Sales Tax and Streaming Services: What You Need to Know

Remember when “movie night” meant heading to the theater, buying a $7 tub of popcorn, and settling into a seat someone else just vacated? Today, it’s far more common to queue up Netflix on your couch with microwave popcorn in hand.

As streaming has become the norm, a new question arises for businesses and regulators alike: Are streaming services subject to sales tax?

What Are Streaming Services?

Streaming services allow users to watch or listen to content in real-time over the internet without downloading the media. Popular platforms include Netflix, Disney+, Hulu, Amazon Prime Video, Spotify, and many others.

This booming industry is now worth over $670 billion and is projected to grow by nearly 20% annually over the next seven years. With more than 1.8 billion global subscriptions, streaming is no longer the future; it’s the present.

Are Streaming Services Taxable?

Yes, streaming services can be taxable, depending on the state.

The taxability of streaming services varies significantly by jurisdiction. Some states classify streaming content as digital products, while others apply sales tax through broader categories like subscription-based services or amusement taxes.

States That Tax Streaming Services

Here’s a quick overview of where streaming is taxed:

• Digital Products Taxed: Alabama, Connecticut, Idaho, Iowa, Kentucky, Louisiana, Minnesota, Mississippi, Nebraska, North Carolina, Ohio, Utah, Vermont, Wisconsin, Wyoming
• Streaming Services Specifically Taxed: Arizona, Arkansas, Hawaii, Indiana, New Mexico, South Carolina, West Virginia
• Both Digital and Streaming Services Taxed: Maryland, Pennsylvania, Rhode Island, South Dakota, Tennessee, Texas, Washington, District of Columbia

Even states with no state-level sales tax, like Delaware, can impose alternative taxes such as gross receipts tax on streaming providers. Some localities in Alaska also apply their own local taxes.

Local Examples

• Chicago, IL: Applies a 10.25% "amusement tax" on streaming content like movies and games.
• Florida: Imposes additional communications services taxes on top of standard sales tax.
• Colorado: Treats digital goods as taxable tangible personal property regardless of delivery method.

How Sales Tax Is Applied to Streaming Services

How is sales tax on streaming services calculated?

Sales tax is generally sourced to the customer’s location, not where the provider is based. The provider must collect and remit the correct tax based on the subscriber’s billing address.

This can get tricky due to local sales tax rules, especially in states with numerous jurisdictions like California.

Subscription vs. One-Time Purchases

A one-time rental of a movie may be taxed differently than a monthly or annual subscription. Tax treatment depends on:

• Type of content
• Delivery method
• Duration of access
• State-specific rules

Economic Nexus and Streaming Services

Since the Wayfair decision, states have adopted economic nexus laws requiring out-of-state sellers, including streaming platforms to collect sales tax if they exceed:

• A certain transaction count (e.g., 100 in New York, 200 in Arkansas)
• Or a sales revenue threshold (varies by state)

Some states are removing the transaction threshold, focusing only on revenue, which affects how quickly streaming platforms become liable.

Recent Developments in Streaming Tax Laws

• Georgia and Florida recently began taxing streaming services.
• Louisiana joined them in 2025.
• Maine is considering a similar law.
• Colorado reaffirmed its position in a recent court case involving Netflix, confirming that intangible digital content is still taxable.

With new rulings and legislation emerging regularly, sales tax compliance for streaming services is a moving target.

Key Takeaways

• Streaming services may be taxable, but rules vary by state and locality.
• Economic nexus laws often apply to subscription-based platforms.
• Tax rates and definitions depend on digital product classifications, delivery method, and usage.
• Local taxes like Chicago’s amusement tax can complicate compliance.

Need Help Navigating Streaming Sales Tax?

As more states look to tap into the fast-growing streaming economy, compliance becomes more complex. Don’t risk penalties or overpaying.

Let the experts handle it. Contact TaxConnex to learn how we take the sales tax burden off your plate—so you can keep streaming ahead.