If you’re a software-as-a-service (SaaS) company, determining if your offerings are taxable in the US is a challenge. Since most sales tax laws were written with tangible products in mind, many states are still determining how to manage sales tax on nontangible products.

Today, 25 states tax SaaS services, and an additional 7 states tax SaaS if customers are required to download software. Each state has come to this conclusion in different ways. For example, some states consider SaaS a service, not a product. So, if services are generally taxable in the state—such as in Hawaii—then SaaS is likely to also be taxable. In states where services aren’t taxable, SaaS is unlikely to be taxable. Other states, like Washington, consider SaaS to be an example of tangible software and is deemed taxable. In addition, certain states tax SaaS at a different rate depending on whether it’s being used for personal or business purposes. SaaS companies must be aware of how their offering is taxed in all the states where they have customers.

This guide will help you determine where SaaS businesses should be collecting sales tax from customers in the US.

Use this table to look up your customer’s location and whether SaaS is taxable in that state.

How Stripe can help

While staying aware of tax compliance trends is important for businesses, it’s also complex and time-consuming. Stripe Tax automates global tax compliance from start to finish, so you can focus on growing your business. It identifies your tax obligations, manages registrations, calculates and collects the right amount of tax worldwide, and enables filings—all in one place.

Stripe Tax helps you:

• Understand where to register and collect taxes: See where you need to collect taxes based on your Stripe transactions. After you register, switch on tax collection in a new state or country in seconds. You can start collecting taxes by adding one line of code to your existing Stripe integration or add tax collection with the click of a button in the Stripe Dashboard.
  
• Register to pay tax: Let Stripe manage your global tax registrations and benefit from a simplified process that prefills application details—saving you time and ensuring compliance with local regulations.
  
• Automatically collect tax: Stripe Tax calculates and collects the right amount of tax owed, no matter what or where you sell. It supports hundreds of products and services and is up-to-date on tax rules and rate changes.
  
• Simplify filing: Stripe Tax seamlessly integrates with filing partners, so your global filings are accurate and timely. Let our partners manage your filings so you can focus on growing your business.
  

Read our docs to learn more, or sign up for Stripe Tax today.