Missouri voters had one job last night.
They did it decisively.
Amendment 5 — the proposed constitutional amendment that would have given Missouri lawmakers the power to eliminate the state income tax and expand sales and use taxes to replace the lost revenue — failed 83% to 16%.
"Amendments 4 and 5 have been buried so deep in citizen rejection, they should never come back," said Scott Charton, spokesman for Missourians for Fair Taxation and Missourians for Fair Governance.
83% to 16% is not a close race. It's not even a defeat. It's a repudiation — one of the most lopsided rejections of a major tax ballot measure in recent Missouri history. And it happened on a primary election ballot where Governor Mike Kehoe — one of Amendment 5's most prominent champions — put his full political capital behind it.
We've been covering this story since May. This is the final chapter.
We covered the full details of Amendment 5 when it was first proposed and when it landed on the August 4 ballot. For readers just catching up, here's the short version.
Missouri's current state income tax is nearly flat — every dollar earned over $9,191 per year is taxed at 4.7%. That income tax generates around $8.5 billion in state revenue annually — more than half of the state's general revenue.
Amendment 5 would have:
Rep. Bishop Davidson, R-Republic, who sponsored the amendment, said he believed the possible future sales tax would have been between 4% and 6% higher than current levels to replace the lost income tax revenue. komu.com
Missouri's current state sales tax is 4.225%, not including local taxes. Combined with local additions, many Missouri residents already pay over 9% in combined sales tax. A 4% to 6% increase on top of that would have pushed combined rates toward 13% to 15% in some jurisdictions.
The 83% rejection isn't just a policy outcome — it's a data point about what Missouri voters believe. Understanding why Amendment 5 failed this badly tells us something important about the limits of the income-to-sales-tax trade.
Opposition to Amendment 5 came from a coalition that cut across party lines. The Missouri REALTORS ran the most prominent media campaign against it, expressing concern about the broad authority the amendment would give to the legislature. The Missouri Budget Project pointed out the regressive nature of states reliant on sales taxes — where poorer residents pay a higher share of their income in state taxes than wealthy ones do.
The Missouri Budget Project said 80% of people in the state would have seen a net tax increase, with the average Missourian paying over $500 more in taxes annually. Springfield Daily Citizen
Those numbers were devastating to the campaign. An amendment framed as tax relief was producing data showing the majority of voters would pay more — not less. The political message and the fiscal reality were directly contradicting each other.
Jay Hardenbrook with AARP Missouri said he hopes the failure of Amendment 5 sends the message that there is a desire for tax relief, just not in this way.
That's the most important sentence in last night's results. Missouri voters aren't saying they don't want tax cuts. They're saying they don't want their income tax replaced with an expanded sales tax that would cost them more overall.
Missourians for Fair Taxation and Missourians for Fair Governance — both funded by the Missouri REALTORS — ran the opposition campaign that Charton said buried Amendments 4 and 5.
The REALTORS' involvement is strategically significant. Real estate transactions — both the sale of property and real estate services — were potentially in scope under Amendment 5's broad authorization to expand the sales and use tax base. An amendment that said legislators could tax "any goods and services" was a direct threat to industries currently exempt, and the REALTORS mobilized accordingly.
Their involvement also reflects a broader pattern: when states propose expanding the sales tax base, the industries currently exempt don't wait to find out if they'll be targeted. They fight the expansion proactively. Missouri's failure is partly a story about what happens when multiple industries with economic clout and organized lobbying capacity all oppose the same measure simultaneously.
In a statement issued Tuesday evening, Kehoe said that while Amendment 5 failed, the work "is far from over." "I remain committed to working with the General Assembly in the years ahead on ways to continue cutting taxes, growing our state's economy, and protecting the paychecks of hard-working Missourians." komu.com
The governor's statement is measured but clear — he's not abandoning the income tax reduction agenda, just the specific mechanism. Missouri has already been gradually cutting its income tax rate through legislative action — from 5.9% in 2018 to 4.7% today — without needing a constitutional amendment to do it. That path remains open.
Lawmakers didn't need voter approval to eliminate the income tax — in prior sessions, they already passed income tax cuts. The constitutional amendment was necessary specifically to authorize the expanded sales tax that would replace the revenue. Without that authorization, the legislature can cut income taxes but can't replace the revenue with a broader sales tax base. Springfield Daily Citizen
Kehoe's next move is likely to continue pursuing income tax rate cuts through the legislature while waiting for the political environment to shift enough to try a constitutional amendment again. Given last night's 83% rejection, that shift will take years — not months.
For Missouri businesses and residents, last night's result has immediate practical consequences.
Missouri's income tax stays at 4.7% — no phaseout, no timeline, no five-year clock. The current sales and use tax rate of 4.225% stays as is — no legislative expansion authority, no ability to tax currently exempt services without a new voter authorization.
The constitutional limits on taxing goods and services that Amendment 5 would have curtailed remain in full force. The legislature cannot expand the sales tax base without another ballot measure — and any future attempt faces the formidable precedent of 83% opposition.
For service businesses — law firms, accounting practices, medical offices, real estate services — this result removes a specific threat that had been hanging over their tax status since the amendment was proposed. Services are taxable in Missouri only where specifically enumerated by statute. Amendment 5 would have opened the door to taxing virtually any service without further voter approval. That door is now firmly closed.
For consumers, the most direct impact is what didn't happen. Combined Missouri sales tax rates — currently 9.68% on average — will not climb toward 13% or 15% in this budget cycle.
Missouri's result lands in a national conversation about income-to-sales-tax trade-offs that is actively happening in multiple states.
Alaska is considering a statewide sales tax for the first time since 1980. South Dakota's income-tax-free model continues to influence legislatures. Louisiana has already made the trade — highest combined sales tax in the country at 10.13%, no income tax on investments. Tennessee funds its entire government through sales tax at 9.61% combined.
These states are often cited as models by advocates of income tax elimination. Missouri's 83% rejection adds a significant data point to that debate: voters who are asked to make the trade explicitly and in a binding constitutional form may respond very differently than voters in states where the trade happened gradually over decades.
The Missouri Budget Project's finding — that 80% of Missourians would have seen a net tax increase — is the number that travels furthest from this result. Every state considering a similar shift will now cite Missouri's analysis. Every legislature that proposes it will face opponents armed with 83%.
Income taxes made up 61% of Missouri's general revenue funds — a figure that underscores why the amendment's failure wasn't just a policy defeat for Kehoe, but a structural affirmation of how Missouri funds its government.
We covered this detail in our earlier reporting — a lawsuit filed in Cole County Circuit Court argued that Amendment 5 bundled too many subjects into a single ballot question, violating Missouri's constitution.
The ballot question asked voters whether they wanted to require the legislative phase-out of the individual state income tax, authorize the expansion of sales and use taxes, curtail constitutional limits on taxing goods and services, and require local tax rate cuts — all in a single yes or no question. FOX 2
The court ultimately allowed the measure to proceed to the ballot. Voters didn't need the lawsuit to stop it. They did it themselves, by a margin of 83% to 16%.
Missouri's sales tax structure is stable. The threat of a dramatically expanded base — covering services, healthcare, real estate, and anything else the legislature might have chosen — is gone for this political cycle.
For businesses that were modeling potential exposure under an expanded Missouri sales tax base — particularly service businesses currently exempt — that planning exercise is no longer urgent. Missouri's tax landscape in 2027 will look essentially like it does today.
For businesses selling goods into Missouri — the categories currently taxable under Missouri's 4.225% state rate and applicable local rates — nothing changes. Rates stay where they are. Filing obligations stay the same. Compliance requirements are unchanged.
The Missouri sales tax story that started in May with a House vote, ran through Governor Kehoe's August ballot decision, survived a lawsuit, and ended last night with 83% of Missouri voters saying no — is over.
For now.
Operating a business in Missouri and want to understand your current sales tax compliance obligations — or planning ahead for what Missouri's tax landscape looks like in 2027 and beyond? Book a free consultation with our team at sales.tax. We'll walk through your specific situation and make sure your compliance is current under Missouri's existing rules.
New York's local governments just had their best sales tax collection period in years.
Local government sales tax collections totaled $12.7 billion in the first half of 2026 — an increase of 6.8%, or $803 million, compared to the same period last year, according to a report released by State Comptroller Thomas P. DiNapoli.
The 6.8% increase was stronger than the year-over-year growth in the same period in 2025 at 3.7%, and more than three times higher than the rate in 2024 at 1.9%.
Every region of New York grew. Every borough of New York City grew. 52 of 57 counties grew. On paper, it looks like a boom.
But the state's own comptroller is telling local governments not to celebrate yet.
"New York's local sales tax collections grew significantly in the first half of 2026 compared to last year, but this rate of growth may not last," DiNapoli said. "This growth is due in part to higher prices for goods and services as a result of higher tariffs and global conflicts. Local officials should be cautious in estimating future revenue amid the current economic uncertainties and harmful federal policies."
That warning is the real story — and it applies far beyond New York.
The 6.8% increase sounds like economic momentum. The data tells a more complicated story.
Inflation averaged 3.3% during the first half of 2026, compared with 2.6% during the same period last year. Real personal consumption — spending after accounting for price increases — grew at an average monthly rate of 2.2%. That means part of the increase in sales tax revenue came from consumers paying more for the same goods and services rather than buying substantially more.
This is the critical distinction. Sales tax is calculated as a percentage of the purchase price. When prices go up — because of tariffs, supply chain disruptions, or any other factor — sales tax revenue goes up automatically, even if consumers are buying exactly the same number of items.
A family that bought a $1,000 TV last year and pays the same combined 8% sales tax rate this year would generate $80 in sales tax. If that same TV now costs $1,150 due to tariff pass-through, the sales tax generated is $92 — a 15% revenue increase with zero change in consumer behavior.
That's what's happening in New York — and across the country.
Gasoline is the clearest example. The average New York gas price rose to $4.48 per gallon in May, 47.1% higher than a year earlier, before easing to $4.18 in June. Local motor fuel sales tax collections increased 13.8%, adding nearly $50 million statewide.
Gasoline sales tax collections up 13.8% — not because New Yorkers drove 13.8% more miles, but because the price at the pump jumped nearly 50%.
The headline number — 6.8% statewide — conceals significant variation across New York's 57 counties.
Seneca County had the highest sales tax growth in the first half at 16.5%, followed by the counties of Genesee at 12.5%, Suffolk and Wyoming at 9.2% each, and Niagara at 8.9%.
New York City's sales tax collections totaled nearly $5.8 billion in the first half — an increase of 7.8%, or $418 million — higher than the increase in the same period last year. Outside of New York City, aggregate first-half collections for counties and cities grew by 5.6%, or $324 million — double the increase experienced in the same period in 2025.
Regionally, first-half growth outside of New York City ranged from a low of 2.8% in the North Country to a high of 7.1% on Long Island.
The geographic variation reflects different economic drivers across the state. Long Island's 7.1% growth likely reflects its higher-income consumer base absorbing tariff-inflated prices without significantly reducing spending. The North Country's 2.8% growth — the lowest in the state — suggests a more price-sensitive population that is actually pulling back on purchases even as prices rise.
DiNapoli's caution isn't just a fiscal footnote. It has direct implications for how New York's counties and cities build their budgets for 2027.
Sales tax revenue is one of the largest and most flexible revenue sources available to New York local governments. Unlike property tax — which is predictable but constrained by constitutional caps — sales tax can surge in strong economic periods and collapse in downturns.
Local governments that look at 2026's 6.8% growth and project similar growth for 2027 are building their budgets on a foundation that may not hold. If tariff rates change — through court decisions, trade negotiations, or new legislation — the tariff-inflated price increases that are generating extra sales tax revenue today could normalize or reverse. When that happens, sales tax collections fall back toward levels that reflect actual consumer activity rather than inflated prices.
DiNapoli has seen this movie before. In 2020, New York's local sales tax collections collapsed 10.1% during the pandemic — an $800 million shortfall that forced emergency budget cuts across counties and cities that had projected continued growth. The lesson from that episode: sales tax revenue that looks strong can disappear faster than any other major revenue source.
We covered this story from a business compliance angle earlier this year — how tariff-inflated prices increase the sales tax your customers pay and how states like California and Wisconsin have confirmed that tariff costs passed through to customers are included in the taxable sales price.
New York's data puts concrete numbers on that dynamic at scale.
If $803 million in additional New York local sales tax revenue was collected in the first half of 2026 — and a meaningful portion of that reflects tariff-inflated prices rather than real economic growth — then tariffs are functioning as a de facto sales tax increase for every consumer buying affected goods.
The consumer buying a tariff-affected product pays three taxes simultaneously: the original tariff at the border, the higher retail price that embeds the tariff cost, and then sales tax calculated on that higher price. The third layer — sales tax on a tariff-inflated price — is the most invisible of the three. It shows up as sales tax revenue growth in the comptroller's report without reflecting any real increase in economic activity.
For businesses, the implication is practical: if you've seen your sales tax remittances growing faster than your unit sales, tariff-inflated prices may be part of the explanation. Your compliance obligations — and your customers' tax burden — are growing in proportion to price levels, not just volume.
DiNapoli's warning about revenue sustainability is essentially a forecast about what happens when the tariff-driven price inflation either stabilizes or reverses.
Three scenarios are possible:
Tariff rates stay elevated and prices plateau at current levels. In this case, the year-over-year growth in sales tax collections slows significantly — because the comparison base from the second half of 2025 already reflects elevated prices. Growth of 6.8% becomes growth of 2-3% as the tariff effect is baked into both periods.
Tariff rates are reduced through trade negotiations or court decisions. In this case, prices on affected goods fall. Sales tax revenue on those goods falls proportionally. Counties and cities that built 2027 budgets assuming 6.8% growth face an unexpected shortfall.
Consumer behavior shifts as prices stay high. Higher prices mean some consumers reduce spending on discretionary goods — buying less, buying cheaper alternatives, or forgoing purchases entirely. This reduces the volume of taxable transactions even as the price per transaction stays elevated. The net effect on sales tax revenue is unpredictable and varies by category.
None of these scenarios produces the continued 6.8% growth that the first half of 2026 generated. DiNapoli is right to warn local governments — and businesses — that the current trajectory is not a reliable baseline for planning.
New York's story is being replicated across the country — and the data is starting to show it.
We covered Texas's record sales tax distribution earlier this year — $4.7 billion collected in April 2026, up 9.8% year-over-year. Virginia's revenue forecast jumped $1.5 billion in a single revision. Every state reporting strong sales tax collections in 2026 is doing so against the same backdrop of tariff-inflated prices.
The national population-weighted average combined sales tax rate is 7.53% — applied to a price base that is materially higher in 2026 than in 2025. Even with no rate changes, states are collecting more money simply because the prices their tax applies to are higher.
When the tariff effect eventually moderates — and DiNapoli's warning reflects a genuine belief that it will — the states and local governments that planned around 2026's inflated collections will find themselves with structural shortfalls. The political response to those shortfalls will likely involve pressure to raise rates or expand tax bases — adding to the compliance burden for businesses operating in those jurisdictions.
The revenue surge and the Comptroller's warning together create a specific planning consideration for businesses operating in New York and other high-growth-in-2026 states.
When local governments face revenue shortfalls — which DiNapoli is explicitly warning are coming — the response is often to raise local sales tax rates through ballot measures, to expand the tax base to cover previously exempt categories, or to increase enforcement of existing obligations.
New York's history suggests all three responses are possible. The state has been considering expanding its digital advertising tax. Multiple localities have been weighing new sales tax measures. And the state's enforcement capability has been growing with AI-powered audit selection tools.
Businesses that are fully compliant with current obligations don't need to fear those enforcement expansions. But businesses that have been relying on limited enforcement capacity as cover for compliance gaps are operating in a window that is closing.
Operating a business in New York and want to make sure your sales tax compliance is solid before the revenue picture shifts and enforcement pressure increases? Book a free consultation with our team at sales.tax. We'll review your nexus exposure, your rate accuracy, and your filing history — so you're ready for whatever comes next.
Four days.
That's how long you have to make sure your systems are configured correctly before the biggest back-to-school sales tax holiday weekend of the year begins.
The largest single wave of sales tax holidays hits August 7-9, 2026 — covering Texas, Virginia, Ohio, Missouri, Oklahoma, and South Carolina, with Illinois, Iowa, and Massachusetts opening overlapping windows the same week. Florida's back-to-school holiday is already underway and runs through August 20.
Nine states. Simultaneous. Different rules, different thresholds, different qualifying categories — all going live at midnight Friday.
If you sell into any of these states, here's exactly what needs to happen before Friday morning.
Most sales tax holidays run in isolation — one state, one weekend, a few categories to configure. August 7-9 is different because the compliance obligation hits simultaneously across nine states.
For small online retailers selling into states with sales tax holidays, compliance can be a nightmare. There are legal consequences for over-collecting sales tax from consumers, so last-minute sales tax holiday legislative decisions force sellers to scramble to make sales tax determinations on an evolving range of products, and often with definitions that require careful product-by-product eligibility judgments. Illinois Department of Revenue
The stakes are real in both directions. Collecting tax you shouldn't collect creates over-collection liability — technically, you've taken money from customers you weren't authorized to take. Failing to apply an exemption when you should means under-collecting — which creates exposure if a state audits your holiday-period transactions.
Getting it right requires state-by-state configuration. Here's the checklist.
Iowa's holiday runs only two days — Friday and Saturday. It closes at midnight Saturday August 8. Sunday August 9 transactions are fully taxable in Iowa even while every other state's holiday is still running.
Qualifying items: clothing and footwear priced under $100 per item. No school supplies exemption. No computer exemption. The exemption waives both state and local option taxes — the full combined rate disappears on qualifying items.
Your system needs to open the exemption at 12:01 a.m. Friday August 7 and close it at midnight Saturday August 8. If your system doesn't close automatically, set a manual reminder for Saturday night.
The 2026 Texas Sales Tax Holiday begins Friday, August 7, and continues through midnight on Sunday, August 9. Qualifying clothing, footwear, school supplies, and backpacks can be purchased without paying the state's 6.25% sales tax, provided each eligible item costs less than $100. ABC News
Qualifying items: clothing and footwear under $100, school supplies under $100, backpacks under $100. No computer exemption.
Qualifying items can still receive the tax exemption if shoppers make the final payment on an item already on layaway during the holiday, or place an eligible item on layaway during the holiday.
Texas's holiday is destination-based — if you ship a qualifying item to a Texas delivery address during the holiday window, the exemption applies regardless of where your business is located.
Ohio's 2026 holiday is the traditional three-day format — not the expanded version that ran in 2024 and 2025.
Ohio repealed a previously approved expansion that would have applied to most tangible personal property priced $500 or less. Sellers do not need to plan for expanded exemptions, business-use item relief, or extended timelines. TaxHero
Qualifying items: clothing priced at $75 or less per item, school supplies priced at $20 or less per item, school instructional materials priced at $20 or less per item. No computer exemption. No broader tangible property exemption.
If your system is still configured for Ohio's expanded 2025 holiday format, revert it immediately. Applying the expanded holiday rules in 2026 means exempting items that are fully taxable this year.
