Tax on Streaming Services Starts on January 1

Beginning January 1, 2026, Maine residents will be subject to a new digital streaming tax. This new regulation stipulates that a 5.5% sales tax will be imposed on the monthly fees for services that include Netflix, Spotify, Hulu, Disney+, and other subscription platforms.

Maine's tax code has been modified such that streaming subscriptions, that were previously exempt, are now treated like any other consumer services that are subject to taxation. While cable and satellite television had already been subject to sales tax, streaming services remained exempt until now. The tax will either be shown on the bills as a separate item or included in the total price.

Who Pays the Tax and How It Works

The tax at a rate of 5.5% is levied on the majority of subscriptions for digital video and audio streaming. Among the video services covered are Netflix, Hulu, and Disney Plus, and among the music and audio platforms is Spotify. Also included are smaller streaming apps that provide digital content over the internet.

The providers have until the year 2026 to make the necessary changes to their billing systems that will allow them to collect and report this tax. For the consumers, this tax results in a not-so-significant increase in their monthly bill. To illustrate, a subscription priced at $20 per month will now be subject to an extra $1.10 state sales tax under the new law.

Reason for the New Tax

According to State officials, the new taxation is to modernize the tax system of Maine. Shifting from the traditional cable to the streaming service is a trend which is being followed by more and more people, and lawmakers intend that the tax code should at least be on the same level as the present-day consumers in this case. Besides, the tax is meant to be a source of income for the state which is to be used for the provision of state services.

Revenue and Budget Context

The streaming tax is one of the various tax alterations that comprise Maine's state budget. The new tax on streaming services, in addition to the other mentioned products, is expected to bring in large amounts of money for the state starting in 2026.

The government anticipates that the amount collected through the streaming tax will be in millions of dollars per year as the number of digital service subscribers in Maine continues to grow. States are increasingly considering the digital economy's impact on sales tax laws and are thus making changes similar to that of Maine.