Utah Governor Spencer Cox recently signed various legislation that imposes a new tax on targeted advertising in the state (SB 287), clarifies certain sales and use tax provisions applicable to online transactions (SB 162) and imposes an excise tax on certain entities that provide content harmful to minors (SB 73).

Targeted advertising tax

Beginning January 1, 2027, SB 287 (enacted March 25, 2026) imposes an annual tax on entities that derive at least 50% of their gross receipts in a year from targeted advertising and:

• Earn $1 million or more in gross receipts from targeted advertising to an audience or individual in Utah, and
• Earn $100 million or more in gross receipts derived from all targeted advertising, regardless of location.

SB 287 defines targeted advertising as a transaction in which a business entity delivers, by any means, an advertisement to an audience or individual on behalf of an advertiser in exchange for consideration, and employs the following practices to facilitate this transaction:

• It sells advertising space to the advertiser through a bidding process.
• It obtains or develops individual data profiles to deliver the advertisement.
• The advertisement allows the individual to interface with it to access information or make a purchase, including via a link or QR code.

The law also describes how to calculate the tax and how to determine an applicable entity's gross receipts for the tax year derived from targeted advertising in the state.

Sales and use tax clarifications

SB 162 (enacted March 23, 2026) clarifies certain sales and use tax provisions. The law clarifies that sales and use tax is imposed on amounts paid or charged for:

• Access to digital audio-visual works, digital audio works, digital books or gaming services (collectively, digital works), including subscription-based streaming services, regardless of the delivery method or whether the amount paid or charged to access the digital works is for a single-use or a subscription
• The storage, use or other consumption of prewritten computer software delivered electronically or by load and leave, or seller-hosted prewritten computer software

The law adds a definition of "seller-hosted prewritten computer software" to mean "prewritten computer software that is accessed through the internet or a seller-hosted server, regardless of whether: (a) the access is permanent; or (b) any downloading occurs."

The law also clarifies that the exemption from sales and use tax applies to amounts paid or charged for a transaction subject to the multi-channel video or audio service tax.

SB 162 takes effect on July 1, 2026.

Excise tax on harmful content

Effective October 1, 2026, SB 73 (enacted March 19, 2026) imposes a new excise tax on commercial entities required to implement age verification systems (i.e., a "covered entity") in an amount equal to 2% of the sales price of the covered transaction. A "covered transaction" is defined as "amounts paid to or charged by a covered entity for access to digital images, digital audio-visual works, digital audio works, digital books, or gaming services, including the streaming of or subscription for access to [such items]" regardless of the delivery method or type of access (e.g., single use or subscription). The new tax will be administered, collected and enforced by the Utah State Tax Commission. A covered entity required to file a sales and use tax return will remit this tax on the same schedule as its sales and use tax filing. Penalties and interest will be imposed for failure to timely pay the tax or failure to file a return or statement.

Implications

Taxpayers should review the above changes and consider whether the clarifications to the sales and use tax around digital works and the new tax on targeted advertising will apply to their business.

Utah joins other jurisdictions including Maryland, Washington and the City of Chicago in enacting taxes aimed at social media companies. Maryland's digital advertising tax is imposed on the annual gross revenue derived from digital advertising in the state, Washington taxes sales of digital and nondigital advertising services, and Chicago's new tax is only imposed on social media companies that meet a user threshold. Jurisdictions that recently or are currently considering legislation that would tax social media companies or digital advertising services include, but are not limited to: California (social media), Hawaii (social media), Massachusetts (digital advertising), Michigan (digital advertising), Minnesota (both), Mississippi (social media), Nebraska (social media), New Jersey (social media/data collection), New York (digital advertising), Pennsylvania (digital advertising), Rhode Island (digital advertising) and Tennessee (digital advertising).