Indiana DOR Clarifies Tax Implications for Generative AI Services

The Indiana Department of Revenue (DOR) issued a revenue ruling clarifying the tax implications for a company offering generative artificial intelligence (AI) services. The ruling states that the company, which provides a chatbot API services without delivering software directly, will not be subject to sales tax. The decision aligns with existing regulations that exempt Software as a Service (SaaS) from sales tax, emphasizing that charges for accessing prewritten software electronically, where no ownership is transferred, are not taxable. [In. Dep’t of Revenue, Revenue Ruling No. 2025-02-RST, 07/23/25]