Alabama generally does not require a sales tax on software as a service. There is no specific wording about it in the law, but state law defines computer software as a sequence of instructions for automated data processing equipment. Read also: B2B SaaS marketing.
SaaS is not listed in the code as a type of service subject to sales tax. Unofficial guidance previously provided by the Department of Revenue said that it is generally not taxable like most other services, as long as the buyer does not download or own the software in any way, and only accesses it through a third party or the seller’s servers. If you sell the software as a service in Alabama, you may need to consult the IRS to see if your product is taxable.
