- New bill applies 4.7% tax to online ad revenue from Facebook and Google.
- Money generated by the tax would go to programs that benefit youth health.
- The bill is modeled after a Maryland law that has faced extensive lawsuits.
Utah lawmakers will consider becoming only the second state in the country to levy a tax on online advertising giants like Facebook and Google with a new bill introduced on Tuesday.
The proposal, SB287, would apply the state’s 4.7% sales tax on all revenue from targeted internet advertising from companies that derive at least $1 million from targeted advertising in Utah.
These companies must also derive at least $100 million from targeted advertising, regardless of location, and would need to depend on targeted advertising for at least 50% of annual revenues.
The bill marks a serious escalation in Utah’s yearslong campaign to take Big Tech companies to task over their treatment of children.
Utah Senate Majority Assistant Whip Mike McKell, R-Spanish Fork, who sponsored the bill, said the new tax is intended to protect kids by diverting tax revenues to youth health initiatives.
“Our kids are being targeted,” McKell told the Deseret News. “Their data is being mined, and we’re concerned about it, and that’s why we’re running (the bill).”
What companies would be impacted?
SB287 would have a targeted impact on some of the largest corporations in America.
Meta, the parent company of Facebook and Instagram, reported it makes nearly 97% of its revenue through targeted advertising. Ad revenues reached $58 billion just in the final quarter of 2025.
Alphabet, the owner of Google, reported making more than $82 billion in ad revenue in the final three months of 2025, contributing more than 70% of the company’s overall revenue in that period.
Overall, Meta made over $200 billion, and Google over $400 billion, in revenue in 2025 alone. Reddit and Roku also make a majority of their revenue through targeted advertising platforms.
By going after Big Tech behemoths, SB287 continues Utah’s streak of anti-social media legislation, including bills passed in 2023 requiring enhanced parental controls and in 2025 requiring age verification for apps.
If it passes, government revenue received from McKell’s new tax must be used for programs focused on child literacy, youth recreation, youth volunteerism, child mental health services and park improvement.
“I think it’ll move through the Legislature because it’s the best bill of the session,” McKell said.
Maryland lawsuit
In 2021, Maryland passed a first-of-its-kind tax on digital ad profits. The tax rate increased from 2.5% to 10% for online advertising services with annual revenues ranging from $100 million to over $15 billion.
“This is patterned after much of Maryland,” McKell said. “Certainly anybody that engages in commerce has the potential of being taxed.”
Various social media taxes have been considered over the past five years in at least 15 states across the country. But the only one that has passed, in Maryland, has been caught in litigation over constitutional concerns.
Since its passage, the Maryland bill has attracted multiple lawsuits from Apple, Google and Meta who allege it violates the First Amendment, the Internet Tax Freedom Act, the Constitution’s commerce clause and due process.
In response to a request for comment, Meta provided past statements in opposition to Maryland’s law, which cited criticisms about negative economic impact and unfair burdens for social media companies.
However, the largest constitutional concern in Maryland was a provision preventing Big Tech from telling users about the financial implications of the law. Utah’s law does not have this provision.
“We feel like we’re on good constitutional grounds doing this,” McKell said. “We feel like we can overcome the challenges that Maryland has faced.”
While Maryland’s provision prohibiting firms from passing along costs to users was thrown out by a judge, the Maryland law otherwise remains in effect while courts continue to weigh constitutional concerns.