This month, we continue our blog series with a contrast of a couple of Northeast states – New York and New Jersey – specifically their treatment of technology items for sales tax purposes.

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Software as a Service (SaaS) in New York vs. SaaS in New Jersey

Software as a Service (SaaS) is subject to sales tax in several jurisdictions across the country. Approximately half of states do tax the SaaS revenue stream. As you’ll see below, both states differ regarding their treatment of sales tax.

Cloud Computing Services are subject to sales and use tax in New York and New York City.

The sale to a New York purchaser of a license to remotely access prewritten software is subject to tax and the sale is sourced to the jurisdiction in which the purchaser uses or directs the use of the software.

SaaS is exempt from sales and use tax in New Jersey unless it meets the definition of an information service. SaaS is not considered a transfer of tangible personal property and is not an enumerated taxable service.
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