Utah Enacts 2% Excise Tax on Certain Digital Content
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The taxation on digital businesses continues to evolve as states seek new ways to generate revenue from the rapidly growing digital economy. Traditionally, sales tax has been the primary tax imposed on digital products and services, but now Utah has introduced a new digital content excise tax that specifically targets certain digital businesses.
Utah Governor Spencer Cox signed legislation (SB 73) that, effective October 1, 2026, imposes an excise tax on gross receipts from selling, distributing, or offering subscriptions to digital content that is harmful to minors. Businesses subject to this tax are those that are required to implement age verification systems under UCA §78B-3-1002 and who are required to file a Utah Sales and Use Tax Return.
Who is Subject to Utah’s Digital Content Excise Tax?
The excise tax on digital content will be calculated at 2 percent of the sales price of “covered transactions” made by “covered entities.” A “covered entity” is defined as a commercial entity required to implement age verification systems because it publishes or distributes digital content deemed harmful to minors. A “covered transaction” includes amounts paid to or charged by a covered entity for access to digital images, digital audio-visual works, digital audio works, digital books, or gaming services, including streaming or subscription access, regardless of delivery method or access type.
Unlike a sales tax, where the seller generally collects the tax from their customer, this excise tax is imposed directly on the business providing the covered digital content. The tax is administered, collected, and enforced by the Utah State Tax Commission. The excise tax will be reported on form TC-62W, Miscellaneous Tax Return, and filed at the same time the Sales and Use Tax return is filed. Standard penalties and interest apply for late payment or failure to file.
What This Means for Businesses with Digital Products
It is recommended that digital businesses review their content offerings and assess whether Utah’s age verification requirements apply under UCA §78B-3-1002. Businesses considered to be a covered entity and derive revenue from covered transactions should assess the financial impact of the excise tax as well as review their accounting and tax compliance systems.
KBF Advisory, LLC constantly monitors changes in state tax laws, so our clients are never caught off guard. If your business sells or purchases digital products in Utah, our state and local tax team can help you understand how Utah’s new digital content excise tax affects your obligations. Please reach out to your KBF contact to discuss how SB 73 may impact your business and how to prepare before its effective date.