NSNexus by State

North Carolina Digital Products Sales Tax Guide — 2026

Updated

Reviewed by Nexus by State research team using official state tax sources. Last reviewed .

Guide content last reviewed: 2026-07-02

If your Digital Products business sells $100,000 into North Carolina in a calendar year, you have economic nexus and must register, collect, and remit North Carolina sales tax.

Are digital products taxable in North Carolina?

Yes — North Carolina taxes "certain digital property" (downloaded or streamed music, movies and other video, eBooks, digital magazines and newspapers, digital photographs, and greeting cards) at the 4.75% state rate plus local and, in some counties, transit rates — commonly 6.75%–7.5% combined. The tax applies whether the buyer keeps the item permanently or only streams or subscribes. Software accessed remotely (SaaS/cloud) is generally NOT taxable in North Carolina, which is the opposite of how neighboring Kentucky and Tennessee treat it.

Taxable digital categories

  • Digital audio works — downloaded or streamed music, audiobooks, and ringtones
  • Digital audio-visual works — movies, TV and entertainment programs, music videos, news programs, and streamed or downloaded video
  • Digital books (eBooks)
  • Magazines, newspapers, newsletters, reports, and other publications transferred electronically, where the tangible version is taxable
  • Digital photographs and greeting cards delivered electronically
  • Subscriptions, access, and digital codes that deliver any of the taxable digital property above — the tax applies whether the use right is permanent or conditioned on continued payment

Not taxable / special treatment

  • Software accessed remotely / cloud-based software (SaaS) — North Carolina does not tax software the customer accesses electronically without a tangible or downloaded transfer (see the North Carolina SaaS guide)
  • Information services and educational services — expressly excluded from the "certain digital property" definition
  • Digital versions of items whose tangible-medium equivalent would not be taxable — the digital-property tax tracks the tangible item’s treatment
  • Certain digital property purchased for resale under a valid exemption certificate

North Carolina taxes certain digital property under N.C. Gen. Stat. § 105-164.4(a)(6b). The North Carolina Department of Revenue defines it as specific categories transferred electronically — digital audio works, digital audio-visual works, digital books, electronically delivered magazines/newspapers/newsletters/reports and other publications, photographs, and greeting cards. The general state rate of 4.75% plus applicable local and transit rates applies to the sales price, and the tax reaches the item regardless of whether the purchaser has the right to use it permanently or without making continued payments — so a monthly streaming or eBook subscription is taxed the same as a permanent download.

Streaming: unlike Kentucky (which carves streamed video out of "digital property"), North Carolina taxes both streamed music (a digital audio work) and streamed video (a digital audio-visual work) as certain digital property. Information services and educational services are excluded from the definition, so a pure information feed or an educational service is not swept in.

SaaS is the key exception: North Carolina does not tax software the customer accesses remotely (cloud/SaaS) with no downloaded or tangible transfer. So a North Carolina seller of eBooks, music, or video owes tax while a North Carolina SaaS provider generally does not — the reverse of Kentucky and Tennessee, which tax remotely accessed software. Confirm your specific product against the North Carolina SaaS guide and the Department of Revenue.

Rate and marketplaces: the 4.75% state rate plus a 2%–2.75% local (and, in a few counties, transit) rate applies at the buyer’s North Carolina location, so combined rates on taxable digital products commonly land around 6.75%–7.5%. A marketplace facilitator with more than $100,000 in gross sales or 200 or more separate transactions sourced to North Carolina must collect and remit the tax on facilitated sales of taxable digital property, effective February 1, 2020. Direct sales from your own store remain your responsibility once you have nexus.

North Carolina digital-tax rules last verified: 2026-07-02. Sources: North Carolina Department of Revenue — Certain Digital Property; North Carolina Department of Revenue — Taxable Items; N.C. Gen. Stat. § 105-164.4 — imposition of tax on certain digital property; North Carolina Department of Revenue — Marketplace Facilitators and Marketplace Sellers FAQ; North Carolina Department of Revenue — Remote Sales. date_retrieved: 2026-07-02. State rules change — confirm category-by-category with the North Carolina state tax agency before invoicing.

Sales tax on digital products in North Carolina

“Digital products” covers eBooks, audiobooks, video downloads, online courses, streaming subscriptions, digital artwork, stock photos, music, and similar non-physical delivered goods. Whether North Carolina taxes them depends on how the state classifies the product — “specified digital products”, “electronic transfer of canned software”, or a service. Rules vary more than for physical goods.

If taxable in North Carolina, the product is subject to the 4.75% state rate plus any applicable local rate based on the buyer’s address.

Which digital products does North Carolina tax?

Most states sort digital goods using the Streamlined Sales Tax definition of “specified digital products”, which splits them into three subcategories a state can tax or exempt independently:

  • Digital audio-visual works — downloaded or streamed movies, shows, and recorded events. Streaming video subscriptions fall here.
  • Digital audio works — downloaded or streamed music, podcasts, audiobooks, and ringtones. Streaming music subscriptions fall here.
  • Digital books — eBooks. Newspapers, periodicals, blogs, and databases are excluded from the “book” definition and follow their own rules.

