Utah, Vermont, other States Offering Tax Breaks to Encourage Cloud Use

May 1, 2013

Cloud computing is making our lives more efficient every day, both at home and at work, and several U.S. states are looking to encourage more cloud use from their citizens and businesses. By offering tax breaks to companies who spend money on cloud technology, state governments can do their part to encourage technological advancement.

Idaho is one recent example, according to the Wall Street Journal. Several companies in that state became the subject of audits because of a Idaho State Tax Commission decision subjecting subscription software delivered online to state sales tax. But now, the state is eager to change the tax status quo – House Bill 243 would define cloud software as a service, not a tangible product that's subject to sales tax, according to Boise Weekly.

"This is one of those moments where Idaho can send a positive message to its existing software companies," said Jeff Sayer, director of the Idaho Department of Commerce. "And we can send a message to the rest of the world that Idaho is friendly to new software employers."

Vermont is pursuing similar measures under governor Peter Shumlin. Last year, according to VT Digger, the Shumlin administration backed a retroactive moratorium on taxing cloud computing, reimbursing businesses for about $2 million in taxes that they'd already paid. Now, Shumlin wants to make that tax exemption permanent.

There are plenty more states like Utah and Vermont, the Wall Street Journal revealed. In Kansas, Nebraska, Rhode Island, Tennessee, Virginia and Wisconsin, tax officials have decided that cloud services should be exempt from taxation.

Nearly every business is considering cloud computing on its own merit. But a little financial incentive couldn't hurt, so several U.S. states are doing what they can to encourage technological innovation.