McDermott Will & Schulte secures complete victory in landmark digital advertising tax challenge

Global law firm McDermott Will & Schulte secured a major victory in Google LLC v. Comptroller of Maryland when the Maryland Tax Court struck down Maryland’s first-in-the-nation digital advertising tax.

Maryland enacted its Digital Advertising Gross Revenues Tax in 2020, imposing graduated tax rates of 2.5% to 10% on revenue derived from digital advertising services in the state, with the highest rate applying to companies with more than $15 billion in annual global revenue. Google challenged the tax on the grounds that it unlawfully discriminated against electronic commerce by taxing digital advertising while leaving comparable nondigital advertising untaxed.

Following a bench trial in summer 2025, the Tax Court agreed that digital and nondigital advertising are “similar” for purposes of the ITFA. The Court found that the two forms of advertising share substantially the same attributes, characteristics, goals and activities, rejecting the Comptroller’s effort to distinguish digital advertising based on technological and programmatic differences. The Court concluded that the ITFA prohibits Maryland from singling out internet-based advertising for taxation when similar advertising delivered through other means is not taxed.

The Court also held that Maryland’s tax violates the Commerce Clause and Due Process Clause and ordered refunds of taxes already paid. Based on Maryland’s published estimates, McDermott’s victory could result in refunds of more than $1.5 billion for digital advertising publishers.

The decision has implications well beyond Google: Maryland was the first state to enact a tax specifically targeting digital advertising, and other jurisdictions have considered similar measures. As one of the first substantive challenges to this type of tax, the ruling could have important implications for similar digital tax regimes and proposals around the country.

The team was led by Michael Nadel, with invaluable support from Connor Suozzo, Stephen Kranz, and Mark Nebergall.