SaaS Sales Tax Guide
SaaS taxability by product type and state (2026)
Last updated · Rules verified against official state sources
Quick Answer:
"SaaS" covers several products, and states tax them differently. Hosted SaaS is taxable in 21 states and DC, with California and Colorado joining on January 1, 2027. Downloaded software is taxable in 38 of the 51, API and AI access in 25, cloud infrastructure in 11, and setup and training in 17, often only when they aren't billed separately. Counts include taxes that start in 2027.
| State | Hosted SaaS | Downloaded software | AI tools and API access | Cloud infrastructure (IaaS, PaaS) | Digital goods | Custom software | Setup, implementation and training | Maintenance and support |
|---|---|---|---|---|---|---|---|---|
| Alabama | Not taxable | Taxable | Not taxableWhen accessed remotely | Not taxable | DependsNot clearly addressed in state guidance | TaxableBut separately stated programming is not | Not taxableIf separately stated | TaxableIf mandatory; optional plans are taxed only on upgrades |
| Alaska | DependsLocal tax only, in some cities and boroughs | Taxable | Taxable | Taxable | Taxable | Taxable | Taxable | Taxable |
| Arizona | Taxable | Taxable | Taxable | DependsSometimes taxable as a rental of computer resources | DependsNot clearly addressed in state guidance | Not taxable | Not taxableIf separately stated | TaxableIf mandatory; optional plans are taxed on updates only |
| Arkansas | Not taxable | Not taxable | Not taxable | Not taxable | Taxable | Not taxable | Not taxableIf separately stated | Not taxableWhen the software is delivered electronically |
| California | TaxableFrom January 1, 2027 | TaxableFrom January 1, 2027 | TaxableFrom January 1, 2027 when it gives access to the provider's software | Not taxable | Not taxable | Not taxable | Not taxableIf separately stated | TaxableIf mandatory; optional contracts are partly taxable |
| Colorado | TaxableFrom January 1, 2027 | TaxableFrom January 1, 2027 | TaxableFrom January 1, 2027 when it gives access to the provider's software | DependsNot yet addressed in state guidance, so check each charge | Not taxableAt state level | Not taxable | Not taxableIf separately stated | TaxableIf mandatory, not taxable if optional |
| Connecticut | Taxable | Taxable(1% for business use) | Taxable(1% for business use) | TaxableAt 1% as a computer and data processing service | TaxableAt 6.35% | TaxableAt 1% as a computer and data processing service | Not taxableIf separately stated | Taxable |
| Delaware | Not taxable(no sales tax) | Not taxable | Not taxable | Not taxable | Not taxable | Not taxable | Not taxable | Not taxable |
| District of Columbia | Taxable | Taxable | Taxable | TaxableAs a data processing service | Taxable | TaxableAs a data processing service | DependsPossibly taxable as data processing, so check each charge | TaxableWhen it includes software updates |
| Florida | Not taxable | Not taxable | Not taxable | Not taxable | Not taxable | Not taxable | Not taxableIf separately stated | Not taxableUnless updates are delivered on a physical medium |
| Georgia | Not taxable | Not taxable | Not taxable | Not taxable | TaxableWhen bought with a permanent right to use, not as a subscription | Not taxable | Not taxableIf separately stated | Not taxableUnless updates are delivered on a physical medium |
| Hawaii | TaxableGeneral excise tax | Taxable | Taxable | Taxable | Taxable | Taxable | Taxable | Taxable |
| Idaho | Not taxable | Not taxable | Not taxable | Not taxable | TaxableWhen bought with a permanent right to use, not as a subscription | Not taxable | Not taxableIf separately stated | Not taxableUnless updates are delivered on a physical medium |
| Illinois | Not taxableAt state level (Chicago taxes it at 15%) | TaxableUnless the license meets all five conditions in the state software rule | Not taxableUnless an API, applet or desktop agent is transferred to the customer | Not taxable | Not taxableAt state level | Not taxable | Not taxableIf separately stated | Not taxableWhen sold separately, but canned software updates are taxable |
| Indiana | Not taxable | Taxable | Not taxable | Not taxable | TaxableWhen bought with a permanent right to use | Not taxable | Not taxableIf separately stated | Not taxableFor SaaS, but taxable for downloaded software |
| Iowa | TaxableBusiness use exempt | TaxableExcept for exclusive business use | TaxableExcept for exclusive business use | Not taxableBut file storage services are taxable | TaxableExcept for exclusive business use | TaxableExcept for exclusive business use | TaxableFor installation, but separately stated training is generally not taxable | TaxableExcept for exclusive business use |
| Kansas | Not taxable | Taxable | Not taxable | Not taxable | Not taxable | Not taxable | TaxableFor installing or modifying prewritten software, but not for separately stated training | TaxableFor prewritten software, not for SaaS |
| Kentucky | Taxable | Taxable | Taxable | Not taxableUnless it includes access to prewritten software | Taxable | Not taxableIf the customization is separately stated | TaxableFor installation, but not for separately stated training | Taxable |
| Louisiana | Taxable | Taxable | Taxable | Not taxableFor cloud storage and web hosting | Taxable | Taxable | Not taxableIf separately stated | TaxableUnless it is support only and separately stated |
| Maine | Not taxable | Taxable | Not taxableUnless downloadable or hosted in Maine | Not taxable | Taxable | Not taxable | Not taxableIf separately stated | TaxableIf it includes software updates |
| Maryland | Taxable3% for business use | Taxable | Taxable | TaxableAt 3% | TaxableAt 6% | TaxableAt 3% | TaxableAt 3% | Taxable |
