Lawmakers in Utah have approved updated legislation that would introduce a new tax on adult entertainment platforms operating in the state while also tightening rules around the use of virtual private networks (VPNs) to bypass location-based restrictions.
The proposal, known as SB 73, has undergone substantial revisions since its original introduction earlier this year. While the first draft suggested a significantly higher tax rate and additional compliance requirements, the version that cleared the Utah Senate reflects a more scaled-back approach.
From 7% to 2%: A Major Revision
When initially presented in January, the bill sought to impose a 7% levy on the gross revenues of adult websites conducting business within Utah. It also required affected companies to register with the state’s Division of Consumer Protection and pay a $500 annual administrative fee.
Following negotiations and amendments, the proposal has evolved into broader legislation addressing multiple regulatory functions tied to consumer protection agencies. Several earlier provisions were either modified or removed entirely, including the registration mandate and annual payment requirement.
Under the revised framework, the tax rate has been reduced to 2%. Rather than targeting only traditional adult websites in narrow terms, the excise tax would apply to transactions involving access to digital content. This includes streaming or subscription-based access to digital images, audiovisual materials, audio files, e-books, and certain gaming services distributed online.
Legal Questions and Multi-State Momentum
Industry legal experts have raised questions about potential constitutional and interstate commerce challenges such a tax could encounter. Despite these concerns, similar efforts are gaining traction across the United States.
In July 2025, Alabama enacted legislation imposing a 10% tax on comparable digital adult services. Lawmakers in Virginia are evaluating similar proposals, while legislators in Pennsylvania have signaled interest in exploring a related measure.
Utah’s proposal would direct revenue from the tax into a dedicated state fund focused on youth mental health initiatives. Specifically, the funds would support:
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Treatment programs for minors affected by harmful online material
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Educational resources for parents, teachers, and young people about mental health risks
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Early intervention services for at-risk youth
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Research efforts and public awareness campaigns addressing the psychological impact of explicit material on minors
VPN Language Tightens Geolocation Enforcement
One of the most notable additions to SB 73 involves language addressing virtual private networks and other anonymizing technologies.
The amended bill specifies that a person will be considered to be accessing a website from within Utah if they are physically located in the state even if they are using a VPN, proxy server, or similar technology to mask their geographic location.
In addition, adult platforms would be prohibited from assisting users in bypassing age verification or geofencing controls. This includes offering instructions on how to use VPN services to access restricted content or providing technical means to avoid location-based blocking systems.
Age Verification Loophole
State-level age verification laws have frequently been criticized for their limited geographic reach. Because such regulations apply only within individual states, users can often circumvent them by routing their internet connection through servers in other jurisdictions.
Media coverage highlighting the widespread use of VPNs to evade age verification has prompted legislators to address what they view as an enforcement gap.
For example, West Virginia’s SB 498 proposes a blanket prohibition on allowing users to bypass age verification through VPNs or proxy tools. That measure is still awaiting committee review.
In Indiana, state authorities have taken legal action against Aylo, alleging that the company failed to adequately prevent residents including minors from accessing adult content through VPNs or location spoofing software. Although Indiana’s statute does not explicitly mention VPN usage, the lawsuit argues that access via masked IP addresses constitutes a violation of the state’s age verification requirements.
Utah’s updated language could significantly influence how its existing age verification law which took effect in January 2023 is enforced moving forward.
What Happens Next?
SB 73 now heads to the Utah House Revenue and Taxation Committee for further consideration. If ultimately passed into law, the legislation would become effective on October 1.
As more states examine digital content taxation and age verification enforcement mechanisms, Utah’s approach may serve as a model or a legal test case in the evolving national debate over online adult platforms, digital commerce, and youth protection policies.
