You finally launched that online course, eBook, or downloadable template—and the best part? No inventory, no shipping, and (you thought) no sales tax headaches.
But think again.
Many e-commerce businesses think digital goods are tax-free—but some states have different rules.
While it’s true that digital products used to fly under the sales tax radar, that’s no longer the case in many states. In fact, a growing number of states now treat digital goods just like physical ones—meaning you may be required to collect and remit sales tax on every download or stream, depending on where your customer lives.
And yes, that includes:
- Online courses (even pre-recorded ones)
- eBooks and PDFs
- Design templates and fonts
- Stock photos, videos, and music
- Software and apps
- Membership sites or gated content
Here’s where it gets complicated: every state defines digital products differently. Some tax them. Others don’t. A few only tax certain kinds of digital goods. And if you’re selling across multiple states, that patchwork of rules can create a compliance nightmare.
Even if you’re not based in one of these states, you can still create a sales tax obligation—aka economic nexus—just by selling to customers who are.
So while it’s tempting to assume digital = tax-free, that assumption could leave you open to audits, penalties, and unexpected bills.
What should you do?
- Identify which states tax digital goods
- Track where your customers are based
- Monitor for economic nexus thresholds
- Set up proper sales tax collection in your checkout flow
Interested in a no-obligation free consultation? Schedule a time with us here :
https://yellowbrickfinancials.hbportal.co/schedule/663165633aaf34001f4c93c2