Missouri runs one of the most comprehensive holidays of the weekend — covering multiple categories with generous thresholds.
Qualifying items: clothing under $100 per item, school supplies under $50 per item, personal computers under $1,500, computer software under $350, graphing calculators under $150.
Missouri is one of the only states covering computer software as a qualifying category — downloaded software sold directly to consumers qualifies under $350. If you sell software and ship to Missouri, this exemption applies during the holiday window.
Oklahoma's holiday covers clothing and footwear priced under $100 per item. No school supplies exemption. No computer exemption.
Oklahoma's combined rates vary significantly — from 8.5% to over 11% in some cities. The holiday waives state taxes. Verify whether your specific Oklahoma delivery jurisdictions also waive local taxes during the holiday — local participation varies.
South Carolina runs the most generous holiday of the August cluster — and it has no price caps on most categories.
Qualifying items: clothing, shoes, school supplies, computers, printers, printer supplies, certain bed and bath items — with no price caps on most categories.
There is no $100 clothing limit. No $1,500 computer limit. A South Carolina shopper buying a $3,000 laptop pays no sales tax during the holiday. A shopper buying $500 worth of dorm room bedding pays no tax either.
For retailers selling high-ticket electronics, computers, or back-to-school dorm supplies to South Carolina customers, this is the most valuable holiday of the weekend from a consumer savings perspective — and the one most worth marketing explicitly.
Virginia's August holiday covers multiple categories simultaneously.
Qualifying items: clothing and footwear under $100 per item, school supplies under $20 per item, emergency preparedness items including generators under $1,000, and qualifying Energy Star and WaterSense products up to $2,500.
The Energy Star component is Virginia's most distinctive feature — it makes the holiday relevant for appliance retailers and home improvement sellers, not just back-to-school shoppers. A Virginia customer buying a qualifying Energy Star refrigerator for $1,800 pays no sales tax during the August 7-9 window.
Illinois's holiday runs 10 days — but it is a reduced rate holiday, not a full exemption.
The state's portion of sales tax due throughout the holiday is reduced by 5% from 6.25% to 1.25%. Items include qualifying clothing and footwear with a retail selling price of less than $125 per item and certain school supplies used by students in the course of study. The Dallas Express
The compliance configuration for Illinois is different from every other state this weekend. You're not zeroing out the tax — you're applying a reduced 1.25% state rate on qualifying items while leaving local taxes unchanged at their normal rates. A customer in Chicago paying a combined rate of 10.25% during the holiday pays approximately 5.25% on qualifying items — 1.25% state plus the 4% Chicago local rate.
School supplies are not subject to the $125 threshold — the reduced rate applies to school supplies without a price cap. The Dallas Express
The Illinois IDOR bulletin is explicit about reporting: retailers report normal taxable sales on their return including holiday sales, then claim the reduced rate on Schedule A. The process is different from a standard exemption.
Massachusetts opens one day into the weekend and runs through Sunday — covering the most categories of any state in the August cluster.
Most retail items priced at $2,500 or less for personal use qualify during Massachusetts's August 8-9 holiday. The Sales Tax People
That covers clothing, electronics, appliances, furniture, school supplies, computers — virtually any personal-use retail purchase under $2,500. Business purchases are excluded. Items over $2,500 are fully taxable.
Participation in Massachusetts's holiday is mandatory for all businesses open during the weekend — including online retailers with Massachusetts nexus. There is no opt-out.
1. Verify each state's exemption window opens and closes correctly in your system.
Iowa closes Saturday midnight. Every other state closes Sunday midnight. A system that treats all nine states identically will over-exempt Iowa Sunday transactions.
2. Confirm Ohio is configured for the traditional format only.
If your system was updated for Ohio's expanded 2025 holiday, it needs to be reverted. The expanded format is gone. Clothing under $75, supplies under $20 — nothing more.
3. Configure Illinois as a rate reduction, not a full exemption.
Illinois requires 1.25% state tax on qualifying items — not zero. Local taxes continue at normal rates. This is the most technically distinct configuration of the weekend.
4. Verify South Carolina has no price caps on qualifying categories.
Most states cap clothing at $100. South Carolina doesn't. If your system applies a universal $100 clothing threshold, it will incorrectly tax South Carolina clothing purchases above $100 that should be exempt.
5. Handle online orders correctly in all nine states.
Ecommerce sellers must configure their tax engines to recognize the customer's delivery address. Because sales tax is destination-based, a seller in California must honor the Texas holiday when shipping to a customer in Dallas. StateCalc
The qualifying window is based on order date and payment date — not ship date or delivery date. An order placed at 11:58 p.m. Sunday August 9 qualifies. An order placed at 12:01 a.m. Monday August 10 does not.
6. Review your layaway and buy-now-pay-later policies.
Texas explicitly allows layaway purchases to qualify if final payment is made during the holiday. Other states have varying rules on deferred payment structures. Verify your platform handles these correctly before Friday.
7. Check Florida — the holiday is already running.
Florida's back-to-school holiday started July 20 and runs through August 20. If you're selling into Florida and haven't configured the holiday yet, you've been over-collecting for two weeks. Fix this immediately.
Failure to stop collecting tax on qualifying items can lead to class-action lawsuits, state audits, and a loss of customer trust. StateCalc
Over-collection — charging customers tax during a holiday window — is the more immediate risk. Customers who notice they've been charged tax when they shouldn't have been can file complaints with state revenue departments and, in some states, pursue civil remedies.
Under-collection — failing to apply a required exemption — creates audit exposure if a state reviews your holiday-period transactions and finds you collected tax on exempt items. In most states, the tax liability for under-collection sits with the retailer, not the customer.
Neither outcome is good. Four days is enough time to get this right — but only if you start today.
For a complete state-by-state breakdown of every qualifying item, price cap, and compliance rule for the August 7-9 weekend — plus every other 2026 sales tax holiday through the end of the year — visit our complete 2026 sales tax holiday guide.
Selling into multiple states this weekend and not confident your systems are configured correctly for all nine simultaneous holidays? Book a free consultation with our team at sales.tax. We'll audit your holiday compliance setup across every state and make sure you're applying the right rules before Friday morning.
te has been considering expanding its digital advertising tax. Multiple localities have been weighing new sales tax measures. And the state's enforcement capability has been growing with AI-powered audit selection tools.
Businesses that are fully compliant with current obligations don't need to fear those enforcement expansions. But businesses that have been relying on limited enforcement capacity as cover for compliance gaps are operating in a window that is closing.
Operating a business in New York and want to make sure your sales tax compliance is solid before the revenue picture shifts and enforcement pressure increases? Book a free consultation with our team at sales.tax. We'll review your nexus exposure, your rate accuracy, and your filing history — so you're ready for whatever comes next.
Tennessee's most popular shopping weekend of the year is 9 days away.
Tennessee's annual sales tax holiday begins at 12:01 a.m. on Friday, July 31, 2026, and ends at 11:59 p.m. on Sunday, August 2, 2026.
This year marks the 20th annual sales tax holiday — a back-to-school tradition that has been running since 2006.
Three days. No state or local sales tax on qualifying clothing, school supplies, and computers. And for a state with the second highest combined sales tax rate in the country, the savings are real.
Clothing and school supplies priced at $100 or less and personal computers priced at $1,500 or less can be purchased without paying state or local sales tax — saving Tennesseans nearly 10% on qualifying purchases.
Here's exactly what qualifies, what doesn't, and what retailers need to do before Friday.
Tennessee doesn't have an individual income tax. It funds its government primarily through sales taxes — and the result is one of the highest combined rates in the country.
Tennessee's general state tax rate is 7%. Combined with local tax rates, that figure rises to 9.55% — making Tennessee the state with the second highest average combined state and local sales tax rates in the country, according to the Tax Foundation. utk
That means the tax-free weekend isn't saving shoppers 6% or 7% — it's saving them close to 10% depending on their county. On a $1,400 laptop, that's $126 to $137 in savings. On a $200 worth of clothing and school supplies, that's $18 to $20. The math works particularly well in Tennessee precisely because the regular rate is so high.
As UT taxation expert LeAnn Luna puts it: "The Tennessee sales tax holiday is a 10 percent sale — actually 9.25% to 9.75% depending on your county — on most clothing, computers, and school supplies. The question for shoppers is: would you buy the item outside the sales tax holiday weekend if the retailer offered it for a 10 percent discount? If the answer is yes, the sales tax holiday provides a good opportunity to purchase the goods."
The threshold is simple: clothing and school supplies priced at $100 or less per item may be purchased tax-free during the holiday weekend. Freetaxweekend
The $100 limit applies per item — not per transaction. A shopper buying ten $95 items pays no tax on any of them.
Qualifying clothing includes a broad range of everyday items:
Belts, caps, coats, dresses, gloves, hats, hosiery, jackets, jeans, neckties, pants, scarves, school uniforms, shirts, shoes, sneakers, socks, and underwear all qualify. Fox 17
Less obvious items that qualify include diapers for both babies and adults, bibs, baby receiving blankets, chef uniforms, and even wedding dresses — as long as they're under $100 and for personal use, not business or trade.
School supplies follow the same $100 threshold. Binders, backpacks, crayons, paper, pens, pencils, rulers, art supplies, and similar school necessities all qualify.
The computer exemption is one of the most valuable parts of Tennessee's holiday — and one of the most frequently misunderstood.
Computers priced at $1,500 or less may be purchased without paying state or local sales tax. That covers laptops, desktops, and tablets used for personal purposes. Freetaxweekend
Many related items do not qualify: printers, printer supplies, printer paper, storage drives, software sold separately, computer games, and smartphones do not qualify for the sales tax holiday.
The computer exemption is per unit — a $1,400 laptop qualifies entirely. A $1,600 laptop is fully taxable — there's no partial exemption above the threshold.
This is where shoppers and retailers need to be precise — and where compliance errors happen most often.
Items that do not qualify include jewelry, handbags, sports and recreational equipment, computer software sold separately, printer supplies, and household appliances. Freetaxweekend
A few specific items worth calling out:
Clothing accessories are excluded — belt buckles sold separately, briefcases, cosmetics, hair accessories, handbags, patches and emblems sold separately, sunglasses, umbrellas, and wallets are all taxable during the holiday.
Protective equipment doesn't qualify — breathing masks, face shields, hard hats, and safety vests are taxable.
Sports equipment is fully taxable — athletic pads, cleats and athletic shoes designed primarily for sport, golf bags, helmets, and similar items remain taxable even during the holiday. Note the distinction from everyday shoes: sneakers and shoes worn as regular footwear qualify, but shoes designed primarily for athletic activity don't.
Business purchases are fully taxable. The exemption applies to personal use only — a business owner buying computers or supplies for their company doesn't qualify even during the holiday weekend.
Items sold together cannot be split up to stay below the $100 maximum. Wate
A pair of shoes priced at $130 is fully taxable — you can't sell the left shoe for $65 and the right shoe for $65 to qualify. A matching outfit sold as a set for $180 is taxable even if individual pieces might cost less than $100 each when separated.
The rule is straightforward: the price as sold determines taxability. Retailers cannot restructure bundles or split items during the holiday weekend to manufacture qualifying prices.
Qualifying items may be purchased online and in stores. Freetaxweekend
For ecommerce sellers, the qualifying window is the same as for physical stores — orders placed and paid for between 12:01 a.m. Friday, July 31 and 11:59 p.m. Sunday, August 2 qualify for the exemption. Delivery after the holiday weekend doesn't affect eligibility — the transaction date determines taxability.
Tennessee's holiday is one of the few that explicitly covers both state AND local taxes. Most state holidays waive the state portion only, leaving local taxes in place. Tennessee waives both — making it a complete exemption on qualifying items during the window.
Items placed on layaway during the holiday also qualify. Fox 17
A shopper who puts a $90 pair of shoes on layaway on Saturday, August 1 — even if they don't pick them up until September — pays no tax on that purchase. The layaway placement date during the holiday determines the tax treatment.
Participation in Tennessee's sales tax holiday is not optional for retailers selling qualifying items.
Stores that sell eligible items such as clothing, school supplies, and computers are required to participate if they are open during the holiday weekend. If a store or merchant sells only to other businesses or does not sell qualifying items, participation is not required.
That mandatory participation rule extends to ecommerce sellers with Tennessee sales tax nexus. If you're registered in Tennessee, sell qualifying items, and process orders during the July 31 – August 2 window, you must apply the exemption. Continuing to collect Tennessee sales tax on qualifying items during the holiday creates over-collection liability.
Tennessee's tax-free weekend gets extra attention this year because of what didn't happen in the 2026 legislative session.
We covered Tennessee's grocery tax story earlier this year — lawmakers from both parties filed more than a dozen bills to eliminate or reduce Tennessee's 4% grocery tax, but the 2026 budget passed without any grocery tax changes. Tennessee remains one of only about ten states that still impose a statewide sales tax on groceries.
The tax-free weekend is the legislature's most visible tax relief tool — three days of savings that generates genuine goodwill and media coverage, without the $800 million annual revenue impact of eliminating the grocery tax entirely.
Revenue Commissioner David Gerregano put it plainly: "Tennessee's sales tax holiday has become a back-to-school tradition for families." Tennessee Department of Revenue
It has. But for families buying groceries year-round in a state with the second highest combined sales tax rate in the country, a weekend off on clothing and school supplies is a modest benefit compared to what a permanent grocery tax change would deliver.
Nine days. Here's the compliance checklist for Tennessee retailers and ecommerce sellers:
1. Confirm your system applies the exemption to both state and local taxes. Tennessee's holiday waives both layers — not just the 7% state rate. Your POS or ecommerce tax engine needs to zero out the full combined rate on qualifying items, not just the state portion.
2. Verify the $100 clothing and supplies threshold applies per item. Configure your system to evaluate each line item independently — not the transaction total.
3. Verify the $1,500 computer threshold. Laptops, desktops, and tablets under $1,500 qualify. Peripheral equipment, software, and smartphones don't. Make sure your product taxonomy correctly separates qualifying computers from non-qualifying accessories.
4. Handle online orders correctly. Orders placed and paid for during the July 31 – August 2 window qualify — regardless of when they ship. Configure your ecommerce platform to apply the exemption based on order date, not fulfillment date.
5. Review bundle and set pricing. If you sell clothing sets, uniform bundles, or computer packages, verify that the bundled price doesn't push the item above the qualifying threshold — and confirm your system isn't splitting bundles to manufacture a qualifying price.
6. Train your staff. The most common customer service issues during a tax holiday involve items customers expect to qualify but don't — handbags, sports equipment, accessories, smartphones. Make sure your team knows the answers before the holiday starts.
At Tennessee's average combined rate of approximately 9.55%, here's what shoppers save on a typical back-to-school haul:
| Item | Price | Tax Saved at 9.55% |
|---|---|---|
| Laptop | $1,299 | $124.05 |
| Back-to-school outfit | $85 | $8.12 |
| Sneakers | $75 | $7.16 |
| School supplies | $65 | $6.21 |
| Kids' clothing | $120 across 3 items | $11.46 |
| Full family haul | $1,800 | $171.90 |
A family buying a laptop and a full back-to-school wardrobe during the holiday saves close to $170. That's genuine, meaningful relief in a state where the regular rate is among the highest in the country.
For a full overview of every state's 2026 back-to-school sales tax holiday — including the massive August 7-9 weekend when Iowa, Ohio, Texas, Missouri, Oklahoma, South Carolina, and Virginia all run holidays simultaneously — visit our complete 2026 sales tax holiday guide.
Selling into Tennessee and want to confirm your systems are applying the correct exemption for the July 31 – August 2 holiday — or managing back-to-school holiday compliance across multiple states this summer? Book a free consultation with our team at sales.tax. We'll audit your holiday compliance setup and make sure you're collecting correctly through the entire back-to-school season.
Every year, the Tax Foundation publishes two snapshots of where U.S. sales tax rates stand — one in January and one at midyear, reflecting the wave of local changes that take effect on July 1. The midyear update just dropped.
The headline: no state raised its base sales tax rate between January and July 2026. But beneath that stability, local rate changes shifted the combined rankings in ways that matter for businesses selling across state lines.
Here's what the 2026 midyear data tells us — and what it means for compliance.
The five states with the highest average combined state and local sales tax rates in 2026 are Louisiana at 10.13%, Tennessee at 9.61%, Washington at 9.57%, Arkansas at 9.48%, and Alabama at 9.46%.
Louisiana has held the top position since January 2025, when the state raised its rate from 4.45% to 5% as part of a broader tax reform package that also introduced a flat 3% individual income tax rate. That combination — the highest combined sales tax in the country paired with one of the lowest income tax rates — represents a deliberate trade-off. Louisiana funds its government heavily through consumption taxes rather than income taxes.
The Louisiana story is worth understanding because it's a preview of the debate happening in Missouri, which is considering eliminating its income tax and replacing it with expanded sales tax revenue. Louisiana's 10.13% combined rate is what happens when a state leans all the way into consumption-based funding — and Louisiana's residents pay that rate on virtually everything they buy.
Tennessee at 9.61% is particularly notable because Tennessee has no individual income tax — having fully eliminated the Hall Tax on investment income in 2021. Like Louisiana, Tennessee funds its government almost entirely through sales taxes. The state's 7% base rate plus local additions produce a combined rate that is among the highest in the country — and unlike Louisiana, Tennessee is actively debating whether to reduce the grocery portion of that rate.
At the other end of the spectrum, the five states with the lowest combined rates are all states with no statewide sales tax: Oregon, Montana, New Hampshire, Delaware, and Alaska — all at 0% for the state rate, though Alaska allows localities to impose their own taxes.
Among states that do levy a sales tax, Hawaii, Wyoming, Wisconsin, and Maine typically rank among the lowest combined rates in the country — with Hawaii's general excise tax structure making direct comparisons somewhat misleading, since it applies to gross receipts at every level of the production chain rather than just final retail sales.
There was no state-wide tax rate change between January 2026 and July 2026. This is notable — and increasingly rare. States have been far more active on sales tax base changes, exemptions, and digital goods taxability in 2026 than on headline rate changes.
But local changes were significant enough to move rankings.
Notable combined rate increases occurred in North Carolina — leading to a four-place rank change — Georgia, Washington, California, and Vermont. Wyoming was the only state that saw a reduction in its combined rate, which was due to several jurisdictions reducing their local option tax rates in February and July.
North Carolina's four-place jump is entirely attributable to one change: Mecklenburg County's 1% rate increase effective July 1, 2026 — the first rate change in Charlotte in 28 years. A single county's vote in November 2025 moved an entire state four places in the national rankings. That's how significant the Mecklenburg change was — and it's a concrete illustration of how local decisions shape the national picture.
The nationwide population-weighted average combined sales tax rate is 7.53%.
That's the number that reflects what the average American consumer actually pays in combined state and local sales tax — weighted by where people live, not just by what states exist. It accounts for the fact that more Americans live in high-population states with varying local rates than in low-population states with simpler structures.
