Are Software and Digital Products subject to sales tax?
While Wisconsin's sales tax generally applies to most transactions, certain items have special treatment in many states when it comes to sales taxes. This page describes the taxability of software and digital products in Wisconsin, including canned software - delivered on tangible media, canned software - downloaded, custom software - delivered on tangible media, custom software - downloaded, customization of canned software and digital products. To learn more, see a full list of taxable and tax-exempt items in Wisconsin.
Canned Software - Delivered on Tangible Media
Sales of canned software - delivered on tangible media are subject to sales tax in Wisconsin.
Canned Software - Downloaded
Sales of canned software - downloaded are subject to sales tax in Wisconsin.
Custom Software - Delivered on Tangible Media
In the state of Wisconsin, it is seen as being taxable so long as the true objective of the sale is to provide tangible personal property to customers. It is considered to be exempt if the true object of the sale is to provide exempt custom programming service, although having tangible personal property transferred is not essential to the transaction.
Custom Software - Downloaded
In the state of Wisconsin, there is a rebuttable presumption that assumes that any program which involves a cost of a maximum of 10,000 dollars is not considered to be custom software, and is thus exempt. It should be noted that the definition of custom software does not extend to include any basic operational programs.
Customization of Canned Software
Sales of customization of canned software are subject to sales tax in Wisconsin.
In the state of Wisconsin, the tax applies to only to digital goods characterized as """"specified digital goods"""" and """"additional digital goods."""" The digital goods may be exempt so long as they are sold in a tangible physical form are considered to be exempt.
Back to Wisconsin Sales Tax Handbook