Sales Tax Agony Index

New laws across the world mean you owe sales tax on software and digital products wherever your customers are (learn more here). Here are the most painful tax jurisdictions for your team to prioritise (or you can hand it all off to Paddle).

Estimate your tax liability for 2022 - 2023

$100,000
$93,600 - $212,400 tax liability this year $15,300 estimated penalties

How is this calculated

Your exact tax liability will vary according to your customer and revenue distribution around the world. Different jurisdictions will have different tax levels from low tax regions like South Dakota (4.5%) to high-tax regions like the Netherlands (21%).

This low/high estimate is based on a 80:20 distribution of your revenue in a 4.5% and 21% tax rate, over 12 months.

Low estimate: MRR * 12 * ((0.045 * 0.8) + (0.21 * 0.2))

High estimate: MRR * 12 * ((0.045 * 0.2) + (0.21 * 0.8))

The penalties estimate tends to come to about 10% of the total. This is based on a midpoint:

Penalties estimate: MRR * 12 * 0.1 * ((0.045 * 0.5) + (0.21 * 0.5))

Agony Alphabetical Tax rate Lowest tax thresholds Hardest to register Has prison sentences
Tax jurisdiction
Sales tax rate
Taxable goods
Admin agony
Worst penalty
Total tax agony rating
🇮🇳 India
18%
Yes
😩😩
👮 Prison
🌶🌶🌶🌶🌶🌶🌶
🇺🇸 Texas

▲ High chance of owing tax

6.25%
Yes
😩😩
👮 Prison
🌶🌶🌶🌶🌶🌶
🇸🇦 Saudi Arabia
15%
Yes
😩😩
👮 Prison
🌶🌶🌶🌶🌶
🇺🇸 United States

▲ High chance of owing tax

2.9% - 7%
It depends
😩
👮 Prison
🌶🌶🌶🌶🌶
🇬🇧 United Kingdom

▲ High chance of owing tax

20%
Yes
😩
👮 Prison
🌶🌶🌶🌶
🇺🇸 Vermont

▲ High chance of owing tax

6%
Yes
😩
👮 Prison
🌶🌶🌶
🇺🇸 Rhode Island

▲ High chance of owing tax

7%
Yes
😩
💰 Fines
🌶🌶🌶
🇺🇸 Maine

▲ High chance of owing tax

5.5%
Yes
😩
👮 Prison
🌶🌶🌶
🇺🇸 Nebraska

▲ High chance of owing tax

5.5%
Yes
😩
👮 Prison
🌶🌶🌶
🇺🇸 Mississippi
7%
Yes
😩
👮 Prison
🌶🌶🌶
🇺🇸 New Mexico

▲ High chance of owing tax

5.125%
Yes
😩
👮 Prison
🌶🌶🌶
🇺🇸 Iowa

▲ High chance of owing tax

6%
Yes
😩
👮 Prison
🌶🌶🌶
🇺🇸 Kansas

▲ High chance of owing tax

6.5%
Yes
😩
👮 Prison
🌶🌶🌶
🇺🇸 District of Columbia

▲ High chance of owing tax

6%
Yes
😩
👮 Prison
🌶🌶🌶
🇺🇸 Kentucky

▲ High chance of owing tax

6%
Yes
😩
👮 Prison
🌶🌶🌶
🇺🇸 Indiana

▲ High chance of owing tax

7%
Yes
😩
👮 Prison
🌶🌶🌶
🇸🇪 Sweden

▲ High chance of owing tax

25%
Yes
😩
💰 Fines
🌶🌶🌶
🇪🇸 Spain

▲ High chance of owing tax

21%
Yes
😩
💰 Fines
🌶🌶🌶
🇸🇮 Slovenia

▲ High chance of owing tax

22%
Yes
😩
💰 Fines
🌶🌶🌶
🇸🇰 Slovak Republic

▲ High chance of owing tax

20%
Yes
😩
💰 Fines
🌶🌶🌶
🇵🇹 Portugal

▲ High chance of owing tax

23%
Yes
😩
💰 Fines
🌶🌶🌶
🇵🇱 Poland

▲ High chance of owing tax

23%
Yes
😩
💰 Fines
🌶🌶🌶
🇱🇹 Lithuania

▲ High chance of owing tax

21%
Yes
😩
💰 Fines
🌶🌶🌶
🇱🇻 Latvia

▲ High chance of owing tax

21%
Yes
😩
💰 Fines
🌶🌶🌶
🇮🇹 Italy

▲ High chance of owing tax

22%
Yes
😩
💰 Fines
🌶🌶🌶
🇮🇪 Ireland

▲ High chance of owing tax

23%
Yes
😩
💰 Fines
🌶🌶🌶
🇬🇷 Greece

▲ High chance of owing tax

24%
Yes
😩
💰 Fines
🌶🌶🌶
🇫🇮 Finland

▲ High chance of owing tax

24%
Yes
😩
💰 Fines
🌶🌶🌶
🇪🇪 Estonia

▲ High chance of owing tax

20%
Yes
😩
💰 Fines
🌶🌶🌶
🇩🇰 Denmark

▲ High chance of owing tax

25%
Yes
😩
💰 Fines
🌶🌶🌶
🇨🇿 Czech Republic

▲ High chance of owing tax

21%
Yes
😩
💰 Fines
🌶🌶🌶
🇭🇷 Croatia

▲ High chance of owing tax

25%
Yes
😩
💰 Fines
🌶🌶🌶
🇧🇬 Bulgaria

▲ High chance of owing tax

20%
Yes
😩
💰 Fines
🌶🌶🌶
🇧🇪 Belgium

▲ High chance of owing tax

21%
Yes
😩
💰 Fines
🌶🌶🌶
🇦🇹 Austria

▲ High chance of owing tax

20%
Yes
😩
💰 Fines
🌶🌶🌶
🇺🇸 Colorado
2.9%
Yes
😩😩
👮 Prison
🌶🌶🌶
🇺🇸 Arizona
5.6%
Yes
😩😩
👮 Prison
🌶🌶🌶
🇦🇪 United Arab Emirates
5%
Yes
😩😩
👮 Prison
🌶🌶🌶
🇳🇱 Netherlands

▲ High chance of owing tax

21%
Yes
😩
💰 Fines
🌶🌶🌶
🇭🇺 Hungary

▲ High chance of owing tax

27%
Yes
😩
💰 Fines
🌶🌶🌶
🇯🇵 Japan
10%
Yes
😩😩
💰 Fines
🌶🌶🌶
🇺🇸 New York

▲ High chance of owing tax

4.7546%
Yes
😩😩
💰 Fines
🌶🌶🌶
🇪🇺 European Union

▲ High chance of owing tax

17% - 27%
Yes
😩
💰 Fines
🌶🌶🌶
🇩🇪 Germany

▲ High chance of owing tax

19%
Yes
😩
💰 Fines
🌶🌶🌶
🇫🇷 France

▲ High chance of owing tax

20%
Yes
😩
💰 Fines
🌶🌶🌶
🇦🇺 Australia
10%
Yes
😩
👮 Prison
🌶🌶🌶
🇺🇸 Wyoming

▲ High chance of owing tax

4%
Yes
😩
👮 Prison
🌶🌶
🇺🇸 North Dakota
5%
Yes
😩
👮 Prison
🌶🌶
🇺🇸 South Dakota

▲ High chance of owing tax

4.5%
Yes
😩
💰 Fines
🌶🌶
🇺🇸 West Virginia
6%
Yes
😩
👮 Prison
🌶🌶
🇺🇸 Idaho
6%
Yes
😩
👮 Prison
🌶🌶
🇺🇸 Hawaii

▲ High chance of owing tax

4%
Yes
😩
👮 Prison
🌶🌶
🇺🇸 Arkansas
6.5%
Yes
😩
👮 Prison
🌶🌶
🇺🇸 Alabama
4%
Yes
😩
👮 Prison
🌶🌶
🇺🇸 Louisiana

▲ High chance of owing tax

4.45%
Yes
😩
💰 Fines
🌶🌶
🇺🇸 Connecticut
6.35%
Yes
😩
💰 Fines
🌶🌶
🇺🇸 South Carolina
6%
Yes
😩
💰 Fines
🌶🌶
🇺🇸 Utah

▲ High chance of owing tax

4.85%
Yes
😩
💰 Fines
🌶🌶
🇺🇸 Wisconsin

▲ High chance of owing tax

5%
Yes
😩
💰 Fines
🌶🌶
🇺🇸 Minnesota

▲ High chance of owing tax

6.88%
Yes
😩
💰 Fines
🌶🌶
🇺🇸 Tennessee

▲ High chance of owing tax

7%
Yes
😩
💰 Fines
🌶🌶
🇺🇸 Maryland

▲ High chance of owing tax

6%
Yes
😩
💰 Fines
🌶🌶
🇺🇸 Michigan
6%
Yes
😩
💰 Fines
🌶🌶
🇷🇴 Romania

▲ High chance of owing tax

19%
Yes
😩
💰 Fines
🌶🌶
🇲🇹 Malta

▲ High chance of owing tax

18%
Yes
😩
💰 Fines
🌶🌶
🇱🇺 Luxembourg

▲ High chance of owing tax

17%
Yes
😩
💰 Fines
🌶🌶
🇸🇬 Singapore
8%
Yes
😩
👮 Prison
🌶🌶
🇨🇾 Cyprus

▲ High chance of owing tax

19%
Yes
😩
💰 Fines
🌶🌶
🇺🇸 Ohio
5.75%
Yes
😩
👮 Prison
🌶🌶
🇺🇸 Massachusetts
6.25%
Yes
😩😩
💰 Fines
🌶🌶
🇺🇸 North Carolina
4.75%
Yes
😩😩
💰 Fines
🌶🌶
🇺🇸 Washington
6.5%
Yes
😩😩
💰 Fines
🌶🌶
🇺🇸 Pennsylvania
6%
Yes
😩
💰 Fines
🌶🌶
🇺🇸 New Jersey
6.63%
Yes
😩
👮 Prison
🌶🌶
🇺🇸 Virginia
5.3%
Not yet
😩
💰 Fines
🌶🌶
🇺🇸 Georgia
4%
Not yet
😩
💰 Fines
🌶🌶
🇨🇦 Saskatchewan

▲ High chance of owing tax

6%
Yes
😩
💰 Fines
🌶🌶
🇺🇸 Illinois
6.25%
Yes
😩
💰 Fines
🌶🌶
🇨🇦 Canada

▲ High chance of owing tax

6% - 9.975%
Yes
😩
💰 Fines
🌶🌶
🇨🇦 Quebec

▲ High chance of owing tax

9.975%
Yes
😩
💰 Fines
🌶🌶
🇺🇸 Alaska
Yes
😩
💰 Fines
🌶
🇺🇸 Delaware
Not yet
😩
💰 Fines
🌶
🇺🇸 Montana
Not yet
😩
💰 Fines
🌶
🇺🇸 Missouri
Not yet
😩
💰 Fines
🌶
🇺🇸 New Hampshire
Not yet
😩
💰 Fines
🌶
🇺🇸 Oklahoma
Not yet
😩
💰 Fines
🌶
🇺🇸 Nevada
Not yet
😩
💰 Fines
🌶
🇺🇸 Oregon
Not yet
😩
💰 Fines
🌶
🇺🇸 California
Not yet
😩
💰 Fines
🌶
🇺🇸 Florida
Not yet
😩
💰 Fines
🌶
How do I solve my tax liability?