TaxByte: Georgia Clarifies Sales Tax Rules for Digital Products | TaxValet

Georgia has finalized rules detailing how sales and use tax applies to digital products, including e-books, streaming media, digital artwork, and more. The regulation, effective May 6, 2025, clarifies that many digital transactions have been taxable since January 1, 2024.

Businesses Selling Digital Products in Georgia Should Take Note

If your business sells or provides access to digital content—like digital books, music, streaming videos, or artwork—to customers in Georgia, this regulation matters to you. It clarifies that these digital goods are subject to sales tax if the customer receives permanent access, even if access is granted through a subscription.

This affects publishers, software providers, online content platforms, app developers, and any business offering downloadable or streamable content in Georgia.

What’s Changing with Georgia Sales Tax on Digital Goods?

New Digital Product Tax Rule Now in Effect

Georgia's Rule 560-12-2-.118, adopted by the Department of Revenue, outlines how digital goods are taxed under the state's sales and use tax laws. Here's what businesses need to know:

Key Definitions Covered

The rule defines several categories of digital goods, including:

• Specified Digital Products: Digital audio-visual works (e.g., movies), digital audio works (e.g., music), and digital books.
  
  
• Other Digital Goods: Digital items like artwork, periodicals, newspapers, photos, greeting cards, video games, etc.
  
  
• Digital Codes: Codes that give users access to digital content.
  
  
• Software as a Service (SaaS) and Prewritten Computer Software are also clearly defined, with distinct tax treatments.

When Are Digital Products Taxable?

• Permanent Use = Taxable: If the customer receives the right to permanently use the digital product, it’s taxable—even if delivered via subscription.
  
  
• SaaS and Internet Access = Not Taxable: These services remain exempt.
  
  
• Temporary Use Subscriptions = Not Taxable: If the digital content is only accessible as long as the subscription is active (and cannot be downloaded), it’s exempt from tax.
  
  
  

Example Scenarios:

• A subscription that allows downloading digital newspapers? Taxable.
  
  
• A streaming service where access ends if the customer cancels? Not taxable.
  
  
• Sale of digital art bundled with a NFT* (Non-Fungible Token)? Entire transaction is taxable.
  
  

*An NFT, or Non-Fungible Token, is a special kind of digital certificate that proves you own a unique item online—like a one-of-a-kind piece of art, music, video, or collectible. Learn more.

What Georgia Businesses Should Do About This Update

Review Your Digital Sales and Taxability Status

Businesses should:

• Audit digital product offerings: Identify which digital goods you sell and whether customers get permanent access.
  
  
• Update tax collection systems: Ensure taxable items are properly flagged and sales tax is collected.
  
  
• Assess bundled transactions: If selling non-fungible tokens (NFTs) or other items with digital content, the full transaction may be taxable.
  
  
• Check exemption scenarios: Ensure SaaS and temporary subscriptions are handled correctly.
  
  

If you're unsure whether your digital products are taxable, consult a tax expert or your tax software provider for help determining exposure.

What Georgia Businesses Should Do About This Update

Navigating Georgia's Digital Product Tax Rules with TaxValet’s Help

If you're a TaxValet client, there's no need to stress over these complex tax rule changes. We’ve got it covered. Our team automatically monitors state regulations, adjusts your tax collection settings, and ensures you're compliant—without adding to your workload.

Need help figuring out if your digital sales are taxable in Georgia? Reach out for a free consultation to see how TaxValet can make sales tax compliance stress-free for your business.