The Utah State Legislature is poised to enact a “targeted advertising” tax, the first of its kind in the U.S. This tax is similar to, but distinct from, Maryland’s digital advertising gross revenues tax and Chicago’s social media amusement tax.

The legislation enacting the tax, S.B. 287, has been agreed-upon by both chambers and has been signed by the Speaker of the House. Only the Senate President’s signature is needed before the bill is enrolled and transmitted to Governor Spencer Cox. The governor would then have 20 days to sign or veto S.B. 287. Otherwise, the bill will become law on March 26, 2026. If the governor vetoes the bill, the legislature has the opportunity to override the veto with a two-thirds vote in both chambers. Assuming S.B. 287 becomes law, however, the targeted advertising tax takes effect on January 1, 2027, with the first annual return due in 2028.

Utah’s targeted advertising tax will be imposed on a “targeted advertising entity” at the rate of 4.85% of “the targeted advertising entity’s gross receipts for the taxable year derived from targeted advertising in the state.” A “targeted advertising entity” is a business that meets the following three requirements during the taxable year:

  • The entity delivers targeted advertising to an audience or individual located in Utah;
  • The entity generates gross receipts of at least $1M from targeted advertising in Utah and at least $100M from all targeted advertising, regardless of location; and
  • Targeted advertising gross receipts constitute at least 50% of the entity’s total gross receipts.

“Targeted advertising” means, in relevant part, a transaction in which:

  • The entity sells advertising space to the advertiser through a bidding process;
  • The entity obtains or develops individualized data profiles to deliver the advertisements; and
  • An individual viewing the advertisement has the ability to interface with the advertisement to access information or make a purchase, including through a link or a QR code.

The tax base is apportioned based on the ratio of in-state impressions to the total impressions. An “impression” is “a single instance in which targeted advertising is delivered to an audience or individual, regardless of whether the audience or individual interacts with the advertisement.”

A targeted advertising entity must annually remit to the Utah State Tax Commission a return in a format prescribed by the Commission. The bill permits the Commission to create rules for the administration, collection, and enforcement of the tax, including the due date of the annual return.

Most of the revenue from the tax is deposited into a restricted account which can be used for a variety of services for children including, among other things, literacy programs, youth sports or recreational programs, adoption and foster care services, and public education or awareness campaigns regarding the effects of targeted advertising on children, families, and adults.

Eversheds Sutherland will continue to track and analyze ongoing new taxes on digital services.