Because a state may tax one subcategory and exempt another, “are digital products taxable” rarely has a single yes/no answer. Where North Carolina taxes a subcategory, the charge is subject to the 4.75% state rate plus any local rate at the buyer’s address. Software subscriptions (SaaS and electronically delivered “canned” software) sit outside this framework and follow North Carolina’s separate software-taxability rule — see the SaaS guide for that determination.

Framework source: Streamlined Sales Tax Governing Board — “Specified Digital Products” definition (SSUTA §332). date_retrieved: 2026-06-04. State-by-state taxability still varies; verify each subcategory with the North Carolina Department of Revenue before invoicing.

Key distinctions

  • Specified digital products. Many states (adopting Streamlined Sales Tax definitions) tax SDPs — digital audio/video/books.
  • Online courses and education. Most states treat live-instruction courses as non-taxable services but treat pre-recorded course access as taxable digital products. Watch for this split if you sell both.
  • Subscriptions. Bundled subscription boxes with mixed digital + physical content are often taxed as a single taxable bundle — you can't allocate across taxable and non-taxable components unless the invoice separately states them.
  • B2B vs B2C. Some states exempt B2B digital products when bought for resale or when the buyer has a direct-pay permit. Keep certificates on file.

Common digital-product mistakes in North Carolina

  • Treating all digital products the same across states — eBook tax treatment differs from SaaS, which differs from streaming.
  • Bundling digital + physical goods without a line-item breakdown. Most states tax the full bundle at the physical rate if not itemized.
  • Applying origin-based sourcing (your state's rate) when most states source digital products to the buyer's billing or shipping address.

North Carolina nexus note

North Carolina sales tax nexus and economic nexus threshold: effective July 1, 2024, the remote-seller transaction threshold was repealed. A remote seller is engaged in business in North Carolina when gross sales sourced to North Carolina exceed $100,000 in the previous or current calendar year, including sales as a marketplace seller and marketplace-facilitated sales. NCDOR guidance says the threshold calculation includes taxable sales, sales for resale, exempt sales, nontaxable sales, and marketplace-facilitated sales. Marketplace facilitators use the same $100,000 sourced-gross-sales threshold, including all marketplace-facilitated sales for all marketplace sellers.

What to do next

Read the full North Carolina overview for thresholds, filing frequency, marketplace facilitator rules, and registration links. Use the nexus calculator to check whether you have crossed the threshold. For background on the post-Wayfair economic nexus framework, see the pillar guide.

Digital Products sales tax in other states

Compare North Carolina's digital products rules with nearby and similar states' digital products sales tax guides:

Frequently asked questions

Are digital products taxable in North Carolina in 2026?
Yes. North Carolina taxes "certain digital property" — digital audio works (music, audiobooks, ringtones), digital audio-visual works (movies and streamed or downloaded video), digital books (eBooks), electronically delivered magazines and newspapers, digital photographs, and greeting cards — under N.C. Gen. Stat. § 105-164.4(a)(6b) at the 4.75% state rate plus applicable local and transit rates. The tax applies whether the buyer keeps the item permanently or only subscribes. Software accessed remotely (SaaS/cloud) is generally not taxable.
Does North Carolina tax digital downloads (eBooks, music, video)?
Yes. Downloaded music and audiobooks (digital audio works), downloaded movies and video (digital audio-visual works), and eBooks (digital books) are taxable certain digital property in North Carolina at the 4.75% state rate plus local and transit tax. The tax applies regardless of whether you download the file permanently or access it through a subscription.
Does North Carolina charge sales tax on streaming services in 2026?
Yes. Unlike Kentucky, North Carolina taxes both streamed music (a digital audio work) and streamed video (a digital audio-visual work) as certain digital property, including subscription access and digital codes. Information services and educational services are excluded from the definition, so a pure information feed or educational service is not swept in.
What North Carolina sales tax rate applies to digital products?
North Carolina's state sales and use tax rate is 4.75%, and local (and, in a few counties, transit) rates of about 2%–2.75% apply on top at the buyer's North Carolina address, so combined rates on taxable digital products commonly land around 6.75%–7.5%.
Is SaaS taxable in North Carolina?
Generally no. North Carolina does not tax software the customer accesses remotely (cloud/SaaS) with no downloaded or tangible transfer, even though it does tax digital goods like eBooks, music, and video. That makes North Carolina the reverse of Kentucky and Tennessee, which tax remotely accessed software. Check the North Carolina SaaS guide and confirm your product with the Department of Revenue before invoicing.
Who collects North Carolina sales tax on digital products sold through a marketplace?
A marketplace facilitator with more than $100,000 in gross sales or 200 or more separate transactions sourced to North Carolina must collect and remit North Carolina sales tax on facilitated sales of taxable digital property, effective February 1, 2020. Direct sales from your own store remain your responsibility once you have nexus.

Sources

date_retrieved: 2026-05-22