Sales Tax on Digital Products: A US Creator's Guide (2026)

If you sell ebooks, templates, presets or courses to buyers across the US, sooner or later you'll wonder whether you should be adding sales tax at checkout. The honest answer is that it depends on two things: whether the buyer's state taxes that kind of product, and whether you have a tax connection ("nexus") with that state. This guide walks through both, in plain words, so you know which questions to ask your CPA.

There's no federal sales tax

Sales tax in the US is set by states and, in many places, by cities and counties too. There's no single national rule for digital products. Each state decides whether ebooks, digital downloads, online courses or streaming are taxable, and the answers differ. Alaska, Delaware, Montana, New Hampshire and Oregon have no statewide sales tax, although some Alaska towns charge their own.

Question 1: does the state tax what you sell?

States often treat similar-looking products differently. A state might tax a downloaded ebook but not a live coaching call, or tax prewritten software but exempt digital books. Before you decide anything, work out which category each of your products falls into:

• Digital goods you download and keep, such as ebooks, PDFs, templates, presets and music.
• Online courses and recorded video, which some states treat as digital goods and others as education or a service.
• Live services, such as 1:1 calls, coaching and consulting, which many states don't tax.
• Memberships and subscriptions, which are usually taxed (or not) according to what the member actually gets.

Your state's department of revenue publishes guidance on digital products. Search its site for "digital goods" or "specified digital products" and check the date on the page.

Question 2: do you have nexus with the state?

You only have to collect a state's sales tax if you have nexus with that state. There are two kinds:

• Physical nexus: you live or work there, or keep staff or property there. For most solo creators, that's your home state, from the first sale.
• Economic nexus: since the Supreme Court's South Dakota v. Wayfair decision in 2018, states can require remote sellers to collect tax once their sales into the state pass a threshold, even with no physical presence.

Marketplaces vs your own store

Who collects the tax depends on where you sell:

Insidemetics is in the third group. Buyers pay into your own PayPal account, so you're the seller and any sales tax is yours to handle. We don't add sales tax at checkout or file returns for you. If your home state taxes your products, include the tax in your price or talk to a CPA about the best way to collect it.

Income tax and Form 1099-K

Sales tax is separate from income tax. Whatever you earn from digital products is income, and you report it on your tax return whether or not you get a form for it. Payment platforms such as PayPal send a Form 1099-K when your payments for goods and services in a year pass both $20,000 and 200 transactions; the One, Big, Beautiful Bill put that threshold back to its earlier level, according to the IRS. If you're self-employed, self-employment tax may also apply.

A simple checklist

1. List your products and note which category each one falls into.
2. Check your home state's rules for each category, on its department of revenue site.
3. If your state taxes them, register for a sales tax permit before you sell, and decide whether prices include tax.
4. Download your sales report each month and keep a running total of sales by state.
5. When you approach $100,000 (or 200 sales) in another state, check that state's rules.
6. Set money aside for income tax, and keep your 1099-K and payment records together.