California could tax software and SaaS in 2027

I don't know if our EU, AU/NZ, UK, CN, KR, JP and IN friends in the forum here would also be (or already are) affected by taxes on digital software downloads (excludes music, films, books, etc), but here we go.

In fairness, this appears to be a mix of an update to the tax law (I remember paying sales tax when I would go buy boxed software products, from Logic Pro to drum and piano sample libraries, CD-ROMs, etc.), there's no reason why those same products should be tax exempt when delivered digitally.

In fact, though I've not bought any new plugins in years now, I seem to remember my last purchases did already include CA sales tax.

Anyway - let us know if you guys overseas, or out of state, are affected by online sales taxes - or not - and/or if you found a way to circumvent it (currently, they go by the zip/postal code of your CC billing address).

 

If you buy software, the tax is already included in the price... so what am I missing here? What exactly they want to tax? VLC downloads (free)? As an example. That would be... really dumb, to say the least. And what's the reasoning behind it? That it uses energy to download a program? I'm sure I'm missing something or your info is too blurry. Sometimes it's hard to understand how tech-idiots / politicians think.

 

In the EU and the UK, digital products (SaaS, downloads, plugins) have been fully subject to VAT since 2015.

Regulation: The so-called MOSS (Mini One-Stop-Shop) procedure—now known as OSS—applies. When selling to an end consumer in the EU, a US provider (such as Plugin Alliance, Apple, or Avid) must add and remit the VAT applicable in the buyer's home country (e.g., 19% in Germany, 20% in Austria).

Exception: If you run a business and provide a valid VAT identification number (VAT ID), the reverse-charge mechanism applies, and the invoice is issued at the net price.

 

Last edited: Jun 27, 2026 at 4:37 PM

I'm not sure what you mean by "my info" or "too blurry," but if you mean the article linked above is unclear, I can only agree with you.

Nevertheless, I took a few minutes to read through several other articles referenced in the one article linked above, and to keep it simple, it's looking to me as though CA is looking to update, or if you prefer, bring up to date (i.e., modernize) its tax laws to bring its code into the digital age.

For us musicians and producers especially (film composers too), the digital age means subscription. Some of us buy (pay for software), some never do, and some of us (no one I know, but perhaps this is a generational thing) rent it all. I hear Pro Tools is a subscription service these days, as are Waves, and Slate, even (some or all - unclear to me) UAD plugins. Heck, even Logic, Mainstage, & their MacOS brethren are available on subscription as of earlier this year.

For our fashion or general business photographer friends and girlfriends (mine for instance), this is nothing new - Adobe got them shackled years ago.

I reckon that the spirit of this CA tax law adjustment (aka SB-122) is to ensure 1) more revenue for CA's coffers (hello), and 2) that whether you buy your software boxed (as one did in the past, and still can, at GC, Best Buy or Staples for instance), online, or pay for it as a service, appropriate tax is collected.

I believe - but was asking our friends who live overseas to confirm if - that's been the case in the EU and UK, and perhaps the Asia/Pacific region as well (if memory serves, I've had to pay VAT whenever I bought something in the UK, DE, DK, FR, and NL).

Hope this short clarification helps.

 

Other states: More than half of U.S. states already tax SaaS and digital software downloads (e.g., New York, Texas, Washington).

California actually lagged behind the rest of the country regarding purely digital goods (those without physical media). If you paid taxes there in the past, it was often because the vendor was based in California or the transaction was "mixed" (e.g., involving hardware). The planned legislative change simply closes the gap regarding the purely digital economy.

 

It's unclear because you said the download is subject to tax. If you download something without making a purchase, there's nothing to tax. That's not how taxes work. It's not the download that is taxed, but the money transfer.