Maryland sales tax on restaurant meals and alcohol: what to charge

Maryland's restaurant sales tax looks simple until you serve a drink. Meals are taxed at one rate, alcohol at another, and the state expects you to keep them apart on the check. This guide explains the two rates, how to itemize, what to do about free drinks and takeout, and how to set up your point-of-sale system so the numbers match your returns. It is general information, not tax advice. The Comptroller of Maryland administers sales tax, and its guidance is the place to confirm every rate and rule.

What is the sales tax rate on meals?

Prepared food sold by a restaurant is taxable in Maryland, and the Comptroller can confirm the current rate and how it applies to takeout, so do not copy a rule from a neighboring state. Non-alcoholic drinks sold with a meal are generally taxed like the food.

What is the rate on alcohol?

Alcoholic beverages are taxed at a higher rate than food in Maryland, and the higher rate replaces the food rate on those sales rather than stacking on it. Ask the Comptroller for the current rates. If your restaurant has a beer, wine or liquor license, every alcoholic drink you sell is taxed at the higher rate.

Why does itemizing matter?

Maryland expects a restaurant to calculate the tax separately on sales of alcoholic beverages at the higher rate and on sales of food and other items at the lower rate, and the state's guidance for restaurants says so. If your system lumps them together, you can overcharge or undercharge guests, and your returns will be wrong. Set up your menu categories so that each item carries the right rate, and test a receipt with a meal and two drinks before you open.

What about free alcohol?

If you give alcohol to customers at no charge, such as a complimentary glass with a Sunday brunch, ask the Comptroller how tax applies to the drinks you give away. Free is not necessarily tax-free. If you run promotions that include a drink, ask your accountant how to treat the cost and the tax, and price the promotion with that cost in mind.

How do you handle bundled meals and set menus?

A prix fixe menu that includes a drink must be split so that the part for alcohol carries the higher rate. Decide, and document, how you allocate the price among items, and apply the method consistently. A common approach is to use the regular menu prices of the items as the basis for the split. Write down the method with the date, keep it in your tax file, and update it when prices change. Ask the Comptroller's office or an accountant to review your method, since an arbitrary split can draw questions in an audit.

What about catering, delivery and service charges?

Catered food is generally taxable, and where a service charge or delivery fee is part of the sale, its tax treatment depends on how it is described and what it covers. Do not assume a fee is tax-free. Ask the Comptroller or your accountant, and show the fee clearly on the check. If you cater off-site, keep a record of the event address, the menu and the amount charged for food, drinks, staff and rentals, because each piece may be treated differently. A written quote that separates them makes the tax simple to explain to the client and to an auditor.

How do you register and file?

Businesses that sell taxable goods register with the Comptroller for a sales and use tax license, collect tax at the register and file returns on the schedule the Comptroller sets for your volume. Check your due dates when you register, mark them in a shared calendar, and file on time, even if the return shows little tax. Keep sales reports, receipts and returns for the period the state requires. Many owners ask their bookkeeper to compare the return with the register report before filing, since the totals should match. If your point-of-sale system exports a tax report, save one each month.

How can you prevent mistakes, and what about gift cards?

Gift cards are generally not taxed when sold but the food bought with them is taxed when the card is used. Retail items such as bottled sauces or merchandise are taxed under their own rules, so keep these categories separate in your reports from the start. A short checklist keeps most Maryland restaurants out of trouble.

• Set the rate by item in your point-of-sale system, not by hand.
• Review the monthly tax report against your sales report.
• Re-test a receipt after every system update or menu change.
• Keep a written note of how you treat comps, promotions and bundles.

Is your register ringing enough to make the tax worth sorting?

Tax is a cost of every sale, which makes the number of sales the thing to work on. Mosey is a food-first app where diners search by dish and mood, rate what they ate and keep lists of places they want to try, and where independent restaurants and cafes get tools for their own page, menu and regular guests. If you want more guests to find your cooking by what is on the plate, discovery by dish and rating is what Mosey is built around.

More guides for your business:

• Maryland food service license and certified food manager rules
• Maryland minimum wage and tipped wage for restaurants (2026)

More in the US guides for food businesses.