Software as a service (SaaS) is a model where software is hosted in one place but licensed by subscription for use by customers. For example, some states consider SaaS a service. So, if services are generally taxable in the state – such as in Arizona – then SaaS is considered taxable. In most states, where services aren’t taxable, SaaS also isn’t taxable. Other states, like Washington, consider SaaS to be an example of tangible software and thus taxable. Just like with anything tax-related, each state has made its own rules and laws. This list compiles all SaaS-related state sales tax laws at the time of this writing.

Sales Tax Applicability State Wise

Alabama - Taxable

Alaska - Taxable

Arizona - Taxable

Arkansas - Non Taxable

California - Non Taxable

Colorado - Non Taxable

Connecticut - Taxable

Florida - Non Taxable

Georgia - Non Taxable

Hawaii - Taxable

Idaho - Non Taxable

Illinois - Non Taxable

Indiana - Non Taxable

Iowa - Taxable

Kansas - Non Taxable

Kentucky - Non Taxable

Louisiana - Taxable

Maine - Non Taxable

Maryland - Non Taxable (when used for business from 1st July 2022)

Massachusetts - Taxable

Michigan - Non Taxable

Minnesota - Non Taxable

Mississippi - Non Taxable

Missouri - Non Taxable

Nebraska - Non Taxable

Nevada - Non Taxable

New Jersey - Non Taxable

New Mexcio - Taxable

New York - Taxable

North Carolina - Not Applicable

North Dakota - Not Applicable

Ohio - Taxable - For Business Use Non Taxable - For Personal Use

Oklahoma - Non Taxable

Pennsylvania - Taxable

Rhode Island - Taxable

South Carolina - Taxable

South Dakota - Taxable

Tennessee - Taxable

Texas - 80% Taxable, 20% Non Taxable

Utah - Taxable

Vermont - Non Taxable

Virginia - Non Taxable

Washington - Taxable

Washington D.C - Taxable

West Virginia - Taxable

Wisconsin - Non Taxable

Wyoming - Non Taxable