New Law Exempts Certain Software From State Sales Tax

Mar 23, 2018

Gov. Eric Holcomb says a bill he signed Friday to exempt sales tax for software delivered as a service sends a message that Indiana wants to be a leader in the tech sector.

Under the bill, if you go to the store and buy, say, tax preparation software, you’ll be charged sales tax. But if you access that program online, you won’t. Before now, the state wasn’t clear on that difference. And that matters to a tech company like Demand Jump that delivers data-based marketing solutions, says CEO Christopher Day.

“It wasn’t about stopping taxing something that was previously taxable," Day says. "It was more about clarity and parity.”

Holcomb says Indiana becomes the 31st state to exempt sales tax for what’s known as “software as a service.”

“I think not having this clarification was holding back potential investment,” Holcomb says.

The bill is expected to cost the state between $7 million and $15 million a year. Holcomb says he thinks new investment will more than offset that loss.