Pennsylvania Imposes Sales and Use Tax on Digital Products

House Bill (HB) 1198 expands the definition of tangible personal property in Pennsylvania to include digital products.
Signed by the state’s governor on July 13, 2016, and effective August 1, 2016, the new legislation includes the following items within the definition of tangible personal property:

  • Video
  • Photographs
  • Books
  • Any other otherwise taxable printed matter
  • Applications, commonly known as apps
  • Games
  • Music
  • Any other audio, including satellite radio service
  • Canned software, notwithstanding the function performed
  • Any other otherwise taxable tangible personal property

These items are subject to tax whether they’re delivered electronically or digitally, streamed, or accessed and whether purchased singly, by subscription, or in any other manner, including maintenance, updates, and support, according to Pennsylvania Code 72 Section 7201(m)(2).


Prior to enactment of HB 1198, digital products weren’t defined as tangible personal property, which made them exempt from Pennsylvania sales or use tax. 


Effective August 1, 2016, companies need to register, collect, and pay tax if they have:

  • Sales or use tax nexus in Pennsylvania
  • Sales of digital products to consumers in Pennsylvania

Pennsylvania has broad nexus thresholds for remote sellers with affiliates located in the state. Remote sellers that have affiliate agreements with companies in Pennsylvania that encourage customers to make purchases can create nexus without the traditional nexus activities of payroll, property, and employee travel activities into the state.

There are several exemptions that may apply in Pennsylvania depending on a company’s facts and circumstances.

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