HB 2585 Summary

• Creates a new "digital goods classification" subject to 5% transaction privilege tax on sales, leases, and licenses of prewritten computer software and specified digital goods (digital audiovisual works, digital audio works, digital books, and digital visual works).

• Excludes "digital services" (cloud-based software, data center services, and other electronically-provided services not specifically identified as taxable) from state and local transaction privilege and use taxes.

• Establishes a corresponding use tax on prewritten computer software and specified digital goods at the same rate as the transaction privilege tax, with an additional 0.6% increment through June 30, 2041.

• Provides exemptions from taxation for application services used by schools and universities for student assessment and curriculum design, and for over-the-top video/audio programming services comparable to broadcast television or radio.

• Allows municipalities to impose taxes on prewritten computer software and specified digital goods under the same terms as the state, while prohibiting local taxes on digital services and certain excluded digital goods.