Which Midwestern states apply a sales tax to streaming audio and video services?

At least 20 states, including five in the Midwest (see map), have enacted taxes on the “streaming” of media, such as music, movies or TV shows.

Known colloquially as a “Netflix tax,” the taxes allow states to adapt to new, Internet-based trends in entertainment consumption.

The Recording Industry Association of America, for example, reported that revenue from streaming music services surpassed $1 billion for the first time in 2015. And a 2016 survey of U.S. consumers by PricewaterhouseCoopers found that 78 percent of respondents subscribe to at least one streaming video service. 
One interesting case is Iowa, which specifically exempts digitally delivered products from state taxes. In 2016, however, the state’s Department of Revenue ruled that services offered through Amazon Prime and Prime Video fall under the category of “bundled services” and “pay television,” both of which are subject to the state’s 6 percent sales and use tax. 
Nebraska and South Dakota have had laws on the books since 2008 that allow them to collect sales taxes on streaming media services. That year, both states adopted language that mirrored a set of uniform tax guidelines called the Streamlined Sales and Use Tax Agreement. Under the SSUTA language, streaming audio and video services are known as “specified digital products.” The SSUTA requires member states to specify, in statute, whether the tax applies to sales of digital products on a temporary or permanent basis, or when dependent on continued payments. 
Other Midwestern states that have enacted sales taxes on streaming audio and video using SSUTA language are Wisconsin (in 2009), Minnesota (in 2013) and Ohio (in 2014). 
Currently, lawmakers in Illinois are considering a sales tax expansion on many services, including video and audio streaming, as part of a solution to the state’s budget woes. (Illinois has not enacted a complete budget since 2014 and owes over $12 billion in unpaid bills.)
Under legislation introduced in March (SB 9), streaming services would be taxed at 6.25 percent, and the revenue would be deposited in a new fund dedicated to stabilizing the budget.  
In 2016, as part of a similar sales tax expansion, Pennsylvania imposed a 6 percent tax on products delivered by digital streaming and download services. A fiscal note attached to the legislation (HB 1198) estimated the tax would generate $46.9 million in general fund revenue in fiscal year 2016-17. 
Arkansas recently enacted a tax on streaming audio and video that will allow the state to provide a tax exemption on military benefits.
Other states that are mulling a “streaming” tax include West Virginia, Alabama and Maine. Conversely, California legislators earlier this year introduced the Streaming Tax Relief of Entertainment and Movies Act of 2017, which would put a moratorium on streaming taxes in the state until 2023.
Stateline Midwest: April 20173.08 MB