Quick Word on Patreon Taxes

Hey everybody!

This month, all of us who pledge as patrons (myself included!) got an email from Patreon about some new taxes taking effect as of July 1st. If you missed that email, I'll cut & paste it for you below.

Basically, in a nutshell, Patreon is complying with some new laws about sales tax. Some countries have been charging sales tax for a while, other countries and states are just starting to do so. What they are taxing and how much they are taxing all depends on where you live, so definitely check out Patreon's links below for more information.

For my part as a creator, I was asked to categorize my tiers and benefits so that Patreon can set sales tax according to what is being offered. From my perspective, the pledge tiers are General Support, and general support is not taxed. That is how I have categorized everything, so for this month's pledge processing cycle, Patreon should take those settings into account and not apply the new taxes.

I have more to say about these new "sales" taxes, and I plan on making a more detailed video about it, but for now I just wanted to let you all know that I have categorized all 3 Fourth Wall Tiers as "general support" and should not be subject to these new taxes.

This is the email I received from Patreon (as a patron, rather than creator):

Dear patron,

We hope you’re safe and healthy during these difficult times. With the country hurting right now, the timing is not ideal to let you know that starting July 1st, we are mandated by law to start adding sales tax to certain pledges in some US states, including the state you live in. We wanted to give you plenty of advance notice before this required change takes effect in July.

Not all pledges are taxable
Whether or not sales tax will apply to your pledge depends on what benefits your creator(s) provide(s) and what’s considered taxable in your location. ‘Benefits’ are things creators provide in return for your pledge, like exclusive videos, extra podcast episodes, merch, etc. Not all pledges or benefits are taxable, and in many cases only a fraction of a pledge will be taxable.

How much sales tax might be charged?
Sales tax rates in the US range from 4% to 11%. On a $5 pledge, in the unlikely event that the full $5 is taxable, tax could range from 20 cents to 55 cents. But it could be as low as $0 if the benefits you receive are not taxable where you live, or your creator doesn’t provide benefits and you are simply providing support. Learn more about what benefits are taxable here.

We’ve been working with creators closely over the past several weeks to help them prepare for sales tax and minimize the impact on their patrons. In their settings, creators can specify the value of each benefit so that we only apply taxes to the taxable portion of your pledge. Any sales tax collected goes directly to your local government.

For more information and FAQs, click here. If you have any questions, don’t hesitate to reach out to us here.

Now more than ever, we’re grateful to you for supporting creators when they need it most.

The Patreon Team