Maine Extends Sales Tax on Digital and Streaming Services

Starting on January 1, 2026, Maine will be expanding its sales tax to include digital services such as streaming platforms like Netflix, Hulu, and Spotify. This means that a 5.5% state tax will now be applied to these services, which were previously untaxed. The goal behind this change is to bring these digital services in line with other taxable digital content like cable TV and downloadable media.

In addition to including streaming services, the new legislation, LD 210, has also abolished the Service Provider Tax (SPT) that had been in place since 2004. Under the SPT, a narrow range of services such as satellite TV and radio were taxed. Now, these services will fall under the broader sales tax umbrella at the 5.5% rate, which also results in a standardization of the tax treatment for both digital and traditional services. This change will also mean a lower effective tax rate for some services that were previously taxed at higher SPT rates.

Maine is not alone in updating its tax laws related to digital and streaming services. Maryland, for example, has instituted a reduced 3% tax on digital services starting July 1, 2025, with a standard rate of 6%. Similarly, Washington State and Washington DC have also recently imposed taxes on digital services, including streaming and SaaS.

This trend of updating sales tax regulations extends beyond just Maine and a few other states. Many states across the US have introduced new tax rates and thresholds for remote sellers and digital services. For example, Alabama has a 4.0% state sales tax rate and a $250,000 annual threshold for remote sellers since October 2018. On the other hand, Alaska has no state-wide sales tax. Arizona has a 5.6% sales tax rate and a $100,000 annual threshold since October 2019, with digital services being taxable. Arkansas, on the other hand, has a 6.5% sales tax rate and does tax digital services.

As states continue to adapt their tax laws to the digital age, it’s important for consumers and businesses to stay informed about these changes to ensure compliance and avoid any surprises come tax time. Make sure to keep an eye out for any updates in your state’s tax regulations to stay ahead of the game.