Maryland considers, nixes retail delivery fee

Broadly, a retail delivery fee is just what it sounds like: a fee on retail deliveries. Getting into the specifics requires looking at each state’s law.

The first version of Maryland House Bill 352 defined a retail delivery fee as the fee imposed on “a delivery to a person located in the state of tangible personal property purchased by a person located in the state as part of a retail sale that is subject to the sales and use tax.” It’s a bit of a mouthful.

The proposed 75-cent Maryland retail delivery fee would apply to retail deliveries of taxable tangible personal property like books, clothing, or furniture. It would affect many items Marylanders routinely purchase through online shopping.

Items that are exempt from Maryland sales and use tax, like groceries and feminine hygiene products, would be exempt from the retail delivery fee. So, while the fee would apply to take-out food delivered by a restaurant or a third party like DoorDash or Uber Eats, it would not apply to grocery deliveries. 

The fee would kick in any time a retailer subject to the fee makes a sale of tangible personal property for delivery to a person located in Maryland. This should include items bought in person for delivery (like an appliance purchased at a local store) as well as items purchased online (ecommerce delivery).

Given the language of the bill, it’s unclear whether the fee would apply when a resident of another state or country purchases a taxable good for delivery to a person in Maryland. Presumably it would, but this would need to be clarified.

The fee would apply once per transaction even if the items are delivered in multiple shipments, so long as the purchase contains one item of tangible personal property subject to Maryland sales tax.

The retail delivery fee would apply to the following businesses:

• Vendors that made retail sales totaling $500,000 or more in the previous calendar year (or reach that threshold in the current calendar year)
• Marketplace facilitators (like Amazon or DoorDash) that facilitated retail sales of marketplace sellers totaling $100,000 or more in the previous calendar year (or reach that threshold in the current calendar year)

HB 352 doesn’t specify whether these thresholds apply to Maryland revenue or total revenue, but it’s probably Maryland revenue. That’s the case with the Colorado and Minnesota retail delivery fees. 

Businesses would become subject to the retail delivery fee on or before the first day of the month 60 days after the month in which they cross the applicable threshold.

Having a different threshold for sales tax registration could be confusing for businesses. Under Maryland’s economic nexus law, remote retailers and marketplace facilitators establish an obligation to collect and remit Maryland sales tax if they have $100,000 in sales or 200 transactions in Maryland in the current or previous year. The proposed retail delivery fee threshold for retailers is $500,000.

Businesses could elect to pay the retail delivery fee themselves or pass it on to consumers. This is the same policy in effect in Colorado and Minnesota.

Should a marketplace or vendor opt to collect the fee from buyers, they must:

• Charge the retail delivery fee in addition to any other delivery fee
• Separately state the retail delivery fee on the invoice, receipt, or other bill of sale
• Identify the fee as a “delivery impact fee”

A retailer or marketplace facilitator may only refund the retail delivery fee if the retail delivery is canceled by the buyer, delivery provider, or marketplace facilitator before the delivery occurs.

Maryland’s gas tax revenue is declining, which is jeopardizing funding for transportation projects. And Colorado and Minnesota are raking in money with their retail delivery fees. In its first year, Colorado’s fee generated $75.9 million. Minnesota’s fee is expected to raise $59 million in its first year.

Revenue generated by a Maryland retail delivery fee would go toward the state’s Transportation Trust Fund. 

Governor Moore is the driving force behind the 75-cent Maryland retail delivery fee. A 50-cent retail delivery fee introduced in 2024 faced a good deal of opposition and never made it out of committee. The 75-cent fee proposed in 2025 ended up being cut as well.

While retail delivery fees can help fill state coffers, they tend to be costly for businesses to implement. “Retail delivery fees in Colorado and Minnesota are complicated for entirely different reasons,” observes Scott Peterson, VP of Government Relations at Avalara. For example, Minnesota’s fee applies to most but not all taxable tangible personal property as well as some nontaxable sales, while Colorado’s fee must be reported on a separate retail delivery fee return. “States could make these simpler for retailers to administer.”

Avalara is helping many businesses comply with the retail delivery fees in Colorado and Minnesota. If Maryland ever does adopt a retail delivery fee, we’ll help businesses comply with it too.