The rise of microtransactions and new forms of economic interaction on digital platforms, video games, social networks, metaverses, and apps has generated a vibrant but poorly regulated economy from a tax perspective. These small transactions (from pennies to a few dollars) generate billions in revenue for technology and entertainment companies, but raise questions: How are they taxed? Who should pay taxes? Is the user, the developer, or the platform taxed?

What are microtransactions?

Microtransactions are very small payments made within digital platforms or applications. They are used to acquire virtual goods or unlock additional features. Common examples:

• Skins, weapons, or items in video games (e.g., Fortnite, Roblox, Call of Duty)
• Stickers, emojis, or boosts on social media (Snapchat, TikTok, Instagram)
• Tokens or virtual currency for participating in streaming platforms, metaverses, or mobile apps
• Payments for partial access or limited use (pay-per-use)

While these are small amounts individually, their accumulation generates massive revenue. In 2024:

• In mobile video games alone, microtransactions generated more than US$80 billion worldwide.
• On platforms like TikTok or Twitch, virtual tips and gifts add up to billions annually.
• The trend continues to grow with monetization models based on attention, time, and engagement.

How are microtransactions recorded in the US?

Currently, the tax treatment of microtransactions in the U.S. is uneven and complex:

• Sales of virtual goods: In many states, these are subject to sales tax if they are considered “digital goods.” However, the classification is not uniform: some states (like Texas and New York) tax them; others do not.
• Virtual tips and donations: If a creator receives income from tokens or gifts, this is usually considered ordinary income subject to federal income tax. However, many platforms do not properly report this income to the IRS, which complicates taxation.
• Cryptocurrencies and digital assets: When microtransactions are made with cryptocurrencies (BTC, ETH, tokens), capital gains taxation comes into play, adding another layer of complexity.
• Business income for developers: Platforms (App Store, Google Play, Steam) must report microsales revenue as part of gross income. It is difficult to apply withholding or cross-border taxes if the developers are located abroad.

Current tax challenges

• Regulatory Fragmentation: There is no federal consensus on whether certain digital goods should be subject to sales tax.
• Evasion and Underreporting: Many small creators do not report income from digital tips.
• Lack of Traceability: Small payments are difficult to track, especially if alternative methods are used (tokens, crypto, internal virtual currencies).
• Digital Informal Economy: Secondary markets (selling accounts, items, services) are emerging that operate outside the tax system.

Emerging digital economies

• Play-to-Earn (P2E): Video games that allow users to earn real money or tokens through gameplay (e.g., Axie Infinity).
• Creator Economy: Platforms like Patreon, Substack, Twitch, and OnlyFans, where users monetize content directly through small, recurring payments.
• Streaming + Tips: TikTok, Instagram Live, YouTube, monetization through direct interaction.
• Metaverses: the exchange of digital assets such as land, items, and services in virtual environments (e.g., Decentraland, Roblox).
• AI-as-a-Service: platforms that charge per interaction or usage token (ChatGPT, Midjourney, Copy.ai) also fall under micropricing models.

Proposals to modernize digital taxation

• Uniform regulations on digital goods and microsales: creating a federal definition of a “taxable digital good” that includes virtual items, internal currencies, etc.
• Mandatory automatic reporting for platforms: similar to Form 1099-K, but adapted to microtransactions and digital tips, with low thresholds.
• Simplification of interstate digital sales tax: a model like Streamlined Sales Tax to facilitate compliance between states and small businesses.
• Inclusion in international tax treaties: to prevent tax evasion through platforms located abroad or non-resident developers.
• Tax education for digital creators: many small business owners are unaware that they must declare income from Twitch, TikTok, etc.

Overall, it may be said, microtransactions are redefining how value is generated and distributed in the digital economy. Their taxation can no longer be a mere band-aid solution to outdated rules. By 2026, a digital tax reform is urgently needed that recognizes: the new nature of digital work and consumption, the risks of tax erosion from untraceable payments, and the need to protect tax equity in the face of the rise of these platforms. Legal fragmentation not only affects tax collection but also creates uncertainty for millions of users and creators who literally live off the click economy.