Alert
Proposed Digital Advertising Taxes Could Impact Some Taxpayers
Several states proposed new digital advertising taxes which could, if enacted, impact taxpayers who provide advertising services in the states.
While not yet enacted, they could create new reporting and payment requirements in the states mentioned below, in the future.
Tennessee
Tennessee’s data transaction privilege tax, Senate Bill (SB) 270, would be imposed on a taxpayer’s annual gross revenues derived from digital advertising services apportioned to Tennessee.
The tax would be at a rate of 9.5% and would apply to those with an assessable base of $50 million or more.
The taxable base would be upon gross revenues derived from digital advertising services including banner advertising, search engine advertising, interstitial advertising, and other comparable advertising services that use personal information about the people to whom the advertisements are being served, that are attributed to Tennessee.
Rhode Island
Rhode Island’s digital advertising gross revenue tax, House Bill (HB) 5076, would begin on January 1, 2026, and would be imposed at the rate of 10% of the assessable base of a taxpayer with annual gross revenues exceeding $1 billion or more.
The assessable base would be annual gross revenues in Rhode Island from advertising services in the form of banner advertising, search engine advertising, interstitial advertising, and other comparable advertising services.
New York
New York’s digital advertising tax, SB 173, would be imposed on the apportioned annual gross revenues of any person who derives revenue from digital advertising services in the state at the rate of 2.5% to 10% depending on the annual gross revenue from all sources in New York.
Montana
Montana’s digital advertising tax, SB 192, would be imposed on persons with worldwide annual gross revenue from digital advertising services of $25 million or more and with gross revenue from digital advertising services in the state.
The rate of the tax would be 10% of the apportioned assessable base. The assessable base would mean gross revenue from digital advertising services, including revenue from banner advertising, search engine advertising, interstitial advertising, and other comparable advertising services.
Hawaii
Hawaii’s proposed HB 1458 directs the Department of Taxation to apply the state’s corporate income tax to advertising revenue earned by major social media platforms, defined as online platforms that have over one million active users in the United States that:
- Earn revenue primarily from advertising
- Collect data to otherwise interact with users located in Hawaii
We’re Here to Help
To learn more about the proposed tax and potential payment or reporting requirements for each of these states, contact your Moss Adams professional.