For businesses trying to estimate their average tax collection burden across a national customer base, 7.53% is a reasonable working figure — though the actual rate for any specific transaction depends entirely on the delivery address.
The five states with the highest average local sales tax rates — meaning the local add-on above the state base — are Alabama at 5.46%, Louisiana at 5.13%, Colorado at 4.99%, Oklahoma at 4.56%, and New York at 4.54%.
Alabama's high local rate is particularly striking because Alabama's state rate is a relatively low 4%. But 5.46% in average local additions pushes the combined rate to 9.46% — fourth in the country. For businesses selling into Alabama, the local layer is more significant than the state layer — and tracking it at the address level is essential.
Several rate changes visible in the current data will shift the rankings again before the next midyear update.
South Dakota cut its state sales tax rate in 2023 — a reduction set to sunset in 2027. If South Dakota allows the cut to expire, its rate returns to its pre-2023 level and combined rankings shift accordingly. South Dakota's legislature will need to act to make the reduction permanent — and that decision hasn't been made.
New Mexico operates under a gross receipts tax rather than a traditional sales tax — currently at 4.875%, reduced from 5.125% in July 2022. The reduction includes a revenue trigger: if gross receipts tax revenue falls below 95% of the prior year's revenue in any single fiscal year from 2026 to 2029, the rate automatically reverts to 5.125%. A revenue shortfall — possible given New Mexico's oil-dependent budget — could trigger an automatic rate increase without any legislative action.
Washington D.C.'s general sales tax rate increases from 6.5% to 7.0% on October 1, 2026 — a change we covered in detail earlier this month. D.C. isn't ranked alongside states, but businesses selling into the District need to update their rates by October 1.
Louisiana's franchise tax repeal in 2026 improves its overall tax competitiveness ranking even as its sales tax rate remains the highest in the country — a reminder that the sales tax rate is just one dimension of a state's overall tax environment.
The Tax Foundation's combined rate rankings are a useful starting point — but they measure average rates, not the rate that applies to any specific transaction.
Several states with modest average combined rates have significant local variation. California's statewide rate is 7.25%, but combined rates in many cities exceed 10%. Texas's statewide rate is 6.25%, but combined rates in some cities reach 8.25%. The averages smooth out extremes that matter enormously for businesses selling into specific cities.
The rankings also don't account for base differences. States can vary greatly in what is taxable and what is not. For instance, most states exempt groceries from the sales tax, others tax groceries at a limited rate, and still others tax groceries at the same rate as all other products. Some states exempt clothing or tax it at a reduced rate.
Tennessee's 9.61% combined rate applies to a broad base that includes groceries — which is why Tennessee's rate feels particularly heavy on lower-income households. Louisiana's 10.13% rate also applies broadly, though Louisiana has specific exemptions for certain food and medical items.
For businesses managing multi-state compliance, the rankings are a useful orientation tool — but the actual compliance work requires address-level rates, product-specific taxability, and state-specific exemptions that averages can't capture.
South Dakota's 2023 sales tax rate cut is set to expire after 2026.
South Dakota reduced its state sales tax rate from 4.5% to 4.2% in 2023 — a consumer-facing cut that has been in place for three years. That reduction sunsets unless the legislature acts to make it permanent. The 2027 South Dakota legislative session will determine whether the cut extends or the rate returns to 4.5%.
For businesses selling into South Dakota, this is worth monitoring. A 0.3 percentage point increase may sound small — but for high-volume sellers, the compliance update and customer-facing price adjustment needs to happen before the first transaction of 2027 if the sunset occurs.
The midyear rankings tell a consistent story: state base rates are stable, but local rates are active. The compliance risk in 2026 isn't from states dramatically raising their headline rates — it's from the hundreds of local jurisdictions adjusting their add-on rates quarterly, often with minimal advance notice reaching businesses outside the immediate community.
North Carolina jumped four places in the national rankings because of one county's vote. Colorado's retail delivery fee increased. Illinois processed 202 local rate changes on July 1. Washington processed 864.
The businesses most exposed to unnoticed rate changes are those relying on state-level rate tables rather than address-level calculation — and those that do their rate review annually rather than quarterly.
Retail sales taxes are an essential part of most states' revenue toolkits, responsible for 24% of combined state and local tax collections. That share isn't shrinking. And as more states expand their sales tax base to include digital goods, services, and new categories, the compliance surface area for most businesses is growing — even when the headline rates hold steady.
Not sure whether your current sales tax rates reflect the midyear 2026 updates — especially for North Carolina, Washington, California, or Vermont where local rates shifted meaningfully in July? Book a free consultation with our team at sales.tax. We'll verify your rate setup across every state where you sell and make sure you're calculating correctly before your next filing period.
Florida has been running the most generous sales tax holiday program in the country for years. Freedom Month. Back-to-School. Disaster Preparedness. Tool Time. The holidays kept coming — and retailers kept adapting.
In 2025, Florida's legislature hit the reset button. And on July 1, 2026, the results of that reset took full effect.
Governor Ron DeSantis signed HB 7031E on June 29, 2026. The bill took effect July 1 — bringing $272.2 million in state and local tax cuts, restructuring Florida's holiday calendar from the ground up, and permanently ending some exemptions while creating new ones that have never existed before.
If you sell into Florida — from a storefront, a website, or an ecommerce platform — your compliance setup for 2026 looks different than it did in 2025. Here's what changed, what's new, and what's gone.
This is the headline that Florida shoppers are just discovering.
Florida's Freedom Month does not return on July 1, 2026. Lawmakers reorganized many of the state's tax breaks, making some permanent and moving others to different sales tax holidays.
For several years, Florida's July sales tax holiday — Freedom Month — covered an enormous range of purchases: camping gear, museum admissions, concert tickets, gym memberships, boating and fishing supplies, and more. It grew into one of the most anticipated retail events in the state.
Then in 2025, lawmakers rewrote Florida's approach entirely. Instead of renewing Freedom Month, legislators reorganized many of its tax exemptions — making some permanent year-round, moving others into different holidays, and simply letting others expire.
For consumers, the overhaul means there is less of a need to wait for a particular week — or even a particular month — to make certain purchases. Permanent exemptions are better than temporary holidays for planning purposes. But at the same time, new rules also mean that shoppers can no longer assume a familiar tax holiday will return simply because it appeared on the calendar the prior year.
For retailers, the overhaul means the compliance landscape has fundamentally changed — and last year's setup doesn't apply in 2026.
The most significant new addition to Florida's holiday calendar is a four-month sales tax holiday specifically for outdoor recreation products.
Starting September 1, 2026, through December 31, 2026, qualifying hunting, fishing, and camping supplies are exempt from Florida sales tax.
The qualifying items cover the full range of outdoor recreation gear:
Ammunition, firearms, bows, crossbows, rods and reels, fishing tackle and lures, fishing poles, tackle boxes, coolers, ice chests, outdoor grills and cooking equipment, tents, sleeping bags and ground cloths, camping stoves and fuel, lanterns, flashlights and batteries, certain knives and multi-tools, life preservers and personal flotation devices, and waders and fishing boots.
Four months — September through December — is the longest single holiday window in Florida's history. And the categories are unusually broad. Firearms and ammunition qualifying for a sales tax exemption is notable — making Florida one of only a handful of states offering explicit tax relief on these categories, alongside Louisiana and Mississippi's existing Second Amendment holidays.
For retailers selling any of these categories, September 1 is the compliance date to prepare for. Systems need to be updated to apply the exemption to qualifying items during the holiday window — and reverted on January 1.
Florida's back-to-school sales tax holiday isn't new — but its dates have shifted significantly.
The new back-to-school sales tax holiday created last year will now begin on July 20 before school starts and run through August 20 each year.
Previously, Florida's back-to-school holiday ran in early August — a timing that felt disconnected from the actual school calendar for many Florida districts that start in late July. The shift to July 20 through August 20 better aligns the holiday with when Florida families are actually shopping for school.
The move also creates a compliance wrinkle for multi-state retailers. Florida's July 20 start now overlaps with Iowa's August 7-8 holiday, Missouri's August 7-9 holiday, Texas's August 7-9 holiday, Ohio's August 7-9 holiday, and Illinois's August 7-16 holiday — meaning retailers managing multiple state holiday calendars are handling Florida separately from the August cluster.
The qualifying categories for Florida's back-to-school holiday remain consistent with prior years: clothing, footwear, school supplies, learning aids, and personal computers and related accessories. The month-long format — 32 days — remains the longest back-to-school holiday in the country by a significant margin.
For retailers, the July 20 start means back-to-school compliance in Florida begins several weeks earlier than most other states. If your systems were configured based on the old August dates, update them now.
Florida's approach to hurricane preparedness tax relief has evolved — and the new structure is meaningfully different from the temporary exemptions that preceded it.
HB 7031E allows purchasers of home hardening products — such as impact-resistant doors, garage doors, and windows — to seek a sales tax refund for purchases between July 1, 2026, and June 30, 2029.
This is a refund program, not an exemption at point of sale. The distinction matters for retailers and consumers alike.
Under the old approach, impact-resistant doors and windows were tax-exempt during specific holiday windows — meaning no tax was collected at checkout during the holiday period. Under the new approach, the full sales tax is collected at the time of purchase. Homeowners then apply for a refund — up to $500 — after the fact.
Homeowners investing in storm-hardening upgrades have a multi-year window to claim the $500 refund, but the application must be made before September 30, 2029.
For retailers: you collect full sales tax on these items as you normally would. The refund is between the homeowner and the Florida Department of Revenue — not a point-of-sale exemption you need to apply. If customers ask, clarify that the exemption is now a post-purchase refund rather than a checkout discount.
This one is straightforward and permanent.
HB 7031E creates a permanent tax exemption for propane tanks with a capacity of 20 pounds or less.
Standard 20-pound propane tanks — the kind used for backyard grills, camping stoves, and patio heaters — are now permanently exempt from Florida sales tax. There's no holiday window, no expiration date, and no application required.
For retailers selling propane tanks: update your POS system to apply the exemption to 20-pound and smaller tanks starting July 1. Larger tanks — 30-pound, 40-pound, 100-pound — are not covered by the exemption and remain taxable.
This exemption doesn't require a holiday window or system clock — it's a permanent product-level change that applies to every qualifying sale from July 1 onward.
Separate from the home hardening refund program, HB 7031E also creates a temporary sales tax exemption on impact-resistant windows and doors.
The bill temporarily exempts impact-resistant windows and doors for three years — through June 30, 2029.
This is an at-the-register exemption — unlike the refund program for broader home hardening products. Impact-resistant windows and doors are tax-exempt at the point of sale from July 1, 2026, through June 30, 2029.
The distinction between the two programs — refund for some home hardening products, direct exemption for impact-resistant windows and doors — reflects the legislature's attempt to balance consumer benefit with administrative simplicity. Windows and doors are clearly defined categories. The refund program covers a broader but harder-to-define range of home hardening products.
For retailers selling impact-resistant windows and doors: apply the exemption at the register from July 1. No customer paperwork required. For retailers selling other home hardening products: collect normal sales tax and direct customers to the Department of Revenue's refund application process.
HB 7031E includes two tax rate changes that affect specific industries.
The tax on slot machine revenues drops from 35% to 34% — a 1 percentage point reduction for Florida's pari-mutuel facilities and tribal gaming operations that offer slot machines.
The gross receipts tax on cardroom revenues drops from 8% to 5% — a 3 percentage point reduction for facilities offering poker and other card games.
These aren't sales tax changes — they're excise and gross receipts tax changes. But they affect the overall tax burden for gambling industry participants in Florida and reduce the effective cost of operating these facilities in the state.
For alcohol, HB 7031E also makes adjustments to tax rates on alcoholic beverages. Retailers and distributors should verify updated rate schedules through the Florida Department of Revenue to confirm their specific product categories.
Florida's 2026 tax overhaul is the most significant restructuring of the state's sales tax holiday system since the holidays began. The shift from Freedom Month and temporary annual holidays toward a mix of permanent exemptions and restructured holiday windows reflects a deliberate policy decision — predictability and permanence over novelty and frequency.
For retailers, the practical implications are significant:
The back-to-school holiday now starts July 20 — earlier than most retailers' systems were configured for. Update now, not when the holiday arrives.
The hunting, fishing, and camping holiday starts September 1 — a completely new four-month window covering categories that have never had a Florida holiday before. Firearms, ammunition, camping gear, fishing tackle — all qualifying for the first time. Systems need to be updated before September 1.
The propane tank exemption is permanent — it's a product-level change, not a holiday window. Configure it as a permanent exemption in your tax software, not a time-limited holiday rule.
Impact-resistant windows and doors are exempt at the register through June 2029 — a three-year at-the-register exemption that requires a product-level configuration update, not a date-based holiday rule.
The home hardening refund program requires no change to your point-of-sale system — but you should be prepared to explain to customers that the refund application happens directly with the Department of Revenue, not at your register.
Freedom Month exemptions that are now permanent year-round don't require holiday window management — but verify which specific items moved to permanent status versus which moved to other holidays, to avoid misclassifying taxable items as exempt outside their valid windows.
We expect the Florida Department of Revenue will issue additional guidance related to these new exemptions. Monitor the Department's website for further updates before the September 1 hunting, fishing, and camping holiday begins.
For a complete overview of every 2026 state sales tax holiday — including Florida's updated schedule alongside Ohio, Massachusetts, Connecticut, Iowa, Texas, and more — visit our complete 2026 sales tax holiday guide.
Selling into Florida and want to make sure your systems are configured correctly for the restructured back-to-school holiday, the new September hunting and camping holiday, and the new permanent exemptions that took effect July 1? Book a free consultation with our team at sales.tax. We'll audit your Florida compliance setup and make sure every change is applied correctly before the next holiday window opens.
Something that has never happened before is now happening in multiple states simultaneously.
Three states — Ohio, Arizona, and Illinois — have all suspended their data center sales tax exemptions in 2026. Virginia created a new energy consumption tax on data centers last month. Texas is outlining plans to repeal its own exemption in 2027. Utah's governor issued an executive order restricting data center development.
Arizona, Illinois, and Ohio have all paused data center tax incentives in 2026. Arizona enacted a three-year moratorium on its data center sales tax exemption through a budget that runs from July 1, 2026, until June 30, 2029. Illinois Governor Pritzker directed the state's Department of Commerce and Economic Opportunity to pause tax incentives beginning July 1, 2026. And Ohio Governor DeWine took similar action. Sales Tax Calculator
The era of automatically available, unquestioned data center sales tax exemptions — which drove more than $1 trillion in U.S. data center investment over the past decade — is ending. Not gradually. All at once.
Every state's data center exemption story follows the same arc. And it always comes back to one problem: the projections were spectacularly wrong.
Ohio reported that the tax incentive cost $1.6 billion in 2025 — more than twelve times the budget estimate of $136 million. In Georgia, current revenues are showing a cost of approximately $2.5 billion, nearly eight times the budget estimate of $327 million. Pennsylvania's estimate of $45 million has more than quadrupled to almost $190 million. Madrasaccountancy
Virginia's exemption — originally projected to cost $1.54 million per year — cost $1.6 billion in 2025.
Indiana's exemption cost $655 million in 2025 — an amount that shocked lawmakers who had no idea it had grown that large, with 86% going to Amazon alone.
The AI boom that began with ChatGPT's launch in late 2022 turbocharged data center construction far beyond anything any state projected when it created its exemption. The exemptions worked — spectacularly. And in working, they created fiscal problems that are now triggering political responses across the country simultaneously.
Ohio Governor Mike DeWine announced he directed the chair of the Ohio Tax Credit Authority to pause consideration of any new data center tax exemption requests while the Ohio General Assembly's Joint Data Center Committee studies the growth of data centers in Ohio. Numeral
The governor said the moratorium was announced hours after Signal Statewide reported the tax breaks' value had grown to nearly $1.6 billion in 2025 — or 11 times larger than state estimates. It will continue while a special legislative committee holds hearings on data centers.
The last exemption approved before the moratorium took effect — a $42.3 million tax break for Cologix Inc.'s planned data centers in suburban Delaware and Licking counties — was grandfathered in because it was already in the pipeline. As a condition of taking the state tax incentive, Cologix promised to spend $1.17 billion to build the new data centers, hire 90 full-time workers before 2035 with a payroll of $10 million, and keep its new facilities operating for at least 13 years.
Republican legislators tried to eliminate the state's data center tax exemption last summer, but DeWine blocked them with a veto. GOP House Speaker Matt Huffman has announced plans to overturn the veto, but has said he's so far been unable to muster enough Republican votes to do so. Mass.gov
Meanwhile, two bills are moving through the Ohio legislature that would go further than the moratorium: House Bill 975 would end the sales tax exemption entirely, effective October 1, 2026. Senate Bill 374 — its companion — would end the exemption on October 1, 2027.
The moratorium is a pause. The bills are a potential permanent end.
In Arizona, Governor Katie Hobbs approved a budget that includes a three-year moratorium on the state's data center sales tax exemption. The pause prohibits the Arizona Commerce Authority from accepting applications for the exemption from July 1, 2026, until June 30, 2029.
Today — July 1 — is the first day that moratorium is in effect.
While Governor Hobbs celebrated the tax moratorium's enactment, it is a step back from her initial request to eliminate the tax exemption entirely. Arizona's legislature was willing to pause but not to permanently eliminate — a compromise that mirrors the broader political tension in every state where this fight has played out.
Three years is a significant runway. By June 2029, the AI infrastructure build-out will have matured further, the fiscal costs will be more completely documented, and Arizona's legislature will face the question of what to do at a point when the data center industry has already absorbed the pause.
For data center operators who had Arizona applications in the pipeline, the message is blunt: if you weren't approved before today, you're waiting until at least July 2029.
Illinois Governor J.B. Pritzker paused data center tax incentives starting July 1 and encouraged lawmakers to adopt additional restrictions during the fall veto session, including residential ratepayer protections and water permitting requirements.
Illinois's pause is distinct from Arizona's three-year moratorium — it's an executive direction rather than a budget provision, and it doesn't have a defined end date. The fall veto session is the next opportunity for Illinois lawmakers to act, where Pritzker wants to see residential ratepayer protections and water permitting requirements become law — conditions that would reshape how data centers operate in Illinois, not just whether they receive tax breaks.
For Illinois data center operators, the pause on new exemptions is effective today. Existing exemptions are not affected. But the broader direction — toward environmental conditions, ratepayer protections, and water restrictions — signals that Illinois is moving from an unconditional welcome to a conditional one.
We've covered Virginia's data center fight in detail throughout 2026 — and its resolution is now the template that other states are measuring themselves against.
Virginia didn't eliminate its exemption. It didn't impose a moratorium. It created a new $600 million per year energy consumption tax on data centers while preserving the equipment exemption that drives investment decisions, and created a study subcommittee reporting by December 15.
Virginia's Governor Spanberger pushed back on legislative proposals to curtail the state's data center tax exemption — and the final resolution preserved the exemption while creating new revenue through an energy tax. TaxJar
The Virginia model — preserve the investment incentive, generate new revenue from operations, study the long-term picture — is the most industry-friendly of the approaches being taken nationally. Ohio, Arizona, and Illinois are all taking harder lines.
