- Starting Jan. 1, 2027, California and Colorado will expand sales tax to many SaaS offerings, cloud-based applications, and electronically delivered software.
- Colorado will treat most downloaded and remotely accessed software as taxable tangible personal property, including SaaS, mobile apps, and internet-based software platforms; custom software and certain negotiable license agreements remain exempt.
- California will broaden its sales and use tax base to cover many sales of prewritten digital software, including electronically delivered and remotely accessed software, plus some subscription and perpetual licenses; custom software and certain professional services remain favorably treated.
- These changes mark a major shift from both states’ prior general non-taxation of SaaS and digital software and may signal broader nationwide movement toward taxing digital products.
Source: ksmcpa.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