| Massachusetts | Taxable | Taxable | Taxable | Not taxableUnless it is mainly access to prewritten software | Not taxable | Not taxable | Not taxableIf optional and separately stated | DependsPartly taxable: upgrades are taxed, or 50% of the charge if not separately stated |
| Michigan | Not taxable | Taxable | Not taxableUnless software is downloaded | Not taxable | Not taxable | Not taxable | Not taxableIf separately stated | TaxableFor updates, not for separately stated support |
| Minnesota | Not taxable | Taxable | Not taxable | Not taxable | Taxable | Not taxable | TaxableFor installing prewritten software, but not for training | Not taxableFor hosted software (taxable for installed software) |
| Mississippi | Not taxable | Taxable | Not taxableIf hosted outside Mississippi | Not taxable | Taxable | Taxable | TaxableFor installation and configuration | Taxable |
| Missouri | Not taxable | Not taxable | Not taxable | Not taxable | Not taxable | Not taxable | Not taxable | Not taxableUnless tied to software on a physical medium |
| Montana | Not taxable(no sales tax) | Not taxable | Not taxable | Not taxable | Not taxable | Not taxable | Not taxable | Not taxable |
| Nebraska | Not taxable | Taxable | Not taxableUnless software is transferred | Not taxable | Taxable | Taxable | TaxableWhen paid to the seller of taxable software | TaxableWhen it includes software upgrades |
| Nevada | Not taxable | Not taxable | Not taxable | Not taxable | Not taxable | Not taxable | Not taxable | Not taxableUnless it is mandatory with software sold on physical media |
| New Hampshire | Not taxable(no sales tax) | Not taxable | Not taxable | Not taxable | Not taxable | Not taxable | Not taxable | Not taxable |
| New Jersey | Not taxable | TaxableUnless used only in the buyer's business | Not taxableUnless it is an information service | Not taxable | Taxable | Not taxable | Not taxable | Not taxableFor SaaS |
| New Mexico | Taxable | Taxable | Taxable | Taxable | Taxable | Taxable | Taxable | Taxable |
| New York | Taxable | Taxable | Taxable | Not taxableUnless it includes prewritten software | Not taxable | Not taxable | Not taxableIf separately and reasonably stated | Taxable |
| North Carolina | Not taxable | Taxable | Not taxable | Not taxable | Taxable | Not taxable | Not taxableIf separately stated | TaxableWhen it covers downloaded software |
| North Dakota | Not taxable | Taxable | Not taxable | Not taxable | Not taxable | Not taxable | Not taxable | TaxableWhen it is mandatory or covers downloaded software updates |
| Ohio | TaxableBusiness use only | Taxable | TaxableFor business use | TaxableFor business use | Taxable | Not taxable | Not taxableIf separately stated | TaxableWhen it covers prewritten software |
| Oklahoma | Not taxable | Not taxable | Not taxable | Not taxable | Not taxable | Not taxable | Not taxable | Not taxableUnless tied to software on physical media |
| Oregon | Not taxable(no sales tax) | Not taxable | Not taxable | Not taxable | Not taxable | Not taxable | Not taxable | Not taxable |
| Pennsylvania | Taxable | Taxable | Taxable | Not taxableUnless it includes canned software | Taxable | Not taxable | TaxableWhen tied to canned software | Taxable |
| Rhode Island | Taxable | Taxable | Taxable | DependsGenerally not taxable unless it includes prewritten software | Taxable | Not taxable | TaxableWhen needed to complete the sale, except separately stated installation | TaxableExcept contracts for technical support only |
| South Carolina | Taxable | Not taxable | TaxableWhen sold as access to hosted software | Not taxable | TaxableWhen streamed | Not taxableWhen delivered electronically | Not taxableIf separately stated | DependsOn how updates and support are delivered |
| South Dakota | Taxable | Taxable | Taxable | TaxableExcept web hosting | Taxable | Taxable | Taxable | Taxable |
| Tennessee | Taxable | Taxable | TaxableUnless primarily data processing | Not taxable | Taxable | Taxable | TaxableWhen part of the software sale | Taxable |
| Texas | TaxableOn 80% of the charge | TaxableOn the full charge | TaxableOn 80% of the charge | TaxableOn 80% of the charge | Taxable | Not taxableIf all rights transfer to the buyer | TaxableExcept separately stated training | Taxable |
| Utah | Taxable | Taxable | Taxable | DependsGenerally not taxable | Taxable | Not taxable | TaxableWhen tied to prewritten software | Taxable |
| Vermont | Taxable | Taxable | Taxable | DependsGenerally not taxable | Taxable | Not taxable | Not taxableIf separately stated | TaxableWhen it includes software updates |
| Virginia | Not taxable | Not taxableWhen delivered electronically | Not taxable | Not taxable | Not taxable | Not taxable | Not taxableIf separately stated | Not taxableWhen it covers only exempt software |
| Washington | Taxable | Taxable | Taxable | TaxableExcept mere data storage | Taxable | Taxable | Taxable | Taxable |
| West Virginia | Taxable | Taxable | TaxableUnless it is an exempt data processing service | TaxableUnless it is an exempt data processing service | DependsGenerally taxable | Taxable | DependsGenerally taxable | Taxable |
| Wisconsin | Not taxable | Taxable | Not taxable | Not taxableUnless the customer controls the equipment | Taxable | Not taxable | Not taxableUnless required with taxable software | TaxableFor prewritten software |
| Wyoming | Not taxable | Taxable | Not taxable | Not taxable | TaxableWhen the buyer gets permanent use | Not taxable | Not taxableIf separately stated | TaxableWhen it includes prewritten software updates |
Galvix SaaS Sales Tax Checker
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