State Digital Advertising Tax Update

In 2020 after Maryland enacted a first-of-its-kind law levying taxes on annual gross revenues derived from digital advertising services, many tax policy experts predicted a wave of new state digital advertising taxes to backfill COVID-19-related budget shortfalls. While digital advertising and consumer data broker tax policies have been floating around for a few years now, lawmakers are facing increasing pressure to tax digital advertising revenues and data brokers to address increasing public misperceptions of social media company tax loopholes and soaring profits from businesses utilizing bulk consumer data.

With the 2021 state legislative season coming to a close and most FY 2022 state budgets enacted, we wanted to share the latest on state digital advertising tax laws. Each state has proposed legislation with different structures, different rules and different legal challenges. Agencies with operations in multiple states may find it hard to keep up.

The 4As Government Relations team put together a quick issue overview and state bill tracking chart to help you follow which state legislatures are proposing new taxes and the types of tax frameworks being floated. Fortunately, thus far, no new state digital advertising taxes have been enacted during the 2021 state legislative season, although several serious proposals have been introduced in New York, Connecticut, West Virginia, and Massachusetts. It appears many states are taking a wait and see approach with the associated legal challenges facing Maryland’s 2020 law, which has delayed implementation until 2022.

[State Digital Advertising Tax Legislation 2021]

[State Digital Advertising Tax Update June 2021]