Software as a service (SaaS) is a model where software is hosted in one place but licensed by subscription for use by customers. Knowing that SaaS businesses have to protect their bottom line as well as reputation, the risk of being noncompliant is not an option. But just like many other “new” technologies, most states haven’t quite wrapped their hands around whether or not SaaS is taxable in their state. For example, some states consider SaaS a service. So, if services are generally taxable in the state – such as in Arizona – then SaaS is considered taxable. In most states, where services aren’t taxable, SaaS also isn’t taxable. Other states, like Washington, consider SaaS to be an example of tangible software and thus taxable. Just like with anything tax related, each state has made their own rules and laws.