Which states tax SaaS?

SaaS is taxable in 21 states and the District of Columbia today, including Texas, New York, Pennsylvania and Washington. California and Colorado begin taxing SaaS on January 1, 2027. The table above lists every state.

Do I have to collect sales tax on SaaS in every state?

No. You collect only where SaaS is taxable and you have nexus, either a physical presence or sales above that state's economic threshold. Both have to be true.

Is downloaded software taxed differently from SaaS?

Often, yes. Many states that do not tax SaaS still tax software the customer downloads or installs, so a desktop app or agent can change the answer for the same product.

What changes in 2027?

California and Colorado start taxing SaaS on January 1, 2027, and the District of Columbia's rate is scheduled to rise from 6% to 7% on October 1, 2027.

Is SaaS Taxable? SaaS Sales Tax by State (2026)

SaaS taxability by state

Select a state to open its guide.

Taxable (22)

21 states and the District of Columbia tax SaaS today.
Taxable from January 1, 2027 (2)

California and Colorado. Neither taxes SaaS at state level until then.
Not taxable (22)

No state tax on SaaS, though several still tax downloaded software.
Local tax only (1)

Alaska: no state sales tax, but many cities and boroughs tax SaaS.
No sales tax (4)

Delaware, Montana, New Hampshire and Oregon.

All 50 states and DC

State	Is SaaS taxable?	State rate	Economic nexus threshold
Alabama	Not taxableTaxed if downloaded	4%	$250,000 in sales
Alaska	Local onlyLocal tax applies	0%	$100,000 in statewide sales
Arizona	Taxable	5.6%	$100,000 in sales
Arkansas	Not taxable	6.5%	$100,000 in sales or 200 transactions
California	TaxableFrom January 1, 2027	7.25%	$500,000 in sales
Colorado	TaxableFrom January 1, 2027	2.9%	$100,000 in sales
Connecticut	Taxable	6.35%	$100,000 in sales and 200 transactions
Delaware	No sales tax	None	Not applicable
District of Columbia	Taxable	6%	$100,000 in sales or 200 transactions
Florida	Not taxable	6%	$100,000 in taxable remote sales
Georgia	Not taxable	4%	$100,000 in sales or 200 transactions
Hawaii	TaxableGeneral excise tax	4%	$100,000 in gross income or 200 transactions
Idaho	Not taxable	6%	$100,000 in sales
Illinois	Not taxableChicago taxes it at 15%	6.25%	$100,000 in sales
Indiana	Not taxableTaxed if downloaded	7%	$100,000 in sales
Iowa	TaxableBusiness use exempt	6%	$100,000 in sales
Kansas	Not taxableTaxed if downloaded	6.5%	$100,000 in sales
Kentucky	Taxable	6%	$100,000 in sales
Louisiana	Taxable	5%	$100,000 in sales
Maine	Not taxableTaxed if downloaded	5.5%	$100,000 in sales
Maryland	Taxable3% for business use	6%	$100,000 in sales or 200 transactions
Massachusetts	Taxable	6.25%	$100,000 in sales
Michigan	Not taxableTaxed if downloaded	6%	$100,000 in sales or 200 transactions
Minnesota	Not taxableTaxed if downloaded	6.875%	$100,000 in sales or 200 transactions
Mississippi	Not taxableTaxed if hosted in Mississippi	7%	$250,000 in sales
Missouri	Not taxable	4.225%	$100,000 in taxable sales of tangible goods
Montana	No sales tax	None	Not applicable
Nebraska	Not taxableTaxed if downloaded	5.5%	More than $100,000 in sales or 200 transactions
Nevada	Not taxable	6.85%	More than $100,000 in sales or 200 transactions
New Hampshire	No sales tax	None	Not applicable
New Jersey	Not taxable	6.625%	More than $100,000 in sales or 200 transactions
New Mexico	Taxable	4.875%	$100,000 in taxable sales
New York	Taxable	4%	More than $500,000 in sales and more than 100 transactions
North Carolina	Not taxableTaxed if downloaded	4.75%	More than $100,000 in sales
North Dakota	Not taxableTaxed if downloaded	5%	More than $100,000 in taxable sales
Ohio	TaxableBusiness use only	5.75%	More than $100,000 in sales or 200 transactions
Oklahoma	Not taxableTaxed only on physical media	4.5%	$100,000 in taxable sales
Oregon	No sales tax	None	Not applicable
Pennsylvania	Taxable	6%	$100,000 in sales
Rhode Island	Taxable	7%	$100,000 in sales or 200 transactions
South Carolina	Taxable	6%	$100,000 in sales
South Dakota	Taxable	4.2%	$100,000 in sales
Tennessee	Taxable	7%	$100,000 in sales
Texas	TaxableOn 80% of the charge	6.25%	$500,000 in sales
Utah	Taxable	4.85%	$100,000 in sales
Vermont	Taxable	6%	$100,000 in sales or 200 transactions
Virginia	Not taxable	4.3%	$100,000 in sales or 200 transactions
Washington	Taxable	6.5%	$100,000 in sales
West Virginia	Taxable	6%	$100,000 in sales or 200 transactions
Wisconsin	Not taxableTaxed if downloaded	5%	$100,000 in sales
Wyoming	Not taxableTaxed if downloaded	4%	$100,000 in sales

How states decide whether SaaS is taxable

States without a law written for SaaS fit it into an older category, and the category they pick decides the answer.

Taxed as software

The state treats SaaS as the sale or license of prewritten software, so access is taxed even though nothing is downloaded.

For example: New York, Pennsylvania, Massachusetts

Taxed as a service

The state taxes SaaS as a listed service, such as data processing or a digital automated service, sometimes on part of the charge.

For example: Texas (80% of the charge), Washington, South Carolina

Depends on the buyer

The answer or the rate changes with who buys and how they use it, so you need to know your customer.

For example: Connecticut, Maryland, Ohio, Iowa

Not taxed

Nothing tangible changes hands and SaaS is not a listed service, so the subscription is not taxed. Downloads often still are.

For example: Florida, Georgia, Virginia, Wisconsin

Is SaaS Taxable? A State-by-State Guide (2026)