Indiana: Sales Tax Handbook
Are Software and Digital Products subject to sales tax?
While Indiana'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 Indiana, 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 Indiana.
Canned Software - Delivered on Tangible Media
TAXABLE
Sales of canned software - delivered on tangible media are subject to sales tax in Indiana.
Canned Software - Downloaded
TAXABLE
Sales of canned software - downloaded are subject to sales tax in Indiana.
Custom Software - Delivered on Tangible Media
EXEMPT
Sales of custom software - delivered on tangible media are exempt from the sales tax in Indiana.
Custom Software - Downloaded
EXEMPT
Sales of custom software - downloaded are exempt from the sales tax in Indiana.
Customization of Canned Software
TAXABLE
In the state of Indiana, if the modification or enhancement is created specifically to the specifications of a certain buyer, software is considered to be prewritten computer software. In a case where there is a reasonable, separately stated charge for a modification of this type, more specifically a modification or an enhancement, the modification or enhancement is not considered to be prewritten computer software and thus is considered to be exempt.
Digital Products
TAXABLE
In the state of Indiana, digital products are considered to be taxable so long as the seller grants the end user a right of permanent use, one which is not require continual payment by the buyer.
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