Are digital products taxable in Texas in 2026?

Usually, but classify the product first. Texas taxes taxable items sold electronically the same way it taxes the item on physical media, and it taxes specific digital-service categories such as streaming video/video-on-demand, online games, software or computer-program licenses, and SaaS/data-processing services. Separately stated internet access is not taxable.

Does Texas charge sales tax on digital streaming services in 2026?

Yes for common video-streaming categories. The Texas Comptroller lists streaming video programming and video-on-demand services under taxable cable television services, and online games under taxable amusement services. Separately stated internet access is not taxable; bundled internet access plus taxable streaming or telecommunications needs a reasonable allocation to keep the internet-access portion exempt.

What Texas sales tax rate applies to digital products?

Texas's state sales and use tax rate is 6.25%, and local sales or use tax can add up to 2%, for a maximum combined rate of 8.25%. Remote sellers may collect use tax by destination rate or Texas's single local use tax rate when eligible; marketplace providers collect on certified marketplace sales.

Are software subscriptions and SaaS taxed as digital products in Texas?

They are usually taxed through Texas's software and data-processing rules, not a separate digital-products statute. The Comptroller says data-processing providers include SaaS sellers and application service providers, and 20% of a data-processing charge is exempt — so the taxable base is generally 80% when that classification applies.

Who collects Texas tax on digital products sold through Amazon, Etsy, or another marketplace?

A marketplace provider engaged in business in Texas must collect and remit Texas tax on marketplace-seller sales and certify that responsibility to the seller. If the marketplace has not certified collection, the seller should collect until it receives certification. Direct sales from your own site remain your responsibility once you have Texas nexus.

Texas Digital Products Sales Tax Guide — 2026

Updated 2026-05-25

Guide content last reviewed: 2026-06-07

If your Digital Products business sells $500,000 into Texas in a calendar year, you have economic nexus and must register, collect, and remit Texas sales tax.

Are digital products taxable in Texas?

Usually yes for common streaming-video, online-game, software, and SaaS offers — but Texas does not use a single "specified digital products" bucket. Classify the charge as a taxable item, cable television/amusement service, data-processing service, or computer-program license, then apply the Texas rate rules.

Taxable digital categories

Streaming video programming and video-on-demand services, which the Comptroller lists under taxable cable television services
Online games and similar paid entertainment access, listed as taxable amusement services
Computer-program sales, leases, and licenses transferred electronically or on physical media
SaaS, application-service-provider, web-hosting, data-storage, and other data-processing services — 20% of a data-processing charge is exempt, so the taxable base is generally 80% when that classification applies
Taxable items sold online to Texas customers, including electronically delivered taxable items when Texas law treats the underlying item as taxable

Not taxable / special treatment

Separately stated internet access charges — Texas stopped taxing internet access on July 1, 2020 and removed it from taxable services effective July 1, 2025
Custom contract programming when the programmer transfers all rights to the custom program and does not retain rights in the program
Professional services that merely use a computer as a tool, such as accounting or architecture work, when the service is not data processing
Marketplace-facilitated sales where a certified marketplace provider collects and remits Texas tax; keep the provider certification instead of collecting a second time

Texas starts from the taxable item framework: tangible personal property plus taxable services. Texas Tax Code §151.010 says a taxable item does not change tax status merely because it is sold or used in electronic form rather than on physical media. That makes the product classification more important than the delivery format.

For the streaming queries, the clearest Comptroller guidance is video-specific: streaming video programming and video-on-demand services are listed under taxable cable television services, and online games are listed under taxable amusement services. Separately stated internet access is not taxable, but bundled charges can become taxable if the seller cannot reasonably allocate the internet-access portion away from taxable cable, telecommunications, or other taxable services.

Rate and sourcing: Texas sellers collect the 6.25% state tax plus applicable local tax, capped at an additional 2%. Remote sellers collect use tax on taxable items delivered to Texas customers. Marketplace providers such as Amazon, eBay, Walmart Marketplace, StubHub, and Etsy collect and remit Texas tax on marketplace sales when they are engaged in business in Texas and have certified that responsibility to the seller.

Texas digital-tax rules last verified: 2026-06-07. Sources: Texas Comptroller — Taxable Services (streaming video, online games, data processing, internet access); Texas Comptroller — Online Orders: Texas Purchasers and Sellers; Texas Tax Code § 151.010 — Taxable item; 34 Tex. Admin. Code § 3.308 — Computers, computer programs, services, and sales. date_retrieved: 2026-06-07. State rules change — confirm category-by-category with the Texas state tax agency before invoicing.

Sales tax on digital products in Texas

“Digital products” covers eBooks, audiobooks, video downloads, online courses, streaming subscriptions, digital artwork, stock photos, music, and similar non-physical delivered goods. Whether Texas 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 Texas, the product is subject to 6.25% state rate plus any applicable local rate based on the buyer's address.

Which digital products does Texas 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 Texas taxes a subcategory, the charge is subject to the 6.25% 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 Texas’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 Texas 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 Texas

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.

Texas nexus note

Texas sales tax nexus and SaaS taxability: economic nexus applies to remote sellers with $500,000 or more in total Texas revenue during the preceding twelve calendar months. After crossing that safe harbor, Texas requires a permit and sales/use tax collection no later than the first day of the fourth month after the threshold-crossing month. Texas treats data processing as a taxable service and the Comptroller says data processing providers include software-as-a-service sellers and application service providers; 20% of a data-processing charge is exempt, so SaaS treated as data processing is generally taxed on 80% of the invoice amount. Marketplace-only sellers whose marketplace provider certifies Texas collection generally do not need a Texas tax permit, but sellers must keep marketplace-sales records for at least four years.

What to do next

Read the full Texas 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.

Frequently asked questions

Are digital products taxable in Texas in 2026?: Usually, but classify the product first. Texas taxes taxable items sold electronically the same way it taxes the item on physical media, and it taxes specific digital-service categories such as streaming video/video-on-demand, online games, software or computer-program licenses, and SaaS/data-processing services. Separately stated internet access is not taxable.
Does Texas charge sales tax on digital streaming services in 2026?: Yes for common video-streaming categories. The Texas Comptroller lists streaming video programming and video-on-demand services under taxable cable television services, and online games under taxable amusement services. Separately stated internet access is not taxable; bundled internet access plus taxable streaming or telecommunications needs a reasonable allocation to keep the internet-access portion exempt.
What Texas sales tax rate applies to digital products?: Texas's state sales and use tax rate is 6.25%, and local sales or use tax can add up to 2%, for a maximum combined rate of 8.25%. Remote sellers may collect use tax by destination rate or Texas's single local use tax rate when eligible; marketplace providers collect on certified marketplace sales.
Are software subscriptions and SaaS taxed as digital products in Texas?: They are usually taxed through Texas's software and data-processing rules, not a separate digital-products statute. The Comptroller says data-processing providers include SaaS sellers and application service providers, and 20% of a data-processing charge is exempt — so the taxable base is generally 80% when that classification applies.
Who collects Texas tax on digital products sold through Amazon, Etsy, or another marketplace?: A marketplace provider engaged in business in Texas must collect and remit Texas tax on marketplace-seller sales and certify that responsibility to the seller. If the marketplace has not certified collection, the seller should collect until it receives certification. Direct sales from your own site remain your responsibility once you have Texas nexus.

Sources

date_retrieved: 2026-05-25