TaxCloud
Contact Sales

Tennessee rules mobile health app subscriptions taxable

Tennessee’s Department of Revenue has ruled that mobile health tracking subscriptions — including bundled software and Bluetooth monitors — are taxable as software sales. This ruling clarifies how healthcare tech companies should handle tax on digital health products delivered via app.

Alex_Lamachenka_TaxCloud

Written by Alex Lamachenka

Head of DemandGen

Calendar icon

Published

TL;DR

  • Effective 24 October, 2025, mobile health subscriptions are taxable in Tennessee
  • Applies when software drives the service (not human-led health guidance)
  • Bundled items like Bluetooth devices and support are also taxable
  • No exemption for “data processing” if software simply tracks participant info

What’s changing

Effective date: October 24, 2025 (Revenue Ruling #25-08)

Trigger: Software that delivers the primary functionality (e.g. tracking vitals)

Scope: Applies to mobile health platforms that include:

  • Subscription-based apps
  • Connected hardware (e.g. blood pressure monitors)
  • Technical support

Key determination: These subscriptions are not exempt “information services” — because the software is tracking and guiding, not converting data for machine use.

Who this affects

  • Healthtech and wellness platforms selling app-based subscriptions in Tennessee
  • SaaS companies bundling physical devices with digital services
  • Finance teams determining taxability for hybrid products and app add-ons
  • Sellers who previously treated these services as exempt under data processing rules

Why this matters

This is a clear signal that Tennessee views digital health platforms as taxable software, not exempt services. If software drives the transaction, the whole subscription is taxable — even when bundled with physical products or support services.

Sellers can’t reduce their tax burden by unbundling or reclassifying service components unless the service is the transaction’s main purpose.

Next steps

  • Confirm whether you sell mobile health or wellness products to Tennessee customers
  • Review how your subscriptions are billed, especially if they include software and physical devices
  • Use automated tax software like TaxCloud to apply the correct rules and rates for software in Tennessee

Official Source:

Other US Sales Tax Updates

Chicago increases PPLTT rate to 15%, impacting SaaS and cloud providers

Chicago has approved a major increase to its Personal Property Lease Transaction Tax. Effective January 1, 2026, the PPLTT rate will increase from 11% to 15%. SaaS companies and other digital service providers must update their tax rates for Chicago customers to remain compliant.

Read more

Indiana rules generative AI tools like ChatGPT are sales-tax free

Indiana has ruled that generative AI tools — like ChatGPT, Jasper, and other text/image/code generators — are not subject to sales tax. But sellers offering AI features across multiple states should tread carefully.

Read more

Illinois remote retailer amnesty program set for 2026

Illinois offers a 2026 remote retailer amnesty program (Aug–Oct). Pay back taxes from 2021–2026 at simplified rates — penalties and interest waived.

Read more