State Tax iTunes and Other Digital Downloads

Find Out How Your State Taxes iTunes Digital Downloads

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Many states have begun charging sales tax on iTunes digital downloads, as well as a variety of other downloaded purchases, in an effort to pump up tax revenues. New Jersey was the first state to impose this tax on digital products in 2007, and most others have come on board since then. 

These types of sales taxes are typically levied on downloads of digital audio, video, ebooks and ringtones, but this can vary considerably across state lines.

Downloaded software or software updates are generally subject to separate, more complex rules.

States That Tax Downloads

Many states have passed laws that impose sales taxes on digital products, but "digital products" can be defined differently in each state. One state may include iTunes digital downloads, while another may tax only ebooks. Several states have adopted the Streamlined Sales Tax Governing Board definition, providing some uniformity to this complex issue. Others do not define digital products in their legislation at all and most of these do not impose a sales tax on these products. 

The federal Digital Goods and Services Tax Fairness Act of 2011 prohibits states from taxing digital products at a rate that's not consistent with its other sales tax laws.

  • Alabama -- No specific definition of digital goods
  • Arizona -- No specific definition of digital goods
  • Arkansas -- Digital goods are defined by state legislation 
  • California -- No specific definition of digital goods. Does not affirmatively tax these products
  • Colorado -- No specific definition of digital goods
  • Connecticut -- Digital goods are defined by state legislation 
  • District of Columbia -- No specific definition of digital goods. Does not affirmatively tax these products.
  • Florida -- No specific definition of digital goods. Does not affirmatively tax these products.
  • Georgia -- Digital goods are defined by state legislation, but the state does not affirmatively tax these products. 
  • Hawaii -- No specific definition of digital goods
  • Idaho -- No specific definition of digital goods
  • Illinois -- Digital goods are defined by state legislation, but the state does not affirmatively tax these products.
  • Indiana -- Uses the SSGTB definition 
  • Iowa -- Digital goods are defined by state legislation, but the state does not affirmatively tax these products.
  • Kansas -- Digital goods are defined by state legislation, but the state does not affirmatively tax these products.
  • Kentucky -- Uses SSGBT definition 
  • Louisiana -- Digital goods are defined by state legislation.  
  • Maine -- Digital goods are defined by state legislation.
  • Maryland -- No specific definition of digital goods. Does not affirmatively tax these products
  • Massachusetts -- No specific definition of digital goods. Does not affirmatively tax these products
  • Michigan -- Digital goods are defined by state legislation, but the state does not affirmatively tax these products. 
  • Minnesota -- Digital goods are defined by state legislation, but the state does not affirmatively tax these products.
  • Mississippi -- Digital goods are defined by state legislation. 
  • Missouri -- No specific definition of digital goods
  • Nebraska -- Uses SSGBT definition 
  • Nevada -- Uses SSGTB definition, but does not affirmatively tax these products
  • New Jersey -- Uses SSGTB definition 
  • New Mexico -- No specific definition of digital goods
  • New York -- No specific definition of digital goods. Does not affirmatively tax these products.
  • North Carolina -- Digital goods are defined by state legislation. 
  • North Dakota -- Uses SSGTB definition, but does not affirmatively tax these products. 
  • Ohio -- Digital goods are defined by state legislation, but the state does not affirmatively tax these products.
  • Oklahoma -- Digital goods are defined by state legislation, but the state does not affirmatively tax these products.  
  • Pennsylvania -- No specific definition of digital goods. Does not affirmatively tax these products
  • Rhode Island -- Uses SSGTB definition, but does not affirmatively tax these products 
  • South Carolina -- No specific definition of digital goods. Does not affirmatively tax these products.
  • South Dakota -- No specific definition of digital goods
  • Tennessee -- Uses SSGTB definition 
  • Texas-- Digital goods are defined by state legislation.  
  • Utah -- No specific definition of digital goods
  • Vermont -- Uses SSGTB definition 
  • Virginia -- No specific definition of digital goods, and the state specifically exempts sales of digital products from taxation
  • Washington -- Uses SSGTB definition 
  • West Virginia -- Digital goods are defined by state legislation, but the state does not affirmatively tax these products.  
  • Wisconsin -- Uses SSGTB definition 
  • Wyoming -- Uses SSGTB definition 

In most cases, states with unclear legislation do not tax all -- if any -- digital downloads. States that have adopted SSGTB guidelines generally tax these products.

This area of taxation is an ever-changing landscape. If you're a seller, contact the state's Department of Revenue or Comptroller's Office for specific legislation and rules to find out exactly what you must tax and what sales you don't have to worry about. 

Why Didn't They Charge Me for the Tax?

    Even if your state made the list for affirmatively charging a sales tax on iTunes digital downloads, you may not see a sales tax charge on your electronic receipt. Some online retailers do not have to collect out-of-state sales taxes if their principal location is in a state where they must abide by only their own tax rules, not those in the states where their customers reside. These retailers must only charge sales tax if they're subject to a legal concept called nexus -- they have a physical presence or affiliate in your state. Although your state may require retailers to charge sales tax on digital products, remote sellers like iTunes may only required to collect and remit sales taxes there if they have nexus.