Software-as-a-Service (SaaS) Sales Tax by State

Updated: July 2025

Because of the ways laws vary across states, use and sales tax on Software-as-a-Service can become difficult to understand. To stay up-to-date, use our map of SaaS sales tax by state below!

When does sales tax apply to Software-as-a-Service?

While some services are ordinarily not subject to sales tax, the fact that they are provided in conjunction with SaaS can make them taxable. For example, configuration, support, or training may be taxable when provided in conjunction with SaaS, even if they are separately stated on the invoice.

Technology companies involved in providing software, digital services and goods, SaaS, and more, have always found sales tax challenging–especially as it relates to defining the true object of the product/service relative to sales tax statutes. Additionally, the electronic delivery method of these products/services can create situsing challenges relative to sales tax jurisdictions and applicable rates. In other words, the matter becomes more complicated because laws vary from state to state.

In addition to the variability of SaaS taxability by state, there are additional nuances associated with SaaS within some states. This includes whether you are selling to a business or a consumer (as in Iowa and Ohio), unique state sales tax rates (Connecticut), home-rule jurisdictions (Colorado and Illinois), partial exemptions (Texas), and more.

If you sell software, SaaS or digital services in multiple states, keeping on top of changing sales tax rules can be overwhelming. But not realizing your sales tax obligation or not acting on a growing obligation could have big repercussions for your business.

Why TaxConnex?

Understanding and complying with regulations in SaaS taxable states can be challenging for tech companies. Our sales tax compliance services simplify this process, ensuring your business stays on track. We help you navigate complex and ever-changing tax rules, saving you time and resources while keeping you compliant. With our support, you can focus on what matters most—innovation and growth—while we handle the intricacies of sales tax compliance.

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“The number one benefit we’ve received from working with TaxConnex is removing our risk with sales tax. As a SaaS platform there are many complications, add to that the 2018 Wayfair decision and things got even more complicated, but we can rely on TaxConnex to help us determine our nexus and comply."

“Ingenico has been using TaxConnex for our Tax Reporting and Consulting for as long as I have been associated with the company (at least 8 years). From Robert Dumas to Jeff Meigs to Cathi Johnson, all have shown the utmost professionalism and timely willingness to assist with questions.”

“With customers all over the US, the sales tax issue was quickly becoming too complicated for us to manage. TaxConnex makes it easy for us to adjust and adapt as our obligation grows and new changes occur.”

"TaxConnex doesn’t overcomplicate things for us, they simplify them. Being able to work closely with [a dedicated practitioner] rather than multiple individuals who don’t understand your business is very helpful. TaxConnex takes a lot of weight and worry off us.”