Key takeaways
- California approved new digital tax legislation:
- SB 1327 introduces a 7.5% tax on gross receipts from data extraction for large online platforms.
- AB 886 requires major digital platforms to compensate journalism providers or enter arbitration over advertising-based payments.
- North Carolina removed its 200-transaction threshold — remote sellers and marketplace facilitators now only need to collect tax if sales exceed $100,000.
- Vermont will now tax Software-as-a-Service (SaaS) as tangible personal property starting July 1, 2024.
- These changes reflect growing U.S. efforts to modernize tax laws for the digital economy, ensuring compliance for large tech firms and remote sellers.
In short: In mid-2024, California, North Carolina, and Vermont moved on new tax rules for digital businesses and remote sellers. The California Senate approved SB 1327, a 7.5% tax on data extraction. North Carolina dropped its 200-transaction threshold for remote sellers. Vermont began taxing SaaS from July 1, 2024.
Update (October 2026): The North Carolina and Vermont changes are in force. North Carolina's Department of Revenue confirmed the repeal of the transaction threshold from July 1, 2024 in Sales and Use Tax Directive 24-1. Vermont taxes all prewritten software from July 1, 2024 under Act 183 (H.887), however it is delivered or accessed. The two California bills were still going through the legislature when this article was written. Check the California Legislative Information website for their final status.
California, North Carolina, and Vermont have passed several new tax laws. They bring big changes for digital businesses and remote sellers. These updates aim to keep pace with the digital economy and ensure proper tax compliance.
What digital tax bills did the California Senate approve?
On June 27, 2024, the California Senate approved SB 1327, which imposes a 7.5% tax on gross receipts from data extraction transactions. The tax applies to online platforms with annual gross receipts of $2.5 billion or more when they sell user information or advertising.
AB 886 was amended and passed by the Senate Judiciary Committee on June 26, 2024, then sent to the Appropriations Committee. The bill covers platforms with net annual sales or market capitalization over $550 billion, or more than one billion monthly active users.
These covered platforms must either pay digital journalism providers each year or take part in arbitration. The arbitration sets payments based on advertising revenue. The definition of "covered platform" now excludes companies that earn less than 50% of their annual revenue from online platforms, advertising, and search services.
How did North Carolina change its remote seller threshold?
North Carolina enacted Session Law 2024-28 on July 1, 2024, removing the 200-transaction threshold for remote sellers and marketplace facilitators.
Effective immediately, retailers must collect sales and use tax if gross sales from remote transactions sourced to North Carolina exceed $100,000 in the previous or current calendar year. This includes marketplace sales. Marketplace facilitators must also collect tax if gross sales from all their marketplace sellers' transactions sourced to the state exceed $100,000 in the previous or current calendar year.
Is SaaS now taxable in Vermont?
Yes. On June 17, 2024, Vermont enacted HB 887, which imposes sales and use tax on prewritten software accessed remotely, also known as software-as-a-service (SaaS).
From July 1, 2024, the definition of tangible personal property includes prewritten computer software, however it is paid for, delivered, or accessed. The new law repeals 2015 legislation that said charges for remote access to prewritten software were not charges for tangible personal property under 32 V.S.A. Section 9701(7).
What does this mean for remote sellers and SaaS businesses?
The North Carolina and Vermont changes affect many businesses that sell into those states. Here is what to check:
- North Carolina remote sellers: only the $100,000 sales test now counts. If you registered only because of the transaction count, you may cancel your registration. Your gross sales sourced to North Carolina must not have exceeded $100,000 in 2023, nor between January 1, 2024 and the cancellation date. You must also not be otherwise engaged in business in the state.
- How to cancel in North Carolina: file Form NC-BN with a closure date on or after the filing date. Keep collecting tax, filing returns and paying tax until the cancellation takes effect. See Directive 24-1 for the full conditions.
- SaaS sellers with Vermont customers: charge Vermont sales tax on prewritten software, including software accessed remotely, from July 1, 2024. Custom software written exclusively for the customer's business stays non-taxable, as the Vermont Department of Taxes explains.
- Large digital platforms in California: check the final status of SB 1327 and AB 886 before changing any processes.
How Taxually handles this
Taxually’s CrossTax handles VAT registration, VAT, OSS and IOSS returns and fiscal representation in the countries you sell into, and checks your sales data against 250+ validation rules before each filing. OneTax then pays every tax authority with one bulk payment in your chosen currency.
Related guides
Frequently asked questions
1. What is California’s SB 1327 about?
SB 1327 imposes a 7.5% tax on data extraction transactions for online platforms with over $2.5 billion in annual gross receipts that sell user data or advertising.
2. What does California’s AB 886 require?
AB 886 mandates that large digital platforms (with sales or market cap over $550 billion or 1 billion+ active users) must pay or negotiate compensation for digital journalism content monetized through advertising.
3. What changed in North Carolina’s remote seller rules?
North Carolina removed the 200-transaction threshold. Now, remote sellers and marketplace facilitators must collect sales and use tax if their gross sales exceed $100,000 annually in the state.
4. How does Vermont’s new law affect SaaS providers?
Vermont’s HB 887 makes remote access to prewritten software (SaaS) taxable as tangible personal property, effective July 1, 2024.
5. Who is impacted by these tax changes?
Large digital platforms, online marketplaces, and remote sellers operating across states like California, North Carolina, and Vermont will need to update their tax compliance systems accordingly.
6. Why are these laws being introduced now?
They aim to modernize tax codes for the digital economy, ensuring that large online platforms and digital service providers contribute fairly to state tax revenues.
