Understanding California & Colorado’s 2027 SaaS Tax Changes 

California and Colorado are changing how they tax software. Starting January 1, 2027, SaaS, cloud-based apps, downloaded software and remotely accessed software can be taxable, no matter how they’re delivered. That’s a big change for companies that have long assumed SaaS isn’t taxable.

The change affects more than software vendors. Any business that sells into California or Colorado, and any business that buys SaaS, may face new tax, billing or compliance requirements. There is no grace period, and time to prepare is short.