically covers diabetic care items including insulin, glucose monitors, insulin pumps, syringes, lancets, and testing strips. Patient requests for copies of medical records are also exempt.³

Agricultural products and supplies. Section 11-201 exempts feed, seeds, seedlings, and fertilizers used to produce agricultural products for sale, along with most agricultural products sold directly by farmers. Flowers, sod, decorative trees and shrubs, and nursery products are excluded from that farm-direct provision. Equipment for raising livestock, preparing soil, and planting or harvesting crops also qualifies.⁴

Production and manufacturing equipment. Tangible personal property, digital codes, and digital products used directly and predominantly in production are exempt. The equipment must be integral and essential to the production process rather than administrative or managerial support, and it must be used in production more than 50% of the time. Vendors may ask for a signed certification or a statement similar to a resale certificate confirming the qualifying use.

How Nonprofits Apply for an Exemption Certificate

Nonprofits apply for a Sales and Use Tax Exemption Certificate (SUTEC) through the Maryland Tax Connect portal or by mail. You do not need a Tax Connect account to apply online, though creating one makes it easier to manage your tax activity afterward.⁵

Have these ready before you start:

Your IRS 501(c)(3) determination letter, which must be uploaded during the application. Without it, the application will not be approved.
Names and information for at least two officers, trustees, or members of the organization.
A description of the organization’s activities and the applicable schedule (the portal provides help icons that explain each option).
An authorized signatory, such as the president, executive director, treasurer, or pastor, to submit the application on behalf of the organization.

To apply by mail, send the completed application and supporting documents to the Central Registration Section, SUTEC Unit, Comptroller of Maryland, Revenue Administration Division, PO Box 549, Annapolis, MD 21404-549.⁶ Questions can go to the Comptroller’s office at 410-260-7980.

How Businesses Claim the Resale Exemption

Resellers don’t apply for a SUTEC. Instead, they present a resale certificate to the vendor at the time of purchase. Maryland doesn’t prescribe a specific form. The certificate needs to include the buyer’s name and address, Maryland sales and use tax registration number, a description of the property being purchased, and a statement that the goods are being bought for resale.⁷

There is one cash-purchase restriction to know. Vendors cannot accept a resale certificate for purchases under $200 paid with cash, check, credit card, debit card, or electronic transfer unless the vendor delivers the goods directly to the buyer’s retail location.⁷ The rule exists to keep resale certificates from being used on personal purchases. Once issued, a Maryland resale certificate stays valid until it is revoked by the buyer or the Comptroller, so there is no fixed expiration to track.

Renewing a Nonprofit Exemption Certificate

Nonprofit SUTECs expire every five years and must be renewed to remain valid.⁶ Before expiration, the Comptroller mails a renewal instruction letter to the organization’s address on file. You’ll need your Federal Employer Identification Number (FEIN) and that instruction letter to renew.⁸

Renewals go through the Maryland Tax Connect portal. An authorized officer completes the application, and once approved, the organization receives a new certificate with an expiration date five years out. Save or print each screen as you go, and keep the confirmation number. If your certificate has already lapsed, contact the SUTEC unit at sutec@marylandtaxes.gov to discuss next steps.

Keeping the Exemption in Good Standing

An exemption certificate carries ongoing responsibilities. The Comptroller can audit your purchases at any time, and you will need records showing that each exempt transaction fit the certificate’s purpose.

For nonprofits, that means holding on to invoices, receipts, and correspondence tied to exempt purchases. Every record should make clear that the item was bought to carry on the organization’s charitable, educational, or religious work as described in Section 11-204.¹ If an auditor cannot tie a purchase back to that exempt purpose, expect questions.

Misuse is where organizations get into serious trouble. Using the certificate on personal purchases, items outside the mission, or transactions that plainly don’t qualify can trigger revocation and back taxes on every improperly exempted purchase. Maryland treats improper use of an exemption certificate as tax fraud, which carries fines and potential criminal penalties. Periodic internal reviews and staff training on which purchases qualify are the best defenses.

1
Maryland General Assembly. Maryland Tax-General Code Section 11-204 – Exempt Organizations
2
Maryland General Assembly. Maryland Tax-General Code 11-220
3
Maryland General Assembly. Maryland Tax-General Code Section 11-211 – Medicine and Medical Supplies, Medical Records, Health and Physical Aids, Hygienic Aids
4
Maryland General Assembly. Maryland Tax-General Code Section 11-201 – Agricultural Purposes and Products
5
Comptroller of Maryland. Sales and Use Tax Exemption Certificate Application Guide
6
Comptroller of Maryland. Nonprofit Organizations
7
Library of Maryland Regulations. COMAR 03.06.01.14 – Resale Certificates
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Comptroller of Maryland. Exempt Organization Renewal