Louisiana extends its sales tax to digital products from 1 January 2025

What changed in detail

Louisiana Act 10 (House Bill 8) of the 2024 Third Extraordinary Session was signed on 4 December 2024. It brings digital products into the state sales and use tax base for taxable periods beginning on or after 1 January 2025.

According to the Louisiana Department of Revenue’s legislative summary, digital products are products transferred electronically, and they include:

• digital audiovisual works and digital audio works;
• digital books;
• digital codes;
• digital applications and games, including add-ons;
• digital periodicals and discussion forums.

The definition leaves out several things: intangibles such as patents and copyrights; telecommunications and internet access; electronic copies of a professional service; and cable, satellite and video programming services. Products made available free of charge, and products that become a component of a new product for sale, are excluded.

Digital products are exempt if three conditions are all met: they are purchased exclusively for commercial purposes, they are used directly to produce goods or services for sale, and those goods or services are themselves subject to sales and use tax or insurance premium tax.

What it means

Act 10 is in force. It was passed in the same session as Act 11, so from 1 January 2025 digital products have been taxed at the new 5% state rate.

Act 11 also made prewritten computer software access services and information services taxable. A software or data seller therefore needs to check both Acts, not just the digital-products definition.

The business exemption is narrow because all three conditions must be met. A business buyer that only uses a digital product internally does not qualify.