Steam tax depends entirely on your billing address. The platform collects whatever sales tax, VAT, or GST your local, state, or national government requires on digital purchases, and rates run from 0% in a handful of U.S. states to 27% in Hungary. There is no single Steam tax rate; your checkout total reflects the law where you live.
How Steam Decides Your Rate
Steam applies tax based on the billing address tied to your payment method. When you add a credit card, PayPal account, or other option, that address tells Steam which jurisdiction you fall under, and the platform then charges the exact rate that jurisdiction requires.
You cannot change the rate by editing your profile. If you move, Steam requires a purchase using a payment method from the new country or region before it will update your store setting. The Steam Subscriber Agreement also prohibits using VPNs or similar tools to disguise your location, whether for different pricing or to avoid tax. Violations can result in permanent account termination with no refund of your wallet balance or games.1Valve Corporation. Steam Subscriber Agreement
Sales Tax on Steam in the United States
There is no federal sales tax in the U.S., so each state sets its own rules and Steam collects accordingly. Combined state and local rates range from 0% to over 10%.
Five states impose no statewide sales tax at all: Alaska, Delaware, Montana, New Hampshire, and Oregon. Among the 45 states that do have a sales tax, not all of them tax digital downloads. Roughly half currently treat downloaded software and video games as taxable; the rest either exempt digital goods or have not passed legislation covering them. Whether you owe anything on a Steam purchase depends on both your state’s general rate and how that state classifies digital products.
Where digital goods are taxable, the combined rate you pay can be significant. Louisiana has the highest average combined rate at 10.11%, and Tennessee, Washington, and Arkansas all average above 9%. States that do tax digital goods but have low rates and minimal local additions may charge only 4% to 5%.
The legal basis for Steam collecting tax in states where it has no physical office comes from the 2018 Supreme Court decision in South Dakota v. Wayfair, Inc., which ended the physical-presence requirement for state tax collection.2Supreme Court of the United States. South Dakota v. Wayfair, Inc., et al. Most states have since adopted economic nexus thresholds, and Steam collects in every state that requires it.
Downloads Versus Subscriptions
Some jurisdictions treat a one-time game purchase differently from a subscription or streaming service. Under the Streamlined Sales Tax framework that many states follow, a law taxing digital products generally reaches only permanent downloads unless the statute specifically covers subscriptions or temporary access. A small number of cities add their own layer: Chicago’s 9% amusement tax, for instance, applies to certain streamed or subscription-based entertainment, but not to permanent game purchases.
VAT and GST Rates Outside the U.S.
Most countries outside the U.S. use a national Value Added Tax or Goods and Services Tax on digital purchases. The rate is usually uniform across the country, but often higher than U.S. sales tax.
European Union
EU member states each set their own standard VAT, with a required minimum of 15%. Standard rates on digital services like game purchases run from 17% in Luxembourg to 27% in Hungary, the highest in the EU. Finland charges 25.5%, while Croatia, Denmark, and Sweden each charge 25%. Reduced VAT rates that some countries offer on physical goods generally do not apply to electronically supplied services like game downloads.3Your Europe. VAT Rules and Rates
United Kingdom
The UK charges a 20% standard VAT on digital services, including Steam purchases. The rate applies uniformly across England, Scotland, Wales, and Northern Ireland.
Australia
Australia imposes a 10% GST on imported digital products and services, in effect since July 2017, on any non-resident business whose Australian sales exceed AUD 75,000 per year.4Australian Taxation Office. GST on Imported Services and Digital Products
India
India taxes online gaming at 28% under GST rules that took effect in October 2023, one of the highest rates on digital entertainment anywhere.5Press Information Bureau, Government of India. Government Strengthens Regulations for Online Gaming
Why the Listed Price May Not Match Checkout
In the United States, Steam displays prices before tax. The number on the store page is the base cost, and you will not see the tax added until checkout. This matches how most U.S. retail works.
In the European Union, consumer rules require that displayed prices include applicable taxes and fees from the start.6Your Europe. Pricing and Payments A game listed at €49.99 already includes VAT for the buyer’s country. The UK, Australia, and most other countries with a national consumption tax follow the same approach. U.S. shoppers need to reach the cart to see the final amount; most international shoppers already know it.
Wallet Funds, Gift Cards, and Refunds
Adding money to your Steam Wallet or buying a Steam gift card is not a taxable event. Gift cards are treated like cash. Tax is collected later, when you spend that balance on a game or other content, and Steam calculates it at that point the same way it would for any other payment method.1Valve Corporation. Steam Subscriber Agreement A $50 gift card will not cover a $50 game in a jurisdiction with sales tax; you will need additional wallet funds or another payment method to cover the tax portion.
When Steam approves a refund, you get the full purchase amount back, including any tax charged. The refund goes to your original payment method, or to your Steam Wallet if the original method is unavailable. The standard policy allows returns within 14 days of purchase for games played less than two hours, though some content types have different rules.7Valve Corporation. Steam Refunds
Fees and Taxes on Community Market Sales
If you sell in-game items, trading cards, or other virtual goods on the Steam Community Market, Steam takes a 5% transaction fee from each sale. Some games add their own marketplace fee on top of that. Proceeds go into your Steam Wallet balance, and you cannot withdraw Community Market earnings as cash.
Because those funds stay inside Steam’s closed ecosystem, most sellers will never trigger federal tax reporting. The IRS requires third-party payment platforms to file a Form 1099-K only when a seller receives more than $20,000 in gross payments and completes more than 200 transactions in a calendar year. That threshold, which had been set to drop, was restored to its original level under the One, Big, Beautiful Bill.8Internal Revenue Service. IRS Issues FAQs on Form 1099-K Threshold Under the One, Big, Beautiful Bill Even below the reporting threshold, profit from selling digital items is technically taxable income that should be reported on your federal return.