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.
Written by Ryan Pinkham
VP of GTM
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.
Healthcare tech sellers: Make sure your Tennessee tax handling reflects this ruling.
If you use TaxCloud
TaxCloud tracks software taxability by state — including bundled and hybrid product rules. If you’re selling app-based subscriptions in multiple states, we make sure every charge is mapped correctly.
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 sources:
- 1.
Disclaimer
TaxCloud provides sales tax compliance solutions. We do not provide legal or tax advice. For questions about your specific tax situation or filing requirements, we recommend consulting a qualified sales tax accountant.
Other US sales tax updates
Texas clarifies sales tax rounding rules for cash payers after penny production ends
Penny production in the U.S. has officially ended, which is expected to lead to penny shortages over time. Texas has clarified how rounding should be handled when pennies are not available, especially for cash payments and cash retail transactions.
Williamsburg County, SC sales tax rate will increase to 8% starting May 1, 2026
A new 1% Capital Projects Tax will take effect in Williamsburg County, increasing the total sales tax rate from 7% to 8%. Businesses should start applying the new rate on May 1.
Virginia considers expanding sales tax to digital products and services in 2027
Virginia is reviewing legislation that would expand sales tax to cover digital products and certain digital services beginning January 1, 2027. If enacted, SaaS, software, and digital service providers may need to reassess how they handle Virginia sales.