Final day ‘Christmas tree’ brings sales tax on digital book, music downloads

Credit: Natrice Miller /

Credit: Natrice Miller /

There’s always at least one of them on the final day of the General Assembly session: a “Christmas tree” bill with lots of other measures attached to it.

There were a few in the 2023 session, including legislation that started as a bill to offer a state 401(k) retirement plan to about 30 rural county tax commissioners and, by Day 40, included several tax provisions, including one that could mean Georgians will soon pay sales taxes when they download books, video games and music.

According to state estimates, the digital download tax provision is expected to bring in $80 million in state and local sales taxes in the upcoming fiscal year, $172 million the following year and more than $200 million a year by fiscal 2028. However, other provisions in the “Christmas tree” dealing with income taxes would save many filers money, lawmakers said.

The passage of Senate Bill 56 on the 40th and final day of the legislative session sent it to Gov. Brian Kemp for his consideration. If signed into law, the digital download portion of the bill will take effect Jan. 1.

The digital download measure took a long and winding road through the General Assembly. For years, House members have proposed taxes on digital products, such as Netflix subscriptions and downloads of songs. The bills have usually stalled well before the finish line.

Legislative leaders learned the fiscal power of expanding the sales tax base in 2020.

That year, a few months before the COVID-19 pandemic shut down the economy, the House and Senate passed legislation to collect more sales taxes on products bought through internet sites.

The new tax proved a major boon to the state as Georgians began buying more and more products online. The state has run massive revenue surpluses the past two fiscal years, and the internet sales tax was credited with being one of several factors in that.

This year, House Bill 170 by Rep. Kasey Carpenter, R-Dalton, was the latest bid to bring digital sales in line with taxes paid when Georgians buy similar products from local stores.

Carpenter’s bill included downloads of things such as books, video games and music that a buyer retains possession of. It wouldn’t tax streaming services — such as Netflix — or subscription-based products, he said.

Rep. David Knight, R-Griffin, a longtime member of the House Ways and Means Committee, said the panel has been looking in recent years at the issue of parity for local stores that charge the state’s 4% sales tax and local sales taxes when Georgians buy products from them.

Carpenter’s bill easily passed the House, but Senate tax writers tacked on a measure to make it easier for Georgians to get beer, wine and liquor delivered to their home. The politically powerful beer, wine and liquor distributors’ lobby didn’t like that and stalled the measure.

So the House on Monday tacked Carpenter’s measure onto SB 56 , which just happened to be sponsored by Sen. Chuck Hufstetler, a Republican from Rome and chairman of the Senate Finance Committee, which had passed it earlier with the amendment the liquor lobby didn’t like. That amendment was not included in SB 56.

“I know when the House sends something over with this many measures it’s hard to keep up with them,” Hufstetler told colleagues on the 40th day. “It’s fair to say whichever way you sell something, it should be taxed equally.”

The bill won final passage on a 49-5 vote.

Digital download sales tax

The General Assembly gave final approval on the last day of the legislative session for a state sales tax on digital downloads. The tax would apply to purchases of books, video games and music that a buyer retains possession of. Streaming services — such as Netflix — and subscription-based products would not be taxed.

State estimates show revenue from the new tax would be:

  • $80 million in the upcoming fiscal year.
  • $172 million the year after that.
  • $200 million-plus by fiscal 2028.

If Gov. Brian Kemp signs the tax into law, it will take effect Jan. 1.