TITLE: Louisiana Clarifies Sales Tax Exemption Rules for Digital Tools and SaaS
Louisiana has clarified when businesses can claim a sales tax exemption for digital tools. For UK and EU SaaS, app, digital product and ecommerce sellers serving customers in Louisiana, the message is practical: commercial use alone does not make software exempt.
The final rule, LAC 61:I.4405, was adopted on 20 October 2026 and published in the October Louisiana Register at LR 52:1837. It explains exemptions under La. R.S. 47:305.12. That guidance matters if you license software or sell digital products to customers in New Orleans, Baton Rouge, Shreveport, Lafayette or elsewhere in Louisiana.
Know what Louisiana taxes before you review exemptions
Since 1 January 2025, Louisiana sales and use tax has applied to digital products, prewritten computer software access services, including SaaS, and information services under Act 10 of the 2024 Third Extraordinary Session.
The state sales tax rate is 5%. Applicable parish and local taxes may increase the total rate, so your systems need to use the customer’s correct Louisiana location rather than applying one statewide total. Check the Louisiana Department of Revenue’s rate information and its digital products guidance when reviewing your product catalogue.
The rule calls digital products, computer software, SaaS access services and information services “digital tools.” It does not create a general exemption for business software. Instead, it clarifies specific exemption routes and what their conditions mean.
Don’t treat back-office software as production software
The commercial production exemption applies only when a digital tool is:
- Purchased exclusively for commercial purposes;
- Used directly in producing goods or services for sale; and
- Used to produce goods or services that are themselves subject to sales and use tax or insurance premium tax.
The final rule draws a sharp distinction between tools that directly contribute to making a taxable product or service and tools that simply help run the business.
Accounting, inventory management, project management, scheduling, communication, performance tracking and analytical software are specifically identified as not used directly in production. A subscription does not become exempt merely because your business uses it to support sales or improve productivity.
For example, a SaaS platform that manages your team, records orders or monitors performance is generally not exempt under the commercial production rule. A tool directly integrated into manufacturing a taxable product may qualify, but the production and taxability tests still need to be met.
This distinction is important for digital businesses. Don’t assume a platform is exempt because it helps deliver your service. Review what the software actually does, what you sell, and whether the output is taxable under Louisiana law.
Separate a self-created product from the tools used to make it
The rule also clarifies the exemption for certain digital products created solely for your own business needs and not offered for sale. Examples include an in-house workflow automation tool, a proprietary content management system, an internal brand style guide or employee training videos.
However, the exemption for the product you create does not automatically cover the software used to create it. If you buy SaaS access to develop an internal training video, for example, the video may qualify for the self-created product exemption while the SaaS subscription remains taxable.
Keep records that distinguish the internally created item from the purchased tools, subscriptions and services used to produce it. This will help you support the treatment applied to each charge.
Check whether a specific industry exemption applies
The rule also addresses exemptions for qualifying licensed healthcare facilities and providers, and for FDIC-insured financial institutions and their affiliates.
Healthcare-related digital tools may qualify when used for storing or transmitting healthcare information, or diagnosing or treating a medical condition. The rule includes tools that monitor and protect the transmission and storage of patient information.
The financial institution exemption applies to qualifying tools used for specified functions, including storing, transmitting, processing or analysing customer and account information, and supporting transactions, lending, investment, security or compliance processes.
These exemptions depend on both the buyer’s status and the tool’s qualifying use. If you sell to a buyer claiming an exemption, request a properly completed Louisiana Department of Revenue exemption certificate. Louisiana’s guidance states that a dealer who does not obtain a properly executed certificate may be liable for the tax.
Check your Louisiana sales threshold and registration
An out-of-state or remote seller must assess its Louisiana sales when it sells taxable digital products, tangible personal property or taxable services for delivery into the state. Under La. R.S. 47:301(4)(k)(i), the relevant gross revenue includes those categories delivered into Louisiana. The collection obligation applies when that revenue exceeds $100,000 during the previous or current calendar year.
If your business meets the threshold, review registration with the Louisiana Sales and Use Tax Commission for Remote Sellers. The Commission is Louisiana’s central body for collecting and remitting sales and use tax from remote sellers. You can also check the Louisiana Department of Revenue for official tax guidance and filing information.
Do not wait until year-end to review the threshold. Reconcile Louisiana sales regularly, including digital subscriptions, apps, online products, taxable services and tangible goods. This makes it easier to identify when registration and collection are required.
Review exclusions, invoices and customer location
Not every technology-related charge is a taxable digital product or information service. Louisiana guidance excludes web hosting, cloud storage, data transfer fees, data processing, including payment processing, and internet access. Proprietary information gathered or compiled for a specific client’s exclusive use is also excluded from the definition of information services.
Review your product descriptions and billing structure carefully. If a transaction combines a taxable digital product with other items for one lump-sum price, the entire charge may be taxable under the bundled transaction rules. Separately state genuinely non-taxable support or consulting charges where appropriate. Clear invoices make it easier to apply the correct treatment and keep supporting records.
For digital sales, use the purchaser’s receipt location to source the transaction. If that location is unknown, Louisiana’s guidance points to the purchaser’s address in your business records, then the address associated with the payment instrument, and finally the address from which the digital product was first available for transmission. Capture and retain reliable location data at checkout to support the rate applied.
Put the rule into your compliance workflow
Use this checklist when reviewing digital product and SaaS sales into Louisiana:
- Confirm whether each product or service falls within Louisiana’s taxable digital products, software access services or information services definitions.
- Assess any exemption claim against the specific conditions in LAC 61:I.4405, including the production, self-created product and industry rules.
- Obtain and retain properly executed exemption certificates where a buyer claims an exemption.
- Monitor Louisiana gross revenue against the $100,000 threshold throughout the year.
- Register with the Louisiana Sales and Use Tax Commission for Remote Sellers if the threshold is met.
- Apply the correct state and local rate using the purchaser’s receipt location and reliable address data.
- Keep clear invoices that separately state taxable and non-taxable charges, and retain records supporting each treatment.