Texas Governor Greg Abbott directed state regulators to ensure data centers pay for their own electric infrastructure and interconnection costs so residential ratepayers are not burdened. His 2027 legislative priorities include requiring data centers to use water-efficient cooling systems, add to the state's electric capacity, meet siting and setback requirements, and repealing sales tax exemptions for data centers.
Texas is the most important data center market after Virginia. If Texas repeals its data center sales tax exemption in 2027 — as Abbott's stated legislative priorities indicate — the ripple effect on investment decisions would be unlike anything Ohio's, Arizona's, or Illinois's pauses have created.
Texas's legislature only meets every two years — the next session opens in January 2027. Abbott's stated priorities carry significant political weight in a legislature where he holds substantial influence. The 2027 Texas legislative session on data center taxation is shaping up to be the most consequential chapter yet in this national story.
Ohio and Illinois aren't the only Republican governors taking action.
Utah Governor Spencer Cox released an Executive Order outlining his data center framework, establishing new restrictions on data center construction and operations — directing state agencies to weigh water use, air quality, wildlife impacts, and ratepayer protections alongside economic growth. Mass.gov
Utah's approach is different from a tax exemption pause — it's a broader regulatory framework that makes data center development more conditional rather than simply stopping new tax breaks. But the direction is the same: states that were previously unconditional welcomes for data center investment are now asking harder questions.
A local group in Ohio is trying to get a data center ban on the November ballot that would prohibit data centers with a peak load of more than 25 megawatts per month.
A full ban — not just a moratorium on tax exemptions, but a prohibition on large data center construction — would be unprecedented. Whether the initiative qualifies for the November ballot and whether Ohio voters would approve it are both uncertain.
But the effort reflects something real: in communities adjacent to large data center campuses, the conversation has shifted from economic benefit to concern about utility costs, water use, environmental impact, and neighborhood character. The tax exemption fight at the statehouse and the ballot initiative fight at the community level are parallel expressions of the same underlying tension.
The simultaneous pauses in Ohio, Arizona, and Illinois create a specific compliance and strategic challenge for data center operators.
Existing exemptions are unaffected. All three states' pauses apply to new applications only. Data centers that already hold approved exemptions continue to receive them under existing terms.
Pipeline applications are at risk. Any data center project that was in the application process but not yet approved before the pause took effect is now in limbo. Ohio's last approval was the Cologix project on May 30. Arizona's last approvals were whatever cleared before July 1. Illinois's timeline depends on the specific application status before Pritzker's direction took effect.
New projects need alternative strategies. For hyperscalers evaluating sites for new builds, Ohio, Arizona, and Illinois now have a higher effective cost of development — the equipment and infrastructure purchases that would have been exempt will be taxable until the pause is lifted or the exemption is reinstated.
Virginia's model is the new benchmark. Data center operators negotiating with state governments should understand the Virginia resolution — energy consumption tax, exemption preserved, study commission — as the most favorable outcome achievable in the current political environment. Arguing for no change at all is no longer a viable position in most states.
Texas 2027 is the watch item. If Abbott follows through on repealing Texas's data center sales tax exemption in the 2027 legislative session, it will be the single largest change to the data center investment landscape since Virginia's fight earlier this year. Operators planning Texas builds need contingency models for a post-exemption Texas.
The economic development incentive is somewhat downstream of the overall data center debate. A section of the population may be comfortable with data center development, but not with public subsidies at the current scale. Governor DeWine's moratorium is driven primarily by revenue impacts. Madrasaccountancy
The trend isn't universal — New York Governor Kathy Hochul has signaled that she does not support a moratorium making its way through the legislature. Virginia Governor Spanberger pushed back on proposals to curtail the state's exemption. Sales Tax Calculator
Not every state is moving in the same direction at the same speed. But the direction is clear: the era of states competing to offer the most generous, unconditional data center tax exemptions is over. What replaces it — conditional exemptions, energy taxes, moratoriums, or outright repeal — will vary by state. But the baseline assumption that a data center in America gets a sales tax exemption on its equipment is no longer valid everywhere.
Operating a data center in Ohio, Arizona, Illinois, or any state currently reviewing its exemption — or planning a new data center build and trying to understand the tax landscape across potential locations? Book a free consultation with our team at sales.tax. We'll walk through your current exemption status, model the compliance implications of each state's approach, and help you navigate the rapidly shifting data center tax landscape.
As of this morning, buying a $1,000 laptop in Charlotte costs $10 more in sales tax than it did yesterday.
Mecklenburg County's sales tax increased by one percentage point starting July 1 — raising the total sales tax rate from 7.25% to 8.25%. The tax increase affects purchases including clothing, electronics, dining out, and alcohol.
This is the first rate change in Charlotte in 28 years — a reflection of how long the metro area maintained stable tax rates even as it doubled in population.
It's a significant moment for one of the fastest-growing cities in America. And for every business selling into Mecklenburg County — whether from a Charlotte storefront or a warehouse in another state — the compliance obligations changed the moment the calendar flipped to July 1.
Mecklenburg County added a 1.00% county rate of sales and use tax effective July 1, 2026. The total general state rate and local rates of sales and use tax in Mecklenburg County increased from 7.25% to 8.25%.
Here's how the combined rate breaks down after today:
The additional 1% approved by voters in November 2025 will generate an estimated $19.4 billion over 30 years for transit expansion — with 40% funding rail projects like the Red Line commuter rail to Davidson, 40% for road improvements, and 20% for enhanced bus service.
Voters narrowly approved the tax referendum in November, with 52% voting in favor and 47% against. A close result — but a binding one. The rate is now 8.25% and stays there.
A $1,000 laptop purchased in Mecklenburg County yesterday would have cost $1,072.50 after tax. The same laptop purchased today costs $1,082.50 — about an extra $10.
That gap compounds across categories:
| Purchase | Yesterday (7.25%) | Today (8.25%) | Difference |
|---|---|---|---|
| $500 TV | $536.25 | $541.25 | +$5.00 |
| $1,000 laptop | $1,072.50 | $1,082.50 | +$10.00 |
| $2,000 appliances | $2,145.00 | $2,165.00 | +$20.00 |
| $50,000 vehicle | $53,625.00 | $54,125.00 | +$500.00 |
A Charlotte retailer doing $500,000 in annual taxable sales will collect an extra $5,000 starting July 1, 2026 — money that flows through their books but never touches their bottom line. That's $5,000 more in compliance tracking, reconciliation work, and audit exposure.
For individual shoppers, the increase is modest per transaction. For businesses managing high-volume sales, it's a meaningful new compliance and cash flow consideration.
The new 1% county rate applies broadly — but not to everything.
The additional 1.00% county rate does not apply to certain items that are subject to their own specific tax rates. The tax rate applies to all taxable items except those subject to a specific rate of tax.
Items taxed at specific rates rather than the general combined rate — including certain food, motor vehicles, and other categories with their own statutory rate structures — are excluded from the new 1%. These items were already subject to different rate calculations and continue under those specific rates unchanged.
Gas and most groceries will not be impacted. North Carolina taxes food at a reduced rate structure, and the new 1% county addition does not layer onto those reduced-rate categories. Zamp
For the vast majority of retail purchases — clothing, electronics, furniture, restaurant meals, alcohol, taxable services — the full 8.25% applies starting today.
Here's the compliance detail that's generating the most confusion for Mecklenburg County businesses — and the one most coverage has missed entirely.
The new tax rate will require updates to the sales and use tax forms. Retailers will be required to use the new forms for periods beginning on or after July 1, 2026. The Sales Tax People
New sales and use tax return forms will be required for all filing periods beginning on or after July 1, 2026. Updated forms are expected to be available from NCDOR by August 1, 2026. If you file electronically, the NCDOR will update its online filing system. Businesses that receive paper booklets by mail can expect updated forms to arrive in July or August. Forms will also be available directly on the NCDOR's website or by calling 1-877-252-3052.
This is a two-part compliance obligation: update the rate you collect AND update the form you use to report it. Using the old form for July 2026 transactions creates a filing error — even if the tax amount is calculated correctly.
For businesses that file electronically — which is most businesses — the NCDOR will update the online system automatically. But verify before you file your first post-July 1 return that the system is presenting the updated form, not the prior version.
For businesses that file paper returns: the new booklets will arrive in July or August. Don't use old forms for the new period.
Shopper Krista Cavelli said the higher tax could influence where people choose to make purchases. "I usually shop in South Carolina as much as I can."
Ahmad Homsi said: "If I'm buying something, I do consider alternatives to North Carolina, especially now that it's going up." Zamp
Charlotte sits close enough to the South Carolina border that cross-state shopping on major purchases is a real behavioral option for a meaningful share of residents. South Carolina's combined state and local rate in border areas runs at 7% to 8% — now at or below Mecklenburg County's rate in many cases.
This is the same border shopping dynamic we've covered in Massachusetts vs. New Hampshire and Indiana's gas tax story. When one jurisdiction's rate jumps meaningfully above a neighboring option, some share of consumer spending migrates. For Charlotte retailers selling high-ticket items to price-sensitive customers, that migration is worth monitoring over the next quarter.
After the increase, Charlotte's 8.25% rate ranks among major metros nationally — matching Dallas at 8.25%, though still below Seattle at 10.25% and Los Angeles at 9.5%.
Charlotte at 8.25% is firmly in the upper tier of major U.S. city rates — no longer the low-tax outlier it was among comparable metros. For businesses making location decisions and consumers making large purchase decisions, that positioning matters.
This rate change isn't limited to businesses with physical Charlotte locations. Every ecommerce seller shipping taxable goods to Mecklenburg County addresses is affected.
Post-Wayfair, North Carolina requires remote sellers to collect sales tax based on economic activity alone. The threshold: $100,000 in gross sales in the previous or current calendar year. North Carolina eliminated its 200-transaction requirement on July 1, 2024, simplifying compliance.
If you meet North Carolina's $100,000 economic nexus threshold and ship to Mecklenburg County, you're collecting 8.25% starting today — not 7.25%. Remote sellers who aren't using address-level tax calculation in North Carolina may be collecting the wrong rate on Mecklenburg County deliveries as of this morning.
Purchasers are liable for the new rate of use tax if the retailer does not collect the tax at the time of sale. That means if your system doesn't update automatically and you continue collecting 7.25% on Charlotte deliveries, your customer technically owes the difference as use tax — and you've created an under-collection exposure on your side.
We encourage all Mecklenburg County retailers and businesses with taxable transactions sourced to the county to take the following steps: update your point-of-sale systems, invoicing software, and accounting platforms to reflect the new 8.25% rate; review any existing contracts or lease agreements that include sales tax provisions; confirm whether any products or services you sell fall into the excluded categories listed above; communicate the upcoming change to your finance, billing, and operations teams.
For ecommerce sellers specifically: confirm your sales tax engine is applying the correct county-level rate for Mecklenburg County transactions from July 1 onward. The Sales Tax People
The transition edge cases worth thinking through:
Orders placed June 30, delivered July 2: In North Carolina, sales tax is generally due at the time of sale — the date the order was placed. A June 30 order taxed at 7.25% is correct even if it ships on July 2. But verify your state-specific rules and how your platform handles this distinction.
Subscription renewals: If you sell subscription services to Mecklenburg County customers and renewals process automatically, confirm the billing system is pulling the updated rate for any renewals processing on or after July 1.
Existing contracts: Review any existing contracts or lease agreements that include sales tax provisions. If you have contracts with Mecklenburg County customers that quote a sales tax rate or all-in price inclusive of tax, those agreements may need amendments or at minimum acknowledgment that the rate changed.
New forms: Verify your electronic filing system is presenting the updated NCDOR form before submitting your first post-July 1 return. Don't use old forms for new filing periods.
Charlotte's 28-year run of stable sales tax rates was unusual by any measure. Most major metros see local rate adjustments every several years. Charlotte's stability reflected both strong revenue growth from the metro's economic boom and political reluctance to raise consumer-facing taxes in one of the South's most competitive business environments.
That stability is over — and the transit investment driving the new rate has a multi-decade timeline. The Red Line commuter rail, road improvements, and bus network enhancements funded by today's rate increase will be under construction and operating for years to come. Businesses planning long-term in Charlotte should treat 8.25% as the new baseline, not a temporary adjustment.
Whether another rate change comes in another 28 years — or much sooner — depends on Charlotte's continued growth, its infrastructure needs, and the political appetite of future voters. For now, 8.25% is the number.
Selling into Mecklenburg County and want to confirm your systems are collecting the right rate today — or need help with the new NCDOR form requirements for your July filing period? Book a free consultation with our team at sales.tax. We'll verify your North Carolina compliance setup and make sure your first post-rate-change return is filed correctly.
For nearly a century, a simple rule made cross-border shopping cheap and easy: if your package was worth less than a certain amount, it crossed the border duty-free, with minimal paperwork.
That era just ended — on both sides of the Atlantic.
The $800 de minimis exemption — the rule that let Americans receive low-value international shipments duty-free — has now been eliminated for every country, in two waves. China and Hong Kong lost it first, effective May 2, 2025. Then, effective August 29, 2025, the exemption was suspended for shipments from all other countries as well.
And today — July 1, 2026 — the European Union's version starts disappearing too.
Starting July 1, 2026, every low-value parcel entering the EU faces a flat €3 customs duty for the first time, with full duty assessment following in 2028 once the exemption is fully removed. TaxCloud
If you sell internationally, sell on platforms like Temu, Shein, or Amazon Global, or import products for resale, today marks a genuine turning point. Here's what changed, what it costs, and what you need to do.
The $800 de minimis rule was an exemption that allowed low-value shipments to enter the country duty-free and with minimal paperwork.
For years, it has been one of the most important mechanisms in cross-border ecommerce, allowing low-value shipments to enter markets duty-free and enabling direct-to-consumer brands to stay competitive on price. Numeral
The concept made sense administratively — processing customs paperwork on a $15 phone case isn't worth the government's time or the importer's cost. But the volume exploded. Chinese ecommerce platforms built entire business models around shipping millions of individual low-value packages directly to U.S. consumers, each one slipping under the $800 threshold and avoiding duties entirely.
For nearly a decade, cross-border sellers and platforms such as Shein and Temu leaned on the exemption to flood the U.S. with low-value packages. Meanwhile, American retailers shipping to other countries paid tariffs, hired brokers, and navigated customs compliance. Mass.gov
That asymmetry — foreign sellers avoiding duties while domestic retailers paid them — became the central argument for ending the exemption.
Feb. 1, 2025: President Trump signs executive orders imposing tariffs on Mexico, Canada, and China, citing national security concerns under the International Emergency Economic Powers Act.
May 2, 2025: De minimis ends for China and Hong Kong. Low-value imports from these countries became subject to either the applicable tariff rate or a flat postal duty.
August 29, 2025: The United States suspends duty-free de minimis treatment for shipments from all other countries as well — meaning the $800 threshold no longer applies to any country of origin.
February 2026: The administration continued the suspension by executive order, extending what had originally been framed as a temporary measure. Tax Foundation
The modifications effective February 24, 2026 included a duty equal to the rate set in a February 20, 2026 proclamation on temporary import surcharges, assessed on the value of each dutiable postal item. Galvix
What started as a targeted measure against China for fentanyl-related concerns expanded into a global policy within seven months. By 2026, there is no country whose shipments still qualify for de minimis treatment entering the United States.
By 2026, essentially every package from every country is subject to tariffs regardless of value.
For postal shipments specifically, the structure is unusual: specific duty: a flat rate per item, ranging from $80 to $200, depending on the country of origin's IEEPA tariff. CBP does not prepare entries for postal shipments. Instead, the carrier or another qualified party remits the duties monthly.
Starting February 28, 2026, carriers must use the ad valorem duty method exclusively — meaning duties calculated as a percentage of the item's value, rather than a flat per-item fee, became the standard going forward.
Shipments of up to $800 in goods from China and Hong Kong now face a 54% tariff or a $100 flat fee.
For consumers and small importers, the real-world impact has been concrete and immediate. A pair of lined slippers made in China and shipped to the U.S. that previously cost $30 now costs significantly more once duties are applied.
While the U.S. fight has been settled for months, today marks the EU's turning point.
The European Council voted to phase out the de minimis exemption on November 13, 2025, ending a key benefit that many ecommerce businesses built their models around. The rollout follows a two-phase approach. TaxCloud
Phase one — today, July 1, 2026: A flat-rate customs duty of €3 per HS code applies to every low-value parcel entering the EU. The charge is per HS code, not per package or per SKU. A parcel containing items under a single HS code triggers one €3 charge — even if those items are different SKUs. A parcel that spans two distinct HS codes triggers two €3 charges.
Phase two — mid-2028: This is when EU de minimis is fully removed. The €3 flat rate disappears, and parcels get assessed at standard import duties — the same product-specific tariff rates that apply to commercial bulk shipments today.
This is law, with a fixed start date. There is no grace period. TaxCloud
Fashion, accessories, jewelry, beauty products, home goods, and electronics under €150 will experience the most significant impact. Textiles typically face duty rates around 12%, while electronics often see lower rates of 0-5%.
If you sell direct-to-consumer into Europe and have shipments processed today without accounting for the new €3 per-HS-code charge, you're either absorbing an unexpected cost or under-charging your customers.
The EU's elimination is more aggressive than the US approach. The United States eliminated its $800 de minimis exemption in two phases — for China imports on May 2, 2025, and for all other countries on August 29, 2025. Both regions acted in response to the massive volume of low-value shipments from Chinese ecommerce platforms. TaxCloud
The U.S. approach was blunt — eliminate the threshold entirely and apply existing tariff rates immediately. The EU approach is more gradual — a small flat fee now, full duty assessment in 2028. But the destination is the same: neither region will have a meaningful duty-free pathway for low-value imports by the end of this decade.
In 2026, the era of widely accessible de minimis thresholds like the $800 limit in the US or €150 in the EU is coming to an end. Governments are shifting away from value-based exemptions and toward more consistent duty collection, stricter enforcement, and new fee structures. Numeral
Not every country has moved. Australia's AUD $1,000 threshold remains unchanged — still applies for duties and taxes unless the merchant is registered for GST under Australia's Low Value Imported Goods rules, in which case GST is collected at checkout. Singapore's SGD $400 threshold also remains unchanged, with similar GST registration rules applying.
Governments are shifting away from value-based exemptions and toward more consistent duty collection, stricter enforcement, and new fee structures. Numeral
For now, Australia and Singapore represent two of the larger remaining markets where de minimis-style thresholds persist — though both increasingly require GST registration that achieves a similar revenue-capture effect without eliminating the threshold outright.
The end of de minimis creates clear winners and losers — and they're not who you might initially expect.
Winners:
The suspension could be a boon for merchants and brands that source products in America. This is particularly true for small direct-to-consumer businesses that pay U.S. wages while competing with goods manufactured offshore in markets with extremely low labor costs. The second group to benefit could be every domestic retailer that already pays import duties. Mass.gov
For years, U.S. retailers importing in bulk and paying full duties competed against direct-to-consumer foreign sellers who avoided those same duties through de minimis. That competitive disadvantage is now gone.
