Unsure where you owe sales or use tax or dealing with legacy compliance pain?
Check Your ExposureGrowing digital product businesses often assume sales tax does not apply. In reality, sales tax and use tax exposure for digital products varies widely by state and by product type. Exposure can exist even when products are delivered electronically and no physical goods are involved. The challenge is understanding where digital products are taxable, whether economic nexus thresholds have been crossed, and how to move forward without unnecessary registrations or incorrect filings.
Digital products are treated differently across jurisdictions. Some states tax digital goods broadly, some tax specific categories, and others exempt them entirely. These differences create exposure that is difficult to track manually.
Common drivers of exposure include:
Understanding taxability differences early reduces surprises and unnecessary compliance work.
States vary widely in how they define and tax digital products. Software downloads, digital media, and access based products may be taxable depending on jurisdiction.
Even when digital products are taxable, registration and filing obligations usually depend on economic nexus thresholds. Thresholds are typically based on revenue or transaction counts and vary by state.
Tax treatment may depend on whether a digital product is downloaded, streamed, accessed online, or licensed. Small differences in delivery can change taxability.
Selling digital products across multiple platforms can complicate exposure tracking. Platform reporting often does not reflect state specific obligations accurately.
Digital products are not taxed anywhere is incorrect. Electronic delivery does not eliminate tax obligations. Low priced digital sales cannot create exposure is false. Registering everywhere is not the safest approach. Clarity before action is critical.
Exposure may include:
Exposure does not always require immediate action. Prioritization matters.
A practical approach looks like this:
Identify which digital products you sell
Understand taxability rules by state
Review revenue and transaction counts against thresholds
Determine whether registration or filing is required
Decide next steps before registering, filing, or paying anything
This avoids unnecessary registrations and incorrect filings.
TaxMap helps digital product businesses:
TaxMap supports structured compliance decisions for growing and established businesses.
Many digital product businesses start with basic automation tools that focus on collection or filing. These tools fail when taxability varies by state and delivery method. TaxMap is built for businesses that need taxability clarity and exposure analysis before committing to registration or filing.