7727.09 / Are non-fungible tokens subject to taxation at the state level?
The tax treatment of NFTs at the state level can vary dramatically from state to state. Most state and local governments have yet to weigh in on whether NFTs will be subject to state and local sales tax.
However, Washington state1 has recently released guidance stating that NFTs are subject to state-level sales taxes when sold within the state. Pennsylvania has also added NFTs to its list of taxable digital products for sales tax purposes.2
Taxpayers who buy and sell NFTs should be aware that it remains possible that the state will impose sales tax on the purchase of NFTs even if the product is not specifically referenced by statute. About 30 other states tax digital products in situations where the purchaser obtains full ownership rights over the product. It is therefore likely that these states will include NFTs in their list of digital products for sales tax purposes.
1. See “Interim Statement Regarding the Taxability of Non-Fungible Tokens (NFTs),” available at https://dor.wa.gov/interim-statement-regarding-taxability-non-fungible-tokens-nfts.