Losers:
The end of de minimis will likely reduce the number of smaller international sellers able to compete in the U.S. market. Many emerging brands will find the extra costs and paperwork too burdensome to justify selling here.
Without de minimis, the final price you pay for imported goods will rise, sometimes sharply, because duties, taxes, and import fees will now be applied to every purchase. Delivery may also take longer due to increased customs processing. These changes aren't just about luxury goods — everyday items like slippers, supplements, and kitchen knives will also be hit with higher costs. Sales Tax Calculator
Consumers are the most direct losers — paying more for imported goods across nearly every category, with less product variety as smaller foreign sellers exit the U.S. market entirely.
The smartest cross-border sellers aren't waiting for further policy clarity — they're restructuring their operations now.
One of the most effective approaches is in-country enablement, often referred to as forward stocking. Rather than shipping each order individually across borders, brands import inventory in bulk into a local or regional fulfillment center. This changes the cost structure significantly. Duties are paid once, and typically on the cost of goods rather than the final retail price, which can result in substantial savings. Just as importantly, orders are fulfilled domestically, leading to faster delivery times, fewer customs delays, and a smoother post-purchase experience for customers. Numeral
For small business importers, consider these approaches: consolidate orders into larger bulk shipments to reduce per-unit brokerage costs and amortize duties and fees across more units; compare sourcing by total landed cost across origins, since de minimis no longer favors any country — the differentiators are now the tariff rate, free trade agreement eligibility, and freight cost; renegotiate supplier terms to account for duty costs by requesting Delivered Duty Paid pricing so the supplier handles customs and you get a predictable landed cost; and run the numbers on domestic sourcing or near-shoring to Mexico, where USMCA-qualifying goods enter at 0% reciprocal tariff. Tax Foundation
Here's the angle that connects directly to your sales tax obligations — and it's the piece most de minimis coverage leaves out entirely.
When tariffs increase your landed cost on imported goods, that higher cost flows into your retail price. And in most states, sales tax applies to your full retail price — including the portion that reflects the tariff you paid. We covered this in depth earlier this year: several states, including California and Wisconsin, have confirmed that tariff costs passed through to customers are included in the taxable sales price.
That means the end of de minimis doesn't just increase your costs at the border. It increases the sales tax your customers owe on every transaction, because the taxable base — your sale price — is now higher. If you're not accounting for this compounding effect in your pricing and tax calculation, you may be under-collecting sales tax on every import-dependent product you sell.
If you import goods for resale: Audit your supply chain immediately. Determine your actual landed cost under current duty rates — not the cost structure you built your pricing around before 2025. Review whether forward stocking, consolidated entry, or domestic sourcing changes your economics favorably.
If you sell direct-to-consumer into the EU: Today's €3 per-HS-code charge needs to be reflected in your European pricing and checkout experience immediately. Verify your fulfillment partner or carrier is correctly applying the charge per HS code, not per package, to avoid over-or under-charging customers.
If you sell in the U.S. and source internationally: Confirm your landed cost calculations reflect current duty rates by country of origin. The 54% rate on Chinese goods and varying rates elsewhere mean a uniform markup strategy across all suppliers no longer works.
Everyone: Review how your state treats tariff costs in your sales tax calculation. Higher landed costs mean higher retail prices, which mean higher sales tax collected — verify your systems are calculating correctly on the updated, tariff-inflated price.
Importing goods internationally or selling direct-to-consumer across borders and want to understand how the end of de minimis affects your sales tax calculations and overall compliance? Book a free consultation with our team at sales.tax. We'll review your supply chain, your pricing structure, and your sales tax obligations to make sure nothing falls through the cracks as these changes compound.
Utah just became the second state in the country to tax digital advertising.
On March 25, 2026, Utah Governor Spencer Cox signed Senate Bill 287, establishing an annual targeted advertising tax at a rate equal to Utah's general state sales tax rate, currently 4.85%. The legislation imposes the tax on certain large advertising businesses based on gross receipts attributable to targeted advertising delivered to Utah users. The tax is effective for tax years beginning on or after January 1, 2027. TaxHero
Maryland was first — in 2021. Utah is second. And several states are watching closely, ready to be third.
But Utah's law has a legal problem that may prevent it from surviving long enough to generate a single dollar in revenue. The same legal battle that has consumed Maryland for five years is about to start in Utah.
Here's what the law does, who it affects, what businesses need to do, and why this story isn't over.
Utah deliberately avoided using the phrase "digital advertising" — and that choice was calculated.
Senate Bill 287 creates a new tax on "targeted advertising entities" that deliver paid advertisements to individuals or audiences in Utah using data-driven targeting methods. "Targeted advertising" includes: a business entity selling advertising space to an advertiser through a bidding process; the business entity obtains or develops individualized data profiles used to deliver the advertisement; and the recipient of the advertisement can interact with the advertisement — through a link or QR code — to access information.
In plain terms: programmatic advertising, social media advertising, search engine advertising, and any ad placement that uses individual user data to target specific audiences and allows users to click through to content. The definition is deliberately broad — and deliberately avoids the word "digital" — for legal reasons that will become clear shortly.
This is the most important distinction that most coverage of Utah's targeted advertising tax misses entirely.
SB 287 imposes the annual tax on businesses that qualify as "targeted advertising entities," defined as businesses that: deliver targeted advertising to an audience or individual located in Utah; generate gross receipts of $1 million or more from targeted advertising in Utah and $100 million or more from all targeted advertising regardless of location; and whose gross receipts for the taxable year derived from all targeted advertising constitute 50% or more of the company's total gross receipts for the year. Savant Labs
All three conditions must be met simultaneously. Let's work through what that means:
Condition 1: $1 million in Utah targeted ad revenue. You need to generate at least $1 million in gross receipts from targeted advertising delivered to Utah users specifically. For most businesses advertising in Utah, you're on the buying side — not the selling side. This threshold applies to the platforms selling ad space, not the businesses buying it.
Condition 2: $100 million in total targeted advertising revenue. Your total targeted advertising revenue — across all jurisdictions — must be at least $100 million. This effectively limits the tax to major advertising platforms. A mid-sized digital agency doesn't come close to this threshold.
Condition 3: 50% of total gross receipts from targeted advertising. More than half your company's total revenue must come from targeted advertising. This condition is the most restrictive — it's specifically designed to target pure-play advertising platforms like Meta, Google, and similar companies, not diversified tech companies where advertising is one revenue stream among many.
The tax rate is currently set at 4.85% of applicable gross receipts.
In practice, the three-part threshold means Utah's targeted advertising tax directly affects a very small number of companies — primarily Meta, Google/Alphabet, and similar pure-play digital advertising platforms with significant Utah revenue. Amazon's advertising business may qualify depending on how advertising revenue is calculated relative to its total e-commerce and cloud revenue. Most other businesses — including digital marketing agencies, SaaS companies, and even mid-sized advertising networks — won't hit all three thresholds.
Even though most businesses don't qualify as "targeted advertising entities," the tax has a direct impact on businesses that advertise on platforms that do qualify.
The bill also allows the State Tax Commission to administer the tax. The tax revenue would be deposited into a restricted account made for the targeted advertising tax.
But here's the practical reality: while large digital platforms would collect and remit the tax, much of the burden would fall on businesses paying to advertise in Utah — many of which are Utah-based. Just like the sales tax is collected by retailers but ultimately borne by consumers, much of the burden of this tax on advertising in the state would be shouldered by Utah businesses using these platforms to advertise to their local customer base. Quizlet
Meta and Google don't absorb a new 4.85% tax on their Utah revenue. They pass it through in the form of higher advertising costs. Utah small businesses running Facebook ads, Google search campaigns, and Instagram promotions to reach Utah customers will see their advertising costs increase — not Meta's profit margins.
Sen. Dan McCay said he is concerned that this bill may create a tariff that will be passed on to Utah's small business owners when they want to advertise. Deb Peters, a former state senator from South Dakota, warned: "It's Utah's small businesses, retailers, restaurateurs, real estate agencies, legal practices, accounting practices, just to name a few, who would feel the biggest impact."
If you run ads targeting Utah customers and your ad platform qualifies under SB 287, your effective ad cost in Utah is going up in 2027. Plan accordingly.
SB 287 wasn't the only digital tax bill Utah passed this session. It's worth knowing about the second one — Senate Bill 162 — because it affects a much broader range of businesses.
Senate Bill 162 clarifies that Utah sales and use tax applies to a broad range of digital content and services by expressly imposing tax on amounts paid or charged for access to digital audio-visual works, digital audio works, digital books, and gaming services. This includes both streaming and subscription-based access services and applies regardless of how the content is delivered and whether a customer purchases single-use access such as a one-time rental or pay-per-view event, or access through a subscription model.
Storage, use, or other consumption of prewritten computer software are taxable whether the software is delivered electronically, by "load and leave," or accessed as seller-hosted prewritten computer software such as software-as-a-service.
This isn't new — Utah has been taxing SaaS and digital content for years. But SB 162 makes the rules explicit and removes any remaining ambiguity about whether streaming subscriptions, digital downloads, and cloud software are taxable in Utah. They are. If you've been treating any of these categories as exempt in Utah, review that classification immediately.
Here's where the story gets complicated — and why businesses should monitor this carefully before building significant compliance infrastructure around SB 287.
Utah's solution to avoid Maryland's legal problems was to avoid using the phrase "digital advertising," instead levying a tax on "targeted advertising," ostensibly agnostic to whether the advertising is electronic. Senate Bill 287, however, does not actually tax anything other than digital advertising. That's a problem under the Internet Tax Freedom Act, no matter how artful the legislative language.
The Internet Tax Freedom Act — a federal law — prohibits state and local governments from imposing discriminatory taxes on electronic commerce. Maryland's digital advertising tax has been fighting ITFA challenges since 2021 — and the legal battle is still unresolved five years later. A lower court ruled that Maryland's tax violated the federal Internet Tax Freedom Act and the US Constitution under the Commerce Clause and the First and Fourteenth Amendments. Quizlet
Utah is aware of this problem. Sen. Brady Brammer raised concerns during committee that the bill may be preempted by the Internet Tax Freedom Act. McKell said he would be happy to speak to that issue with Brammer off the record. That kind of off-the-record conversation — rather than a public legal analysis — suggests the bill's sponsors knew the legal vulnerability existed and proceeded anyway. AccurateTax
Affected taxpayers also may want to monitor whether Utah's tax draws legal challenges similar to those raised against digital advertising tax imposed in Maryland. Utah's enactment could prompt additional legislative activity, and businesses should monitor whether this type of tax withstands legal scrutiny. TaxJar
The first annual return under Utah's targeted advertising tax isn't due until 2028 — giving significant time for legal challenges to work through the courts before any tax actually changes hands.
Utah joining Maryland in taxing digital advertising is significant — but it's the beginning of a trend, not the end of one.
California, Massachusetts, Minnesota, New York, Pennsylvania, and Rhode Island are also considering digital ad taxes. We've covered Minnesota's proposal in depth — a bill that passed the House and is now in the Senate, covering billboard advertising, search engine marketing, and web campaign planning. Pennsylvania's digital ad tax passed its House 139-63. New York has similar proposals advancing. Grocery Dive
As of October 2025, Maryland has raised $418 million since the digital ad tax was put in place in 2022 — despite the legal challenges. That $418 million is the number every other state legislature is staring at when they consider whether to follow Maryland's and Utah's lead. Hands Off Sales Tax
The legal battle will eventually be resolved — either by the Supreme Court taking a case, Congress amending ITFA, or states finding a legal structure that survives judicial scrutiny. Until then, every state digital advertising tax exists in a legally uncertain space where collection and compliance depend on the outcome of litigation that may take years.
If you're a large advertising platform that may qualify as a "targeted advertising entity":
Affected taxpayers should assess whether their systems can track Utah impressions and compute the required apportioned receipts amount. They also should begin evaluating data sources and compliance processes ahead of that date. In addition, businesses should monitor Utah State Tax Commission guidance and rulemaking, particularly around sourcing, reporting, return filing, and documentation.
The first return isn't due until 2028 — but building the data infrastructure to track Utah impressions and calculate apportioned receipts takes time. Start now.
If you're a business that advertises on platforms that may qualify:
Build the assumption of higher Utah advertising costs into your 2027 marketing budget. The pass-through from platforms to advertisers may not be labeled as a "targeted advertising tax" on your invoice — it may just appear as a rate increase. Monitor your ad platform's Utah-specific pricing and be prepared to adjust your campaigns or budget accordingly.
If you're a streaming service, SaaS company, or digital content provider:
SB 162's clarification of Utah's digital taxability rules means your products are taxable if they weren't already configured as such. Verify your Utah sales tax setup covers streaming subscriptions, digital downloads, gaming services, and SaaS — and that you're registered and collecting correctly.
Everyone: Monitor the legal challenge landscape. If a court issues an injunction against SB 287 before January 2027, the compliance question becomes moot until the case resolves. Don't build expensive compliance infrastructure around a law that may be blocked before it takes effect.
Advertising into Utah or selling digital content and want to understand how SB 287 and SB 162 affect your sales tax obligations in 2027? Book a free consultation with our team at sales.tax. We'll review your Utah digital tax exposure and help you prepare for both laws before January 1.
Indiana just announced one of the most generous tax amnesty programs in the country — and the window opens in 16 days.
From July 15, 2026, through September 9, 2026, taxpayers have a limited-time opportunity to pay past-due, eligible taxes and receive a waiver of related penalties, interest, and collection fees.
That's not a reduction in penalties. That's a full waiver — every dollar of accumulated interest, every penalty charge, every collection fee. Gone. If you pay the underlying tax you owe, the rest disappears.
On top of the financial relief, the program also provides lien releases and protection from civil and criminal prosecution for eligible liabilities.
For any business that has been carrying Indiana sales tax exposure — uncollected tax, unfiled returns, underreported periods — this is the most favorable resolution path that will exist in Indiana for years. Possibly decades. Indiana's last amnesty was in 2015. The one before that was 2005.
This window is real. It is limited. And most businesses that could benefit from it don't know it exists.
To understand the value of this program, you need to understand what Indiana's normal penalty structure looks like without it.
Indiana's standard late payment penalties start at 10% of the tax due — immediately. Interest accrues on top of that at the adjusted rate set quarterly by the DOR, currently running at 5% annually. For a liability that has been sitting unresolved for three years — covering tax periods from 2021, 2022, and 2023 — the accumulated interest and penalties can easily exceed the original tax principal.
A business that owes $50,000 in Indiana sales tax from 2021-2023 might be looking at $65,000 to $75,000 in total liability by the time penalties and interest are added. Under Tax Amnesty 2026, that business pays $50,000 — the tax only — and the remaining $15,000 to $25,000 in penalties and interest is wiped out entirely.
DOR is projecting it could collect between $65 million and $145 million through Tax Amnesty 2026. That projection reflects both the volume of outstanding liability in the state and the program's significant financial incentive to come forward.
The eligibility rules are broader than most people assume — and residency is explicitly not a barrier.
Residency is not a requirement — eligibility is determined by liability, not domicile. Any individual or business with eligible Indiana tax liabilities, including non-residents who earned Indiana-source income or conducted taxable sales into Indiana, may participate.
The three core eligibility requirements:
1. You have eligible tax liabilities. Liabilities for all listed taxes managed by DOR owed for tax periods ending prior to January 1, 2024, are eligible. That covers sales and use tax, individual income tax, corporate income tax, financial institutions tax, and other DOR-administered taxes. Motor Carrier Services taxes including IFTA and IRP liabilities are also eligible with direct contact to DOR or UCB.
2. You didn't participate in Indiana's 2005 or 2015 amnesty programs. Individuals and businesses that have participated in either the 2005 or 2015 amnesty programs are not eligible to participate in Tax Amnesty 2026. If you took advantage of either prior program, this one isn't available to you.
3. All your current Indiana returns must be filed. A valid amnesty election requires that all previous and current Indiana tax returns be filed. You can't participate while owing unfiled returns — the DOR requires your filing history to be current before amnesty can be granted. If you have unfiled returns, file them first.
A few categories fall outside the program's scope:
This is the most remarkable feature of Indiana's 2026 amnesty — and the one most businesses with active audits are missing.
Even businesses currently under audit with an assessment may take advantage of the amnesty window and receive the full benefits. This means that even though the Department has begun a formal review, the state believes your company is liable for tax, and took the steps to initiate a proposed assessment — a company may still opt into the amnesty window. The Sales Tax People
In most state amnesty programs, being under audit disqualifies you entirely. The audit has already started; the state found you; you've lost the proactive advantage. Indiana's 2026 program explicitly allows audited businesses to participate — meaning companies that would normally be locked into the full audit process with full penalties can still use the amnesty to settle their liability at the tax-only amount.
The one trade-off: taxpayers that pay their liabilities during the amnesty period waive their right to appeal or protest those amounts. By participating in amnesty, you're accepting the liability and giving up the ability to contest it later. For most businesses with clear-cut exposure, that's an acceptable trade. For businesses with legitimate legal defenses, it's worth evaluating carefully before participating. Taxfyle
Indiana's Tax Amnesty 2026 isn't the only resolution path available. The DOR's Voluntary Disclosure Agreement program — which provides a limited lookback period — is still available simultaneously.
Per BDO communication with the DOR, the voluntary disclosure agreement program is still available to eligible non-filers, even during the amnesty period.
Here's how to think about the choice:
Tax Amnesty 2026 is better if:
Voluntary Disclosure is better if:
Given that the VDA program provides a limited lookback period and includes all past periods including tax periods ended in 2024 and later, but does not waive interest, non-filers eligible to pay taxes under either program should review the impact of each to make the most beneficial choice. Taxfyle
The right answer depends on your specific situation. A business with three years of under-collected Indiana sales tax and no filing history might benefit more from VDA's limited lookback. A business that filed correctly but has open audit periods with significant accrued interest might benefit more from amnesty's full waiver.
Three categories of businesses have the most to gain from Indiana Tax Amnesty 2026 — and all three should be acting now, not waiting until July 15.
Ecommerce sellers who crossed Indiana's nexus threshold:
Indiana's economic nexus threshold is $100,000 in annual sales or 200 transactions. Sellers who crossed that threshold in 2021, 2022, or 2023 and never registered have been accumulating liability ever since. For multi-state retailers navigating complex sourcing rules, marketplace facilitators and third-party sellers, and businesses mistakenly using the wrong exemption or resale certificate — this amnesty is specifically designed for you. The Sales Tax People
Businesses that misclassified products or services:
Indiana has specific rules about what's taxable and what's exempt. SaaS is generally not taxable in Indiana. Certain digital products are. Services that seem like professional services may actually be taxable if they involve tangible personal property. Misclassification errors that have accumulated over multiple years — taxing things that should be exempt, or not taxing things that should be taxed — create liability that amnesty can resolve cleanly.
Businesses with Indiana locations that haven't reviewed their nexus:
A remote employee working from Indiana, a warehouse or fulfillment partner in Indiana, a sales rep making regular Indiana calls — any of these can create physical nexus that triggers sales tax obligations beyond what economic nexus rules would require. Physical nexus exposure that predates 2024 is eligible for amnesty.
The process is straightforward — but it has specific steps and a hard deadline for each.
Step 1: Check your eligibility now.
The tax amnesty tool allows individuals and businesses to check their eligibility to participate in Tax Amnesty 2026. Information about the tool and what to do if your liabilities are amnesty-eligible can be found in the FAQ on the DOR's page. The eligibility tool is available through INTIME.
Visit in.gov/dor/amnesty to access the eligibility tool. If you receive a letter from UCB (United Collection Bureau) or the DOR announcing amnesty eligibility, that's a signal you have identified liabilities in the system — act on it immediately.
Step 2: File any missing Indiana returns.
Before you can participate, all your Indiana returns must be filed and current. If you have unfiled returns from 2021, 2022, or 2023, file them before July 15. Filing now gives you time to review the returns and prepare for amnesty without the pressure of the deadline.
Step 3: Calculate your liability.
Determine exactly what you owe — the tax principal only, for periods ending before January 1, 2024. Penalties and interest will be waived, so you need the clean underlying number. This is also the moment to decide whether amnesty or VDA is the better path for your situation.
Step 4: Act between July 15 and September 9.
To successfully participate, you must do one of the following between July 15 and September 9, 2026: call UCB at 888-782-5985 to arrange to pay liabilities in full or set up a payment plan, or set up an INTIME account to either pay the liabilities in full or set up a payment plan. The Sales Tax People
Step 5: Pay in full or set up a payment plan.
You must pay your liability in full prior to September 9, 2026, or have your amnesty payment plan paid in full by June 7, 2027.
Payment plan minimums: for individuals, eligible liabilities must total at least $100 to qualify for a payment plan. For businesses, eligible liabilities must total at least $500 to qualify for a payment plan.
Important: there are no extensions available for the Tax Amnesty 2026 program. Miss the September 9 deadline and the window closes permanently. The amnesty is gone. The penalties and interest come back. The Sales Tax People
If you have Indiana sales tax exposure from pre-2024 periods and choose not to participate in Tax Amnesty 2026, the options that remain are significantly less favorable.
Indiana's enforcement environment is getting tighter. The state's data matching capabilities have improved. Marketplace facilitator reporting creates a paper trail for sales that previously went undetected. And Indiana's data center disclosure story — $655 million in exemptions, most to Amazon — has raised the state's profile as a jurisdiction that takes tax obligations seriously.
After September 9, businesses with pre-2024 Indiana liability face the full penalty and interest stack with no amnesty relief available. The next program, if Indiana follows its historical pattern, won't come until 2036.
The cost of waiting is real. The cost of acting now is just the tax you owe.
Operating a business that sells into Indiana and want to understand whether you have pre-2024 sales tax exposure that qualifies for Tax Amnesty 2026 — or whether amnesty or voluntary disclosure is the better path for your situation? Book a free consultation with our team at sales.tax. We'll review your Indiana nexus history, calculate your potential liability, and help you navigate the amnesty process before the September 9 window closes.
Weber County, Utah just made a decision that dozens of local governments across the country are wrestling with right now.
When the county needed more revenue for public safety and transportation, commissioners had two obvious options: raise property taxes or raise sales taxes.
They picked sales tax.
Weber County commissioners approved a 0.2% sales tax hike on Tuesday — generating extra revenue for public safety and transportation for the county as well as its 16 cities. Officials touted the change as an alternative to boosting property taxes.
"This gives us another pot of money to use without making the taxpayers that own real property in this county pay for those services entirely," said Commissioner Gage Froerer.
It's a small percentage point increase in a mid-sized Utah county. But the reasoning behind it — and what it tells us about how local governments are thinking about taxes right now — applies far beyond Ogden.
The rate change is straightforward.
The collective sales tax rate in most Weber County cities — including Ogden, Roy, West Haven, and North Ogden — will go from 7.25% to 7.45% when the 0.2% hike takes effect on October 1, 2026. Zamp
The current 7.25% combined rate in Weber County consists of Utah's 4.85% state rate plus county and local option taxes totaling 2.4%. After October 1, that combined rate moves to 7.45% — still well below the national average for combined state and local rates but a meaningful shift for a county that has historically kept its sales tax burden low. The Shelby Report
Froerer said the increase could generate some $8 million to $12 million in new revenue per year, citing estimates provided by the Wasatch Front Regional Council. About $2 million to $3 million of that would go to the county while the rest would be distributed to the 16 cities and locales based on population — larger locales getting more.
He estimated that new tax would generate an extra $460,000 to $1.6 million a year per city, based on population.
The revenue split reflects the county's most pressing needs — and one of them has been building for years.
Cities may use the funds generated by the new tax to cover transportation expenses, like road improvements, while the county may use the new revenue to cover expenses related to transportation and public safety.
For the county's share, the destination is almost certain. "More than likely, most of it would go to the sheriff's office," Froerer said. County funds could go to the Weber County Sheriff's Office to help expand mental health offerings at the Weber County Jail or to the Weber County Attorney's Office to keep prosecutors from leaving for better pay elsewhere.
The sheriff's office funding gap isn't a new story. Sheriff Ryan Arbon has been pushing to upgrade or expand the sheriff's office and jail facility — but voters in 2023 rejected a $98 million bond proposal to cover the costs of an expansion. He has said improvements are still needed. Zamp
The 2023 bond rejection matters because it shows Weber County voters' resistance to large one-time capital asks. The 0.2% sales tax — generating steady annual revenue for ongoing operational needs — is structurally different from a bond. It's smaller, it's recurring, and it doesn't require a public vote to implement.
One detail in the Weber County story deserves attention — it reveals how Utah's state legislature shapes local tax decisions in ways most people never notice.
Language inserted in a state transportation bill during the 2026 legislative session creates the authority for the 0.2% hike, said Stephanie Russell, economic development director for the county.
Weber County didn't create this option on its own. Utah's legislature gave counties this specific tool during the 2026 session — and Weber County moved quickly to use it. That's a pattern worth understanding: local sales tax increases often depend on state-level legislative authorization. A county can't simply decide to add a new tax category. The state has to create the authority first.
This is why monitoring state legislative sessions — not just local government meetings — is essential for businesses tracking sales tax changes. The Weber County rate change in October 2026 was enabled by a Utah bill passed months earlier, without most businesses in Ogden knowing it was coming.
This is the heart of the story — and it's a debate playing out in budget rooms across the country right now.
Property taxes and sales taxes are both legitimate local revenue tools. But they have fundamentally different political and economic characteristics — and local governments are increasingly choosing sales taxes when they need to raise revenue.
Froerer touted sales tax increases as a more palatable means of boosting taxes, in part because out-of-state visitors are among the pool of people who pay it, not just locals. "Keep in mind, a lot of the sales and use tax comes from people outside the state, outside Weber County. They're using our hotels, using our restaurants," Froerer said.
That's the core political appeal of sales tax — it spreads the burden beyond the resident property owner base. Weber County's location in northern Utah, with access to ski resorts, outdoor recreation, and regional tourism, means a meaningful share of its sales tax revenue comes from visitors who don't vote in local elections.
Property taxes work differently. They fall entirely on property owners — many of whom are long-term residents on fixed incomes who feel every increase acutely. Weber County didn't propose a property tax increase for 2025 or 2026 — and the commissioners clearly wanted to keep it that way, using the new sales tax authority as an alternative funding mechanism. Grocery Dive
The math is also different. A property tax increase requires a Truth in Taxation hearing — a formal public process with mandatory notice and public comment. A sales tax increase approved by commissioners under existing state authority doesn't carry the same procedural burden. It's politically smoother and administratively faster.
Weber County's decision is a local story — but it reflects a national trend we've been tracking all year.
Local governments across the country are turning to sales tax as their preferred revenue tool. Not because it's the most economically efficient option, but because it's politically more viable, procedurally simpler, and — when tourism is involved — partially exported to non-residents.
In Fargo, North Dakota, voters approved a 22-year sales tax extension by 73% rather than face higher property tax assessments and utility bills. In Los Angeles County, Measure ER — a sales tax increase for healthcare — barely passed, with voters choosing it over direct service cuts. In Salina, Oklahoma, a town of 3,500 voted on a 1-cent sales tax increase because property tax and income tax aren't viable local tools. In Contra Costa County, California, voters rejected a sales tax increase — one of the few cases where the sales-over-property preference broke down.
Weber County joins that list — a county that explicitly chose to give its cities a new sales tax tool rather than ask property owners to pay more.
For businesses operating in Ogden, Roy, West Haven, North Ogden, and other Weber County cities, the October 1 effective date creates a specific compliance obligation.
The current combined rate in most Weber County jurisdictions is 7.25%. On October 1, that moves to 7.45%. Every taxable transaction in those jurisdictions — retail sales, taxable services, ecommerce deliveries to Weber County addresses — needs to reflect the updated rate from the first transaction of October 1.
The practical checklist:
1. Identify your Weber County exposure. If you operate a physical location in Weber County or ship taxable goods to Weber County addresses, the rate change affects you. Out-of-state ecommerce sellers with Utah economic nexus — $100,000 in Utah sales — need to update their rates for Weber County delivery addresses specifically.
2. Contact your tax software vendor. Utah's State Tax Commission publishes updated rate tables quarterly. Verify that your tax software will pull the October 1 Weber County rate update automatically. If you manage rates manually, schedule the update now.
3. Update your POS systems before October 1. The 0.2% increase needs to be live for the first transaction of October 1 — not updated during a mid-day rush or discovered during a post-period audit.
4. Note that different cities within Weber County may have different combined rates. While most major cities move from 7.25% to 7.45%, verify the specific rate for each jurisdiction where you operate. Huntsville, for example, already carries a higher combined rate due to additional local option taxes — its post-October rate will be different from Ogden's.
5. Watch for additional changes in other Utah counties. Weber County used new state legislative authority to implement this increase. If other Utah counties adopt the same authority — which is common when one county moves first — you may face similar rate updates in other Utah jurisdictions before year-end.
Weber County's sales tax increase is one piece of a broader Utah tax landscape that's been shifting in 2026.
Utah eliminated its state grocery tax on January 1, 2026 — a significant consumer-facing change that also required compliance updates for food retailers across the state. Effective July 1, 2026, Utah created a new sales tax exemption for home cook food sales at farmers markets and direct-to-consumer locations. And the SNAP exemption expansion for food purchases is taking effect later this year.
For businesses operating across Utah, 2026 has required more active compliance monitoring than any recent year — with rate changes, new exemptions, and now new county-level additions all landing within a single calendar year.
Operating a business in Weber County or selling to Utah customers and want to make sure your rates are updated correctly before October 1? Book a free consultation with our team at sales.tax. We'll review your Utah compliance setup and make sure every jurisdiction where you sell is calculating correctly before the new rate takes effect.
Illinois shoppers haven't had a back-to-school sales tax holiday since 2022.
That changes this August.
Illinois Governor JB Pritzker signed SB 3019 — the state's $56 billion budget bill — on June 16, 2026. Among its provisions: a 10-day back-to-school sales tax holiday running August 7 through August 16, 2026.
During that period, qualifying clothing and footwear priced less than $125 are subject to a reduced state sales tax rate of 1.25% — instead of the normal 6.25%.
Four years in the making. Ten days of reduced taxes. And a broader category of qualifying items than most people realize.
Here's everything Illinois shoppers and retailers need to know before August 7.
Illinois's back-to-school sales tax holiday isn't a new concept. The state ran similar holidays in prior years — including 2022, when the reduced 1.25% rate applied to qualifying back-to-school items.
In 2022, Illinois reduced the sales tax rate for back-to-school items from 6.25% to 1.25%. While efforts were made in the Illinois legislature to bring it back, no such sales tax holiday had been included since — until this year.
The holiday's return in 2026 comes as part of a broader budget deal that also included new taxes on social media, digital assets, fantasy sports, and cryptocurrency — all passed in the same June 1 budget bill and signed June 16. The holiday is the consumer-friendly piece of a tax package that otherwise expanded Illinois's revenue base significantly.
This is where Illinois's 2026 holiday is more expansive than most people realize.
The holiday doesn't just cover clothing and footwear. From August 7 through August 16, 2026, a reduced tax rate of 1.25% applies to clothing with a retail seller price of less than $125 — and also to school supplies, school art supplies, instructional materials, and computer supplies. The Sales Tax People
Breaking that down:
Clothing and footwear — under $125 per item:
Shirts, jeans, dresses, shoes, boots, jackets, coats, uniforms, and similar everyday clothing items. The $125 threshold applies per item — a $124 pair of shoes qualifies, a $126 pair does not.
School supplies:
The standard back-to-school lineup — notebooks, folders, pencils, pens, scissors, calculators, rulers, and similar supplies used for school.
School art supplies:
Paints, brushes, sketchbooks, colored pencils, and similar materials used for art classes.
Instructional materials:
Textbooks, workbooks, reference books, and similar materials used for learning.
Computer supplies:
Items used with computers — mice, keyboards, USB drives, printer paper, and similar accessories.
That's a significantly broader category than most neighboring states. While Texas limits its August 7-9 holiday to clothing under $100 and school supplies under $100, Illinois's 10-day window covers computer supplies and school art supplies that most other states leave out entirely.
This is the most important distinction Illinois shoppers and retailers need to understand.
Illinois's holiday is not a tax-free period. It's a reduced-rate period.
Qualifying items are subject to a reduced rate of state sales tax of 1.25% instead of the normal 6.25%.
The 5% reduction in state rate translates to real savings — but it's not zero. On a $100 purchase, Illinois shoppers pay $1.25 in state tax instead of $6.25. That's $5 in savings per $100 spent.
And local taxes still apply on top of the reduced state rate. Illinois has some of the most complex local sales tax structures in the country — combined rates ranging from 6.25% to 11% depending on the jurisdiction. The holiday reduces the state portion from 6.25% to 1.25% — but the local layer stays at whatever rate applies to the delivery address.
For a shopper in Chicago — where the combined rate is 10.25% — the holiday brings their total rate on qualifying items to approximately 5.25% (1.25% state + 4% Chicago local). That's still meaningful savings, but not zero.
For retailers, this creates a specific compliance requirement: the system needs to apply the reduced 1.25% state rate on qualifying items while continuing to apply the correct local rate unchanged. Getting either piece wrong — reducing local taxes or failing to reduce the state rate — creates compliance errors.
Most state back-to-school holidays run two to three days. Illinois's 2026 holiday runs ten.
According to Governor Pritzker's office, families shopping for school supplies, clothing, computers, and other necessities will benefit from the reduced rate August 7-16.
Ten days is more comparable to Connecticut's Tax-Free Week (August 16-22) than to the standard weekend-only format. The longer window gives Illinois shoppers more flexibility to plan purchases — and gives retailers a longer compliance obligation to manage.
The holiday runs from 12:01 a.m. on Friday, August 7 through the end of Sunday, August 16 — covering two full weekends plus the week in between. That's the peak back-to-school shopping window for most Illinois families.
Illinois isn't the only state with a sales tax holiday the week of August 7. Here's how the regional picture looks:
Iowa — August 7-8. Clothing and footwear under $100. Full exemption (state and local).
Missouri — August 7-9. Clothing under $100, school supplies under $50, computers under $1,500. Full exemption.
Wisconsin — No holiday.
Indiana — No holiday.
Kentucky — No holiday.
Illinois — August 7-16. Clothing and footwear under $125, school supplies, school art supplies, instructional materials, and computer supplies. Reduced rate (1.25% state, local taxes still apply).
The key differences: Illinois has the longest window and covers more categories — but it's a reduced rate, not a full exemption. Iowa and Missouri offer full exemptions for their shorter windows. For shoppers near state borders, the choice between a full exemption in Iowa or Missouri for two to three days versus a reduced rate in Illinois for ten days will depend on what they're buying and how close they are to a border.
For Illinois retailers, the ten-day window means a longer compliance period than most competitors in neighboring states — but also a longer opportunity to capture back-to-school shopping traffic.
The same budget bill that created the sales tax holiday also froze Illinois's annual gas tax increase.
Illinois typically increases its state motor fuel tax annually on July 1. The July 1, 2026 increase — scheduled at 1.3 cents per gallon — was pushed back six months to January 1, 2027 by SB 3019.
For Illinois retailers with delivery fleets or logistics operations, the gas tax freeze is a modest but real operational benefit through the end of 2026. And for consumers, it means the cost of driving to back-to-school sales doesn't increase during the holiday period itself.
Illinois's back-to-school holiday hasn't run since 2022 — which means some retailers' systems may not have been configured for it in years. Here's what needs to happen before August 7:
1. Update your state rate to 1.25% on qualifying items. Your POS and ecommerce tax engine needs to apply the reduced 1.25% state rate to qualifying clothing, footwear, school supplies, art supplies, instructional materials, and computer supplies during the August 7-16 window. The normal 6.25% state rate still applies to non-qualifying items.
2. Keep local taxes unchanged. The reduced rate applies to the state portion only. Local taxes — city, county, transit district — continue at their normal rates for qualifying items. Illinois's local tax structure is complex, and getting this right requires address-level rate accuracy.
3. Verify the $125 threshold applies per item. The clothing and footwear threshold is $125 per item, not per transaction. A customer buying five $120 shirts pays the reduced rate on all five. A customer buying one $130 jacket pays the full 6.25% state rate.
4. Contact your software vendor now. Illinois's holiday hasn't run since 2022. Some tax software platforms may need manual configuration to apply the reduced rate correctly. Verify with your vendor that the August 7-16 reduced rate is programmed — don't assume it updates automatically.
5. Handle online orders correctly. For ecommerce sellers, the reduced rate applies to orders placed and paid for during the August 7-16 window — even if delivery occurs after August 16. The transaction date determines the applicable rate, not the delivery date.
6. Mandatory participation. All businesses open during the holiday are required to participate and cannot advertise that they'll pay or absorb the sales tax on nonqualifying items. The reduced rate is mandatory for qualifying items — and you cannot use the holiday as a marketing tool for non-qualifying products. The Sales Tax People
The switch from 6.25% to 1.25% state rate represents an 80% reduction in state sales tax on qualifying items. Here's what that looks like for a typical Illinois back-to-school shopping trip:
| Item | Price | Normal State Tax (6.25%) | Holiday State Tax (1.25%) | Savings |
|---|---|---|---|---|
| Sneakers | $110 | $6.88 | $1.38 | $5.50 |
| Jeans | $75 | $4.69 | $0.94 | $3.75 |
| School backpack | $65 | $4.06 | $0.81 | $3.25 |
| Laptop accessories | $85 | $5.31 | $1.06 | $4.25 |
| Art supplies | $45 | $2.81 | $0.56 | $2.25 |
| Full back-to-school haul | $600 | $37.50 | $7.50 | $30.00 |
$30 in state tax savings on a $600 back-to-school haul. Add in local tax still applying, and the total savings are somewhat less than a full exemption — but across a ten-day window and a broad category of qualifying items, Illinois's 2026 holiday is genuinely more valuable than the reduced-rate format might initially suggest.
For a full look at every state's 2026 sales tax holiday — dates, qualifying items, price thresholds, and compliance requirements — visit our complete 2026 sales tax holiday guide.
Selling clothing, school supplies, or computer accessories in Illinois and want to make sure your systems are configured correctly for the August 7-16 reduced rate — or managing sales tax holiday compliance across multiple states this summer? Book a free consultation with our team at sales.tax. We'll audit your holiday compliance setup and make sure you're applying the right rates before the first day of the holiday.
Indiana has been quietly handing out hundreds of millions of dollars in sales tax exemptions to data centers every year — and until recently, nobody outside the industry had a clear picture of how much.
An investigation by WTHR-TV in Indianapolis and watchdog group Good Jobs First forced the disclosure. What they found: Indiana is providing more than $655 million in sales and use tax exemptions for data centers across the state.
And $561 million of that — 86% of the total — goes to a single company.
Amazon.
The story of how Indiana ended up here is the same story playing out in Virginia, Ohio, Pennsylvania, and Georgia — just a few years earlier in the political cycle. And now that the number is public, Indiana's exemption is about to face the same scrutiny that has consumed state legislatures across the country in 2026.
Indiana passed its data center sales tax exemption in 2019. The legislation offered eligible data centers a significant sales tax break — facilities packed with state-of-the-art servers could avoid the state's 7% sales tax when purchasing equipment and power.
Indiana offers some of the country's most generous subsidies — including a sales tax exemption on energy and equipment for up to 50 years for data centers that invest more than $750 million.
50 years. That's not a typo. A data center that qualifies under Indiana's most generous tier can avoid paying Indiana's 7% sales tax on equipment and energy purchases for half a century.
The investment thresholds vary by population of the county where the data center is located — ranging from $25 million to $150 million in qualified investment over five years to qualify for the exemption. For hyperscalers like Amazon, Microsoft, and Google, those thresholds are easily cleared.
When the sales tax exemption was passed in 2019, lawmakers didn't anticipate that Big Tech companies would be building out large data centers — thus receiving billions of dollars in tax breaks. The AI boom sparked by the launch of OpenAI's ChatGPT in 2022 accelerated data center construction far beyond anything 2019 projections contemplated.
Sound familiar? It's exactly what happened in Virginia — where a $1.54 million annual projection grew to $1.6 billion. Indiana may be on the same trajectory.
The $655 million figure is significant — but it's explicitly not the full picture.
The more than $655 million figure covers state sales and use tax exemptions reported by data centers. It does not include local property tax abatements or all outstanding 2025 reports.
Indiana's Economic Development Corporation told investigators that some 2025 reports from data centers are still outstanding — meaning the total could grow beyond $655 million once all reporting is complete. And the figure doesn't include local property tax abatements, tax increment financing impacts, or other local incentives layered on top of the state exemption.
The reporting gap itself is a problem. Good Jobs First said it could not find a clear public price tag showing how much tax revenue Indiana was giving up through its data center tax exemption program — which is what prompted the investigation in the first place.
Under Indiana's law, the quasi-public Indiana Economic Development Corporation is responsible for collecting information about tax-abated investments at data center projects and reporting them to the state Comptroller. That arrangement created a transparency gap — the IEDC wasn't publishing the numbers publicly until investigative pressure forced the disclosure.
Here's the breakdown of Indiana's data center sales tax exemptions as disclosed:
Amazon — $561 million. That's 86% of the entire disclosed total going to a single company.
DX Hammond Opco, LLC — $28.4 million since 2022.
Blocke LLC — $12.3 million.
Hatchworks LLC — $2 million. After the award was granted, a state filing showed Hatchworks is a subsidiary of Google. A Google spokesperson said using a third-party LLC until project details are finalized is standard practice in economic development projects.
Two Digital Egg projects — roughly $1.4 million combined.
The LLC opacity issue is worth pausing on. In 2023, a company named Hatchworks applied for Indiana's sales tax exemption — and only after the award was granted did a state filing reveal it was actually Google. The practice of using third-party LLCs to obscure identity during the application process is standard across the industry — which means Indiana's publicly disclosed list of exemption recipients may not accurately reflect which ultimate corporate beneficiaries are receiving the breaks.
There's one notable exception in Indiana's data center landscape — and it's significant.
Microsoft announced in March 2026 that it would no longer be seeking local property tax abatements or breaks for their data center facility in La Porte.
Microsoft's voluntary decision to forgo property tax breaks — in a state where the exemption is available and where Amazon is taking full advantage — is unusual. Whether it reflects a broader corporate ESG positioning, a response to public scrutiny of data center subsidies, or a strategic decision specific to that facility isn't entirely clear.
But it does demonstrate that the exemption isn't mandatory — companies can choose to accept or decline it. And in a political environment where the size of these exemptions is increasingly in the public eye, Microsoft's move creates an interesting implicit pressure on other companies.
The most alarming detail in WTHR's investigation isn't the dollar amount. It's the transparency gap that allowed the number to grow to $655 million without lawmakers having a clear picture of what was happening.
The public needs to know how much money the state is losing, but also the lawmakers need to access this information to be able to make good fiscal decisions about the state budget, said Kasia Tarczynska, a senior research analyst with Good Jobs First.
That's a direct indictment of Indiana's disclosure framework. The state's fiscal decision-makers were voting on budget priorities without a complete picture of how much revenue they were giving away through data center exemptions. The IEDC was collecting the data — but it wasn't being published in a form that made the aggregate cost visible.
Virginia had the same problem. Its data center exemption was projected to cost $1.54 million per year in 2008. It cost $1.6 billion in 2025. The cost exploded not because anyone decided to dramatically expand the program — but because the AI and cloud computing boom drove investment far beyond anything that was modeled, while the transparency mechanisms that would have triggered a legislative review didn't exist or weren't being used.
Indiana is watching Virginia's story play out and now holding its own version of the same mirror.
At $655 million per year, Indiana is headed rapidly toward the dubious club of states already known to be losing more than $1 billion per year to data centers — Georgia, Ohio, Texas, and Virginia.
That club is going to grow. And the pattern is consistent across every member: exemptions created to attract an emerging industry, projections that dramatically underestimated the eventual cost, and a transparency gap that kept lawmakers in the dark until watchdog groups or investigative journalists forced the numbers into the open.
The states still in the dark — where exemption costs exist but haven't been publicly disclosed — include Alabama, Arkansas, Idaho, Iowa, Louisiana, Maryland, Missouri, Mississippi, North Dakota, Oklahoma, and Utah.
Every one of those states is potentially sitting on a number similar to Indiana's $655 million — or larger — without their legislatures having a clear picture of the cost.
Indiana's disclosure is the beginning of a political process — not the end of one.
Virginia's disclosure of its $1.6 billion cost led to a four-month legislative battle that ended with a new $600 million annual energy consumption tax. Ohio's disclosure is now fueling a bipartisan veto override attempt. Pennsylvania's disclosure is driving a House-passed digital advertising tax and bipartisan exemption repeal push.
Indiana's $655 million disclosure — forced by investigative journalism rather than voluntary government transparency — will almost certainly prompt legislative attention in the 2027 session. The question is whether Indiana follows Virginia's energy tax model, Ohio's repeal push, or a third path uniquely suited to its political environment.
Indiana's governor is a Republican. Its legislature is Republican-dominated. The political dynamics are different from Virginia's intra-Democratic fight. But the fiscal pressure is the same — and the "we didn't know how much it cost" defense is no longer available now that the number is public.
The framing that has gained the most traction among critics of data center exemptions is blunt — and worth understanding.
There was a giant transfer of wealth from taxpayers to shareholders, said Greg LeRoy, executive director of Good Jobs First. Some states, like Virginia, are headed toward billion-dollar annual losses.
The counterargument from the industry is equally direct. When lobbying for sales tax exemptions, advocates have said that data centers are a key driver of economic growth — pointing to jobs created, investment generated, and local tax revenue from sources not covered by the exemption.
In Indiana's case, the industry argues that the state is not writing companies a check — rather, the exemptions are part of a competitive framework designed to attract major investment that may not otherwise come to Indiana.
But Good Jobs First's position is that money not collected is still a public cost. A dollar of tax that isn't paid is a dollar that doesn't go to schools, roads, or public services — regardless of whether it shows up as a line item in the budget.
Both arguments are legitimate. The difference in 2026 — versus 2019 when Indiana's exemption passed — is that the cost is now quantified. And quantified costs invite scrutiny in ways that abstract projections never do.
For data center operators currently benefiting from Indiana's exemption, the disclosure doesn't change anything immediately. The exemption remains in place. The 7% state sales tax on qualifying equipment and energy purchases is still waived for qualifying facilities.
But the political environment has changed. The 2027 Indiana legislative session will almost certainly include proposals to modify, cap, or add new revenue requirements to the exemption — following the Virginia, Ohio, and Pennsylvania models. Operators who planned their Indiana investments around a 50-year exemption should be modeling what a Virginia-style energy consumption tax or an Ohio-style repeal of construction materials exemptions would mean for their long-term cost structure.
For businesses generally: Indiana's disclosure is a reminder that data center tax exemptions — and their costs — are being dragged into public view across the country. States that have been quiet about their exemption costs are facing increasing pressure from watchdog groups and investigative journalists to publish what Indiana just published under duress.
The era of invisible data center subsidies is ending. Whatever replaces them — modified exemptions, new consumption taxes, caps, conditions, or outright repeal — will shape the data center tax landscape for the next decade.
Operating a data center in Indiana or evaluating Indiana for future investment? Book a free consultation with our team at sales.tax. We'll help you understand your current exemption status, model the compliance implications of potential legislative changes, and prepare for whatever Indiana's 2027 session brings.
Iowa's back-to-school sales tax holiday is one of the most straightforward in the country.
Two days. One rule. Clothing and footwear under $100 — no sales tax.
Iowa's annual sales tax holiday runs from 12:01 a.m. Friday, August 7 through midnight Saturday, August 8, 2026. By statute, the holiday always begins at 12:01 a.m. on the first Friday in August and ends the following day at midnight. The holiday does not include Sunday.
For Iowa shoppers, it's a clean, easy-to-understand shopping window. For Iowa retailers, it's a compliance event that requires specific preparation — and specific rules about how sales are handled, advertised, and reported.
Iowa's holiday is one of the simplest in the country — and that simplicity is worth noting.
While states like Massachusetts cover most retail items up to $2,500, Connecticut covers clothing and footwear up to $300, and Florida runs an entire month of exemptions across multiple categories — Iowa keeps it clean.
No sales tax or local option sales tax will be collected on sales of an article of clothing or footwear having a selling price less than $100.
That covers both state and local option sales tax — meaning the full combined rate is waived on qualifying items, not just the state portion. Iowa's 6% state rate plus any applicable local option tax (up to 2%) disappears entirely on qualifying purchases during the two-day window.
For a shopper buying a $90 pair of shoes in a city with a 1% local option tax, the combined 7% tax — $6.30 — is completely waived.
The qualifying category is clothing and footwear — broadly defined to cover the everyday items families buy for back-to-school season.
Iowa's Department of Revenue publishes a comprehensive alphabetical list of representative qualifying items. The list covers the range of what shoppers typically buy: shirts, jeans, dresses, coats, shoes, boots, socks, underwear, sweaters, shorts, jackets, and similar everyday clothing items — all qualifying when individually priced under $100.
The $100 threshold applies per item, not per transaction. A shopper buying ten $95 items pays no tax on any of them. Each item is evaluated independently.
Online purchases qualify as well. If a customer orders and pays for a qualifying item during the August 7-8 window, the purchase is exempt — even if delivery occurs after the holiday ends.
Iowa's holiday is simple — but it has specific exclusions that retailers need to apply correctly.
Special clothing or footwear primarily designed for athletic activity or protective use that is not normally worn except for that activity does not qualify. That means protective gear, helmets, pads, and specialty athletic equipment are taxable even during the holiday window.
Accessories — jewelry, handbags, luggage, umbrellas, wallets, watches, and similar items — are also excluded. The exemption is for clothing and footwear worn on the body in the manner characteristic of clothing, not for items merely carried on or about the person.
Business purchases don't qualify either. The exemption is for consumer purchases — items bought for personal use, not for resale or business purposes.
Iowa's Department of Revenue is unusually specific about how sales promotions interact with the holiday — and getting these wrong is one of the most common compliance mistakes.
The total price of items advertised as "buy one, get one free" or "buy one, get one for a reduced price" cannot be averaged in order for both items to qualify for the exemption.
A retailer advertises pants as "buy one, get one free." The first pair is priced at $110 — the second pair is free. Tax is due on $110 — the free pair cannot be used to bring the average price below $100. However, the retailer may advertise and sell the items at 50% off — selling each pair of $110 pants for $55 — making each pair individually eligible for the exemption.
The distinction: averaging prices across a promotion to create a qualifying price is not permitted. Genuinely selling each item at a qualifying price is permitted.
Items normally sold as a unit cannot be separated to qualify. A pair of shoes normally sold for $120 cannot be split into two $60 individual shoes to qualify. A suit normally priced at $125 on a single price tag cannot be split into separate articles to bring any component under $100.
The rule is simple: if it's sold as a unit, the unit price determines taxability.
Iowa has clear rules about returns and exchanges during and after the holiday — another area retailers often handle incorrectly.
When a customer purchases an eligible item during the exemption period and later exchanges it for the same item in a different size or color — no additional tax is due, even if the exchange happens after the holiday ends.
But if the customer exchanges a qualifying item for a different, more expensive item during the holiday — tax is due on the higher price. A customer buying an $85 dress during the holiday, then exchanging it for a $125 dress during the same weekend, owes tax on $125. The $85 credit from the returned item cannot reduce the $125 price to $40 for exemption purposes.
And if the exchange happens after the holiday ends — a customer buys a $35 shirt during the holiday, then exchanges it for a $35 jacket the following week — tax is due on the jacket, because the jacket was not purchased during the exemption period.
Iowa sits in a region where multiple states run back-to-school holidays in the same window — giving retailers and shoppers context for where Iowa's rules fit in the broader picture.
Missouri's back-to-school holiday also runs August 7-9, 2026 — covering clothing, computers, and school supplies. Missouri's holiday is three days and covers more categories than Iowa's two-day clothing-only window.
Nebraska has no sales tax holiday.
Illinois has a reduced-rate holiday August 7-16, 2026 — qualifying clothing and footwear priced less than $125 are taxed at 1.25% instead of the normal 6.25%. That's not a full exemption — it's a reduced rate — but it runs for ten days compared to Iowa's two.
Wisconsin has no sales tax holiday.
For Iowa retailers near state borders — particularly those near the Missouri or Illinois line — understanding the neighboring state rules helps contextualize how shoppers may behave during the holiday window.
For ecommerce sellers shipping to Iowa customers, the holiday creates a specific compliance obligation during the August 7-8 window.
Iowa's economic nexus threshold is $100,000 in annual sales to Iowa customers. Remote sellers exceeding that threshold are required to collect Iowa sales tax — including the local option tax that applies in many Iowa jurisdictions.
Iowa has no transaction threshold — only the revenue threshold applies. Remote sellers who cross $100,000 in Iowa sales are on the hook for both state and local option taxes on qualifying transactions.
During the August 7-8 holiday window, remote sellers must stop collecting both state and local option taxes on qualifying clothing and footwear priced under $100. Continuing to collect during the holiday means over-collecting from customers on transactions where no tax is legally due.
Businesses that are open on these days are required to participate. Participation in Iowa's sales tax holiday is not optional — every retailer open during the August 7-8 window must apply the exemption to qualifying purchases.
The compliance checklist:
1. Update your POS and ecommerce tax settings. Qualifying clothing and footwear under $100 must be processed as tax-exempt during the August 7-8 window. Verify with your software vendor that both state and local option taxes are waived — not just the state rate.
2. Apply the threshold at the item level. The $100 limit applies per item, not per transaction. Configure your system to evaluate each line item independently.
3. Don't advertise tax absorption on non-qualifying items. Iowa specifically prohibits retailers from advertising that they will pay or otherwise absorb the sales tax on items that don't qualify. The holiday exemption applies to qualifying items only — don't use it as a marketing hook for ineligible products.
4. Handle promotions correctly. Review any buy-one-get-one or bundle promotions planned for the holiday weekend. Ensure your promotional pricing structure genuinely reduces each item's individual price — not just the average price across a bundle.
5. Report correctly on your return. When completing your Iowa sales tax return, qualifying exempt sales are included on line 1 — Gross Sales — and also on line 4 — Exemptions. Enter these exempt sales in the Sales Tax Holiday category for line 4 specifically. Don't omit them from gross sales — just deduct them properly on the exemptions line.
6. No exemption certificates required. Iowa explicitly states that retailers do not need exemption certificates to support the sales tax holiday exemption. The holiday is automatic for qualifying transactions — no documentation from customers is required.
Iowa's combined sales tax rate is 6% state plus local option taxes of 0% to 2% depending on the jurisdiction. In most Iowa cities with a local option tax, the combined rate is 7%.
| Item | Price | Tax Saved at 7% |
|---|---|---|
| Sneakers | $85 | $5.95 |
| Jeans | $65 | $4.55 |
| School outfit | $90 | $6.30 |
| Kids' shoes | $55 | $3.85 |
| Family back-to-school haul | $600 across qualifying items | $42.00 |
The savings per item are modest — Iowa's holiday has a lower price cap than Connecticut's expanded $300 threshold or Massachusetts's $2,500 limit. But the full waiver of both state and local taxes, combined with mandatory retailer participation, makes it a genuine and reliable consumer benefit every August.
Selling clothing or footwear into Iowa and want to make sure your systems are configured correctly for the August 7-8 holiday — or managing sales tax holiday compliance across multiple states this summer? Book a free consultation with our team at sales.tax. We'll audit your holiday compliance setup across every state where you sell and make sure you're collecting correctly through the entire back-to-school season.
Connecticut's annual tax-free week just got significantly bigger.
Public Act No. 26-68 increased the sales tax holiday price threshold from $100 to $300 per item and expanded eligibility to include all backpacks and cleated shoes — changes that take effect starting with the 2026 tax-free week. TaxJar
Connecticut's annual sales tax-free week runs August 16 through August 22, 2026 — from the third Sunday in August through the following Saturday. The Sales Tax People
That's 55 days away. And this year, it's worth planning around more than ever.
A $90 pair of sneakers has always qualified during tax-free week. A $250 pair of boots never did — until now. That change alone makes Connecticut's 2026 holiday meaningfully more valuable for back-to-school shoppers and clothing retailers alike.
Connecticut's tax-free week has been running since 1997 — making 2026 its 26th year. The core structure has stayed consistent: one week every August, clothing and footwear exempt up to a price threshold.
But the threshold hasn't always moved with the times. A $100 cap that felt reasonable in the late 1990s covers a narrower range of clothing today, as prices have risen. The legislature's decision to raise the cap to $300 is the most significant expansion of the holiday in years.
Normally, only clothing and footwear priced under $75 per item are exempt from Connecticut sales tax year-round. During the tax-free week, the threshold has historically risen to $100. For 2026, that threshold jumps to $300 — meaning items that would normally be taxed at the full 6.35% rate can be purchased tax-free during the August 16-22 window. The Sales Tax People
The practical impact: a wide range of mid-range clothing and footwear that has never qualified before — dress shoes, boots, quality outerwear, athletic gear worn as everyday clothing — now falls within the exemption.
The legislation also adds backpacks and cleated shoes as newly qualifying categories for the tax-free week. TaxJar
Cleated shoes are particularly notable — they've historically been excluded as "special footwear primarily designed for athletic activity." Their addition in 2026 signals a broader interpretation of what counts as qualifying footwear during the holiday window.
The exemption covers clothing and footwear priced under $300 per item. Here's what qualifies:
Shirts, jeans, dresses, shoes, boots, sleepwear, undergarments, outerwear, hats, gloves, and similar items worn on or about the body — all qualify during tax-free week if individually priced under $300. The Sales Tax People
Backpacks of any type priced under $300 qualify for the 2026 tax-free week — a new addition under Public Act No. 26-68. TaxJar
Cleated shoes — soccer cleats, football cleats, baseball cleats — qualify for the first time in 2026.
The $300 threshold applies per item, not per transaction. A shopper buying five $250 pairs of shoes pays no sales tax on any of them — each item individually qualifies.
The expansion is significant — but it doesn't cover everything.
The following items are specifically excluded from Connecticut's tax-free week exemption: special clothing or footwear primarily designed for athletic activity or protective use that is not normally worn except for that activity, and accessories including jewelry, handbags, luggage, umbrellas, wallets, watches, and similar items carried on but not worn on the body in the manner characteristic of clothing. The Sales Tax People
That means:
The cleated shoe addition creates an interesting edge: cleats are now explicitly qualifying, but other athletic footwear "not normally worn except for athletic activity" is still excluded. The distinction is footwear that has a plausible everyday use versus footwear that only makes sense on a field or court.
This is where Connecticut's 2026 tax story gets more complex — and where businesses need to pay close attention.
Effective July 1, 2026 — before the tax-free week even starts — Connecticut is also exempting nonelectronic school supplies from sales and use tax. Eligible items include backpacks, crayons, lunch boxes, and notebooks. TaxJar
That's a year-round exemption for specific school supplies — separate from the tax-free week.
The interaction between the two creates an interesting overlap: backpacks qualifying as nonelectronic school supplies are sales tax exempt starting July 1 as a permanent year-round exemption, while all backpacks priced under $300 qualify for the tax-free week. The Connecticut Department of Revenue Services may need to publish additional guidance clarifying how these two exemptions interact. TaxJar
For retailers selling school supplies in Connecticut, this is a two-part compliance event: update your systems for the July 1 school supplies exemption first, then ensure the expanded tax-free week rules are applied correctly for August 16-22.
Connecticut sits in a region where back-to-school tax holidays overlap — and shoppers near state borders often cross to take advantage of the most favorable rules.
Massachusetts holds its sales tax holiday on August 8-9 — a full week before Connecticut's August 16-22 window — covering most retail items under $2,500 for personal use, including electronics and appliances. The Sales Tax People
Connecticut's holiday is narrower in category (clothing and footwear only) but now covers a higher price threshold ($300 vs. Massachusetts's general $2,500 cap on most items). Massachusetts's holiday gives more category breadth. Connecticut's gives seven full days.
For families near the Massachusetts-Connecticut border, the strategy is clear: electronics and big-ticket appliances on August 8-9 in Massachusetts, clothing and footwear on August 16-22 in Connecticut.
For retailers in both states, this means two separate weeks of holiday compliance obligations — with different rules, different product categories, and different effective windows.
For businesses new to Connecticut sales tax, the holiday doesn't exist in isolation.
Connecticut's standard sales tax rate is 6.35% for most purchases. Luxury items — including clothing and footwear priced above $1,000 — are taxed at 7.75%. B2B SaaS is taxed at a reduced 1% rate; B2C SaaS and digital goods are taxable at the full 6.35%. The Sales Tax People
Connecticut uniquely requires remote sellers to exceed both $100,000 in gross receipts AND 200 transactions with Connecticut customers to trigger economic nexus — not just one threshold. The "AND" structure means a seller with $500,000 in Connecticut revenue but only 150 transactions hasn't triggered nexus. And a seller with 300 transactions but only $80,000 in revenue hasn't either. The Sales Tax People
Both thresholds must be crossed for the nexus obligation to apply. For businesses approaching the Connecticut threshold, the distinction matters significantly.
The expanded threshold and new qualifying categories mean retailers can't rely on last year's tax-free week setup. Systems need to be updated for 2026's new rules specifically.
1. Update your price threshold from $100 to $300. This is the most critical change. Your POS and ecommerce tax engine needs to apply the exemption to qualifying clothing and footwear priced up to $299.99 — not just up to $99.99 as in prior years.
2. Add backpacks and cleated shoes to your qualifying items list. Both categories are new for 2026. If your system had backpacks flagged as non-qualifying because of prior year rules, that needs to change.
3. Implement the July 1 school supplies exemption separately. Nonelectronic school supplies — backpacks, crayons, lunch boxes, notebooks — become permanently exempt from Connecticut sales tax on July 1, before the holiday begins. This is a separate compliance event that requires its own system update.
4. Handle online orders correctly. Sales tax does not apply to a qualifying item purchased from an online retailer during the tax-free week. The sale is considered to have taken place during the tax-free week if the customer pays in full during that window — even if delivery occurs afterward. The Sales Tax People
5. Don't split items to qualify. Items normally sold as a unit — like a pair of shoes — cannot be separated and sold as individual items to qualify for the exemption. A pair of shoes priced at $320 is taxable. Splitting them into two $160 charges doesn't make them exempt. The Sales Tax People
6. Handle "buy one, get one free" correctly. The $300 threshold applies to the item for which there is a charge. A BOGO promotion doesn't allow the retailer to allocate charges to the free item to bring both under the threshold. The Sales Tax People
The expanded threshold changes the math significantly for Connecticut shoppers.
| Item | Price | Tax Saved at 6.35% |
|---|---|---|
| Sneakers | $180 | $11.43 |
| Winter coat | $275 | $17.46 |
| Dress shoes | $220 | $13.97 |
| Back-to-school outfit | $150 | $9.53 |
| Backpack | $85 | $5.40 |
| Cleats | $120 | $7.62 |
| Full family back-to-school haul | $1,800 across qualifying items | $114.30 |
A family outfitting multiple kids for school — with clothing, footwear, and backpacks all qualifying under the new $300 threshold — could realistically save $100 or more in a single shopping trip. That's a meaningful incentive, and Connecticut retailers who market the expanded holiday effectively have a real traffic opportunity.
Before the August holiday arrives, Connecticut has another sales tax change taking effect July 1 that businesses selling into the state need to know about.
Nonelectronic school supplies become permanently sales tax exempt in Connecticut on July 1, 2026. Backpacks, lunch boxes, crayons, notebooks, and similar items qualify for year-round exemption starting July 1 — regardless of whether they're purchased during tax-free week or any other time of year. TaxJar
If you sell school supplies in Connecticut, your tax configuration needs two updates before August: the July 1 permanent exemption for school supplies, and the August 16 expanded tax-free week rules for clothing, footwear, and backpacks. Both are live compliance obligations that require system changes before their respective effective dates.
Selling clothing, footwear, or school supplies into Connecticut and want to make sure your systems are configured correctly for both the July 1 school supplies exemption and the expanded August 16-22 tax-free week? Book a free consultation with our team at sales.tax. We'll make sure your Connecticut compliance is updated for both changes before they hit.
Virginia passed its budget today. The four-month data center tax fight is over.
Pennsylvania's fight is just getting started — and the clock is ticking in a state that has never met its June 30 budget deadline on time in recent memory.
After last year's budget impasse stretched more than 130 days behind schedule, Pennsylvania lawmakers are hopeful they can avoid a similar delay this year. Gov. Josh Shapiro presented lawmakers with a $53.3 billion spending plan in February and negotiations are ongoing as state officials eye the commonwealth's June 30 deadline. Avalara
Eight days left. A $5 billion structural deficit. A data center exemption fight that mirrors Virginia's. A digital advertising tax proposal moving through the legislature right now. And a Senate and House that haven't agreed on a final product.
Here's where Pennsylvania actually stands — and what the sales tax implications are for businesses across the state.
Pennsylvania's fiscal situation is worse than Virginia's — and Virginia's was bad enough to nearly shut down the government.
Pennsylvania is facing a long-term structural budget imbalance in which the state's expenses are expected to outpace revenues over the next several years. The commonwealth is on track to spend around $5 billion more than it makes in revenue for this fiscal year.
Pennsylvania's Independent Fiscal Office projected that the state faces a General Fund structural deficit of $3.65 billion for the 2025-26 fiscal year — a figure that will grow to more than $7.5 billion by 2030. The commonwealth is anticipated to have roughly $7.7 billion in its Rainy Day Fund at the end of the 2025-26 fiscal year. Quaderno
The Rainy Day Fund — once at $14 billion two years ago — has been cut in half. That kind of deficit spending has become routine in recent budgets and led to cash reserves being halved from $14 billion two years ago to roughly $7 billion.
Pennsylvania has been patching its structural deficit with reserves. The reserves are running out. And this year, the patch may not be big enough.
Pennsylvania is watching Virginia's data center fight very closely — because it's fighting almost the same battle simultaneously.
Eliminating the state's sales tax exemption for purchases related to building and maintaining data centers is on the table. The commonwealth is projected to miss out on $2 billion in accumulated tax revenue by 2031. TaxHero
Two conservative Republicans — state Rep. Jamie Walsh of Luzerne County and Sen. Jarrett Coleman of Lehigh County — have jointly introduced a bill to repeal the data center tax break and use the money to reduce the cost of gas. In a memo seeking support, they said the state should not "continue to give a special tax incentive to the thriving data center industry."
Almost 30 state House Democrats are backing a bill that would repeal the exemption. Unlike Virginia — where the fight was entirely within the Democratic party — Pennsylvania's data center exemption fight has bipartisan opposition. That makes it more likely to move, not less.
This is the more immediately active proposal — and it just passed the House.
Democrats in both chambers of the General Assembly have introduced a proposal that would extend the state's 5% gross receipts tax to digital advertising platforms run by Google, Meta, Amazon and others — potentially generating $500 million in annual revenue.
A bill to levy the digital ad tax passed the Democratic-controlled state House 139-63 on Wednesday. It was unanimously amended to direct any revenue raised to provide property tax relief for older homeowners. The bill is now with the state Senate. TaxHero
Senate majority leader Joe Pittman didn't rule out an ad tax or an end to the data center exemption. "There are concerns about that data center sales tax provision, and it's certainly possible that discussion on what the right approach is will unfold in the weeks ahead," Pittman said.
A digital advertising tax that passed the House 139-63, with Senate Republican leadership not ruling it out — that's a bill with a real path to becoming law before June 30.
Governor Josh Shapiro came into this budget cycle with a clear revenue strategy — and it doesn't rely on tech taxes as the primary mechanism.
In his 2026 executive budget proposal, Shapiro proposed three potential revenue sources: legalizing and taxing recreational marijuana — generating $200 million in annual sales tax revenue, regulating and taxing skill game machines, and increasing the minimum wage from $7.25 to $15 an hour beginning in January 2027 — generating an additional $80 million in annual tax revenue.
None of those three revenue sources has passed yet. Marijuana legalization has stalled in the Senate. Skill game taxation is actively being negotiated. The minimum wage increase is a longer-term revenue play, not an immediate budget fix.
Shapiro's budget proposal also calls for a $4.5 billion transfer from the Rainy Day Fund to balance the budget — a move that would leave the fund significantly depleted and essentially defer the structural deficit problem to the 2027-28 cycle.
The honest answer is: probably.
After last year's budget impasse stretched more than 130 days behind schedule, Pennsylvania lawmakers are hopeful they can avoid a similar delay this year. Avalara
"Hopeful" is not the same as "confident." And Pennsylvania's legislative history doesn't inspire confidence.
The state missed the June 30 deadline in 2024. It missed it in 2025 by more than 130 days. The House passed a General Appropriations bill in April — which is progress — but the House bill and the Senate's position remain significantly apart on revenue questions.
Whether it bears fruit by June 30 remains to be seen. Quaderno
Unlike Virginia — which faced a true government shutdown on July 1 because its constitution requires a balanced budget before spending can occur — Pennsylvania has more flexibility to continue operating past the June 30 deadline. State agencies can continue functioning under existing appropriations in many cases, and Pennsylvania has precedent for extended budget delays without a formal shutdown.
But "no formal shutdown" is not the same as "no problem." Extended budget delays create uncertainty for school districts, social service providers, and any Pennsylvania entity that depends on state funding. And for businesses, a delayed budget means delayed resolution on every revenue and tax question still on the table.
Pennsylvania's budget fight has direct sales tax implications that businesses in and selling into the state need to understand.
The data center exemption: If Pennsylvania eliminates or caps its data center sales tax exemption, operators purchasing computer equipment in the state will owe Pennsylvania's 6% state sales tax — plus applicable local rates — on those purchases. Given Pennsylvania's $2 billion exemption cost through 2031, the compliance and cost implications for data center operators would be significant and immediate.
The digital advertising tax: If the Senate passes the House's digital ad tax bill, businesses buying digital advertising on Google, Meta, Amazon, or similar platforms would face a new 5% gross receipts tax on those purchases in Pennsylvania. This isn't a sales tax collected at the point of purchase — it's a tax on the platform's gross receipts that would almost certainly be passed through to advertisers in the form of higher ad rates.
The marijuana sales tax: If recreational marijuana legalization passes, Pennsylvania would impose sales tax on marijuana retail sales — creating a new compliance category for dispensaries and potentially new questions about the taxability of related products.
The transit sales tax diversion: Shapiro's budget calls for diverting an additional portion of sales and use tax revenue to fund public transit — a structural change in how Pennsylvania allocates its sales tax collections that would affect the General Fund available for other purposes. Quaderno
The parallels between Pennsylvania and Virginia's budget battles are striking — but the outcomes may diverge.
Virginia's fight was internal Democratic disagreement about how aggressively to tax an industry that both sides agreed needed to pay more. The resolution — a two-year energy consumption tax, exemption preserved, study subcommittee created — reflects the limits of what Democrats could negotiate with themselves.
Pennsylvania's fight is more conventionally partisan — a Democratic House pushing tech taxes that a Republican Senate is only partially willing to accept. That divide is structurally harder to resolve before a deadline than Virginia's intra-party fight.
The result: Pennsylvania is likely to do what it usually does — pass a partial budget, continue negotiating on contested revenue questions, and finalize something months after June 30. The data center exemption question, the digital ad tax, and the marijuana legalization revenue will likely be part of a fall negotiation rather than a June resolution.
For businesses in Pennsylvania: the June 30 deadline is real, but the practical impact of missing it is more limited than it would be in Virginia. The more important date to watch is September or October — when Pennsylvania's budget negotiations typically conclude and the final revenue decisions get made.
If you operate a data center in Pennsylvania: The exemption is not yet at risk in the current budget cycle — but the bipartisan support for repeal is real. Virginia's energy tax model gives Pennsylvania a ready template. Start modeling what a Virginia-style consumption tax on your energy use would mean for your cost structure.
If you buy digital advertising in Pennsylvania: The House-passed digital ad tax is now in the Senate. If it passes, Google, Meta, and Amazon will pass the cost through to advertisers. Monitor the Senate's timeline and build potential ad cost increases into your Q3 marketing budget assumptions.
If you sell into Pennsylvania generally: The state's 6% sales tax rate and current exemption structure are stable for now. But watch the fall budget negotiations — any new revenue measures that pass will likely take effect January 1, 2027, giving you a narrow window to update compliance systems.
If you're a marijuana business or investor: Recreational marijuana legalization in Pennsylvania would create an entirely new sales tax compliance category. If it passes — which remains a Senate-dependent question — the compliance infrastructure needed is significant. Start planning now rather than when the law takes effect.
Eight days to June 30. Pennsylvania's budget will almost certainly not be done by then. But the decisions made in the weeks and months after June 30 will reshape the state's sales tax landscape in ways that affect every business operating there.
Operating a business in Pennsylvania — a data center, a digital advertiser, or any company navigating the state's evolving tax landscape? Book a free consultation with our team at sales.tax. We'll help you understand your current exposure and prepare for whatever Pennsylvania's legislature decides in the months ahead.
Four months. Three failed sessions. One "data center diva" insult. Dozens of dramatic headlines.
And on Friday evening, June 19 — with 11 days left before Virginia's first-ever government shutdown — it ended.
Virginia Democrats agreed to impose a new energy tax on data centers, resolving a months-long budget impasse that threatened the state's first government shutdown. Data centers would face a temporary tax on their power use — costing the industry an estimated $600 million per year — under a budget agreement reached Friday by state House and Senate leaders. The deal maintains the industry's sales tax exemptions, which are worth nearly $2 billion a year and had been at the center of the intraparty standoff.
The Senate convened at 10 a.m. and the House of Delegates at 2 p.m. today — June 22 — to vote on the conference report. If passed, it goes to Governor Spanberger for her signature.
Virginia is about to have a budget. And the data center sales tax exemption survives.
The compromise that ended four months of deadlock is elegant in its structure — it gives both sides something real without either side fully winning.
The budget agreement levies a Data Center Electricity Consumption Tax of $0.011 per kilowatt-hour of electricity consumed per month. The State Corporation Commission will collect the tax. No more than $600 million of the proceeds shall go to the general fund.
The key details:
While technically a compromise, Senate Finance Chair Lucas's push for data center revenue resulted in more going to state coffers than in her original proposal, which would have added $977 million in revenue for the two-year budget. The new energy tax is expected to generate $1.2 billion over the biennium. The Sales Tax People
Lucas won on revenue. The House and governor won on the exemption. Neither side got everything — which is exactly what a compromise looks like.
Senate Finance Chair Louise Lucas was the driving force behind the upper chamber's push to tax data centers more aggressively. She spent the past week touring the state on a "data center listening tour" soliciting public grievances against the sector's expansion in Virginia.
The Senate came into this fight wanting to eliminate the sales and use tax exemption entirely — generating nearly $2 billion per year in new revenue. What it got instead is $600 million per year from an energy consumption tax — with no guarantee the tax continues after this two-year budget cycle.
Budgeters including Gov. Spanberger would likely need to replace the $1.2 billion the new energy tax is set to generate during the next budget cycle — meaning the 2028 budget fight could replay many of the same dynamics as this one.
Lucas and the Senate also won a study mechanism. The budget creates a Joint Subcommittee on Tax Policy to study the sales and use tax exemption and report recommendations to the General Assembly by December 15, 2026.
That December 15 report — not the commission's November 1 deadline from the House's earlier proposal — becomes the foundation for whatever the