Maryland has introduced a new 3% sales tax on data and information technology services, set to take effect on July 1, 2025. This legislation expands the definition of taxable services to include essential IT offerings such as cloud storage, IT consulting, and cybersecurity. Experts warn that this tax could lead to increased costs for businesses, potentially discouraging innovation and prompting some to relocate to states with lower tax burdens. The implications of this tax extend beyond Maryland, signaling a potential trend where states may increasingly treat digital infrastructure as a taxable utility.

The introduction of this tax is seen as a precedent that could influence other states to follow suit if Maryland's implementation does not face significant pushback. Managed Service Providers (MSPs) and IT vendors will need to adapt to the new landscape, as the tax could compress margins and impact client retention. Businesses may need to communicate effectively with clients about the reasons for price increases and demonstrate the value of their services to justify these hikes. Additionally, the complexity of compliance with the new tax regulations will require providers to ensure their billing systems can handle the nuanced categorization of services.

In a related development, Microsoft has launched the Wave 2 spring release of its Microsoft 365 Copilot, which includes new features aimed at enhancing productivity through advanced AI capabilities. This update introduces an Agent Store for integrating third-party applications and tools that facilitate better management of AI agents. The enhancements signal Microsoft's commitment to embedding AI deeper into daily workflows, positioning Copilot as a platform that could redefine how work is conducted in organizations.

Furthermore, Cynomi has secured $37 million in funding to enhance its cybersecurity platform, focusing on developing agentic AI capabilities. This investment reflects a broader shift in the cybersecurity market towards strategic, continuous security solutions rather than merely providing tools. As demand for such services grows, MSPs must adapt to meet the evolving needs of their clients, moving towards outcome-based and intelligent security solutions. The podcast emphasizes the importance of advocacy within the MSP community to influence future legislation and avoid being treated as commoditized services.

Three things to know today

00:00 Maryland’s New 3% Sales Tax on IT Services Signals Broader Shift Toward Taxing Digital Infrastructure

05:58 Microsoft Expands 365 Copilot With AI Agents, Cross-App Search, and Agent Store in Major Spring Update

08:22 Cynomi Secures $37M Series B to Drive Agentic AI in Cybersecurity, Riding 3x ARR Growth and Rising MSP Demand

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