Alert
Louisiana Clarifies Taxation of Digital Products and Related Services
Louisiana’s H.B. 8 expanded sales tax to digital goods effective January 1, 2025. Additionally, the Louisiana Department of Revenue (LDR) issued new guidance on August 14, 2025, clarifying the taxability of these products and services.
Expansion of Taxable Services
Louisiana now imposes state and local sales and use tax on digital products transferred electronically, as well as on two newly enumerated services: prewritten computer software access services (SaaS) and information services. The LDR has issued detailed guidance defining taxable products and services, providing sourcing rules, examples, and exemptions.
Digital Products
Taxable digital products include electronically delivered or streamed audiovisual works, including movies, TV, and events; audio works, including music, audiobooks, and ringtones; digital books; digital codes; apps and games, including in-app items; and digital periodicals or discussion forums. Both subscriptions and one-time purchases are included, regardless of whether the purchaser obtains permanent rights. Examples include monthly streaming subscriptions, downloaded e-textbooks or audiobooks, and in-app purchases.
SaaS
Software transferred electronically meets the definition of a digital good as of January 1, 2025. SaaS covers charges to access vendor-hosted software such as productivity suites, CRM platforms, meeting and design tools, storage, or e-signature services.
Maintenance, updates, and support services may also be taxable if they are delivered in electronic form. Merely answering questions or troubleshooting are not taxable when separately stated. Support or maintenance that modifies or repairs the software functionality is taxable.
Examples of taxable services flagged by LDR include Office 365, Google Workspace, Zoom, Salesforce, DocuSign, Dropbox, market data subscriptions, newsletters with searchable archives, and curated lead lists.
Information Services
Information services cover charges for electronic data retrieval, research, and the collection or compilation of news, financial or market data, mailing lists, and subscription-based databases.
Examples of information services include newsletters, research publications, credit reports, severe weather alerts, legislative tracking services, sales lead generators, etc.
Exemptions and Non-Taxable Digital Products and Services
Exemptions
Key statutory exemptions apply when digital tools are used directly:
- In the commercial production of taxable goods or services
- By FDIC-insured financial institutions for core banking
- By licensed healthcare providers for health-related functions
LDR guidance provides detailed examples to support used directly claims, emphasizing proper documentation and exemption certificates.
Nontaxable
Certain products and services remain non-taxable, including:
- Professional services where the digital deliverable is incidental
- Internet access
- Telecommunications
- Intangible assets, such as IP or goodwill
- Specified information services statutorily excluded from tax
Digital products provided free of charge or used as ingredients/components in other products may also be exempt.
Timing Matters
Contracts spanning 2024–2025 should be reviewed, as pre-2025 purchases are not retro-taxed, but renewals or ongoing charges on or after January 1, 2025, are taxable.
Sourcing for Taxation
Sourcing rules follow destination principles, which source digital products to the purchaser’s location or the address from which the product is first transmitted if unknown, and services to the location from which they are provided.
Local taxes are also impacted, and parish collectors have issued notices aligning with the state effective date.
Next Steps to Consider
Businesses who sell these taxable products and services may need to open or add a sale and use tax account and prepare to collect and remit taxes, unless one of the stated exemptions apply to all their sales. Purchasers may also see sales tax included on invoices for purchases of these services after January 1, 2025. To the extent applicable, they should consider a multiple points of use (MPU) certificate.
The LDOR publication lists thirty-five separate examples to this expansion to support taxpayers in a deeper understanding of the January 1, 2025, enactment. All Louisiana businesses should stay informed on legislative developments to understand how these changes may impact their finances.
We’re Here to Help
For help navigating these tax changes, please contact your firm professional.