FOR IMMEDIATE RELEASE: Maryland's Proposed Cybersecurity Tax Threatens Security and Economic Future
Columbia, MD – March 20, 2025 – A proposed 3% sales tax on cybersecurity and IT services in Maryland is drawing sharp criticism, with experts warning of harsh consequences for the state's security and economic competitiveness.
The proposed tax, which would expand Maryland’s sales and use tax to include critical IT and data processing services, is projected to increase costs for businesses and simultaneously make Maryland a less attractive location for cybersecurity firms.
"We are sympathetic to the fiscal pressure exerted on lawmakers, but this tax is an unwise move," stated Tasha Cornish, Executive Director of the Cybersecurity Association, Inc. "Maryland risks losing its competitive edge in cybersecurity, forcing companies to relocate and taking high-paying jobs with them. It's a short-sighted attempt to gain revenue at the cost of our security and future economic stability."
Cybersecurity services are essential for protecting businesses, critical infrastructure, and residents from escalating cyber threats. The impacts of the tax include the following:
🛑 Businesses will face higher expenses for vital cybersecurity protection, costs that will inevitably be extended to nonprofits, government agencies, and consumers.
🛑Disincentivize investment in cybersecurity, leaving Maryland organizations more vulnerable to cyberattacks.
🛑Small businesses, already struggling with economic pressures, will find it harder to comply with security best practices.
🛑Added financial uncertainty for cybersecurity firms and consumers, especially amidst evolving economic conditions.This tax is hitting IT and data service consumers while Original Equipment Manufacturers (OEMs) are raising prices due to increased tariffs.
Additionally, the tax could force cybersecurity firms to relocate to more tax-friendly states, resulting in a loss of high-paying jobs and a significant blow to the state's economy.
"Cybersecurity is a public good," remarked Chuck Faughnan, Board Chairman of Cybersecurity Association, Inc.. "Taxing these essential services is counterproductive and dangerous. It discourages investment in vital protections and jeopardizes the security of our businesses, government, and residents.”