Arizona: Sales Tax Handbook
Are Software and Digital Products subject to sales tax?
While Arizona'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 Arizona, 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 Arizona.
Canned Software - Delivered on Tangible Media
TAXABLE
Sales of canned software - delivered on tangible media are subject to sales tax in Arizona.
Canned Software - Downloaded
TAXABLE
Sales of canned software - downloaded are subject to sales tax in Arizona.
Custom Software - Delivered on Tangible Media
EXEMPT
Sales of custom software - delivered on tangible media are exempt from the sales tax in Arizona.
Custom Software - Downloaded
EXEMPT
Sales of custom software - downloaded are exempt from the sales tax in Arizona.
Customization of Canned Software
TAXABLE
In the state of Arizona, the charges for the modification of any sort of prewritten software intended for the use of an individual customer are considered to be exempt so long as the are separately stated on the sales invoice and records.
Digital Products
TAXABLE
Sales of digital products are subject to sales tax in Arizona.
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