Maryland’s New Tire Fee: Avoiding Double Payment and Compliance Errors

By Casey Surridge, CPA

Maryland has expanded its tire fee requirements with the introduction of a new $5 per‑tire fee and an increase to the long‑standing tire recycling fee.

While the dollar amounts have changed, the collection and remittance process has not.

Auto dealers that misunderstand how the fee works risk paying the state twice.

What Fees Apply

Maryland now imposes two fees on new tires sold in the state:

• A $5 tire fee
• A $1 tire recycling fee, increased from $0.80 effective January 1

Both fees apply to the first sale of a new tire in Maryland, except for sales to a wholesaler. The Comptroller administers both fees using the same reporting and remittance framework that has been in place since 1992. These fees are not limited to consumer sales.

Responsibility depends on who makes the first sale in the state.

When Dealers Buy Tires From Suppliers

When an auto dealer purchases new tires from a tire supplier, that transaction is typically the first sale in Maryland. In that case, the supplier collects the tire fees from the dealer and remits them directly to the Comptroller.

When the dealer later sells those tires to a customer, the dealer may list the fee as a line item but should not remit the fee to the state. A common compliance error occurs when dealerships pass the fee through to customers and then submit it again, resulting in double payment.

New Vehicle Sales

When a dealer sells a new vehicle, the tires on that vehicle are being sold for the first time in Maryland. In this scenario, the dealer must remit the tire fees to the state.

The fees may be shown as a line item on the buyer’s order, but they must be reported on a separate “tire fee” return and not included with Maryland sales tax. Current guidance indicates the fee applies even if the customer plans to register the vehicle outside Maryland, because the taxable event is the first sale of the tire in the state.

Used Vehicles With New Tires

Used vehicle transactions depend on whether the tire supplier already collected the fee.

If the supplier collected and remitted the fee, the dealer may list it on the invoice but should not remit it. If the supplier did not collect the fee, the dealer may list it on the invoice and must remit the fee to the Comptroller.

The Maryland Comptroller has published guidance and regulatory updates related to the tire fee, including:

• ​Tax Guidance - Tire Recycling Fee - Taxpayer Services
• Maryland Comptroller's Office Updates State Tire Fee Regulations

The Bottom Line for Maryland Auto Dealers

Although the fees have increased, the process for collecting and remitting Maryland’s tire fees has not changed. Most issues arise when dealers fail to track whether a supplier already paid the fee or treat every customer charge as a new remittance obligation.

A focused review of dealership procedures can help prevent unnecessary cost and compliance risk.

Casey Surridge, CPA, is a director at Boyer & Ritter who advises auto dealers on tax compliance, accounting processes, and regulatory matters affecting dealership operations. To discuss how Maryland’s tire fees apply to your dealership or to review your current procedures, contact Casey at csurridge@cpabr.com or your Boyer & Ritter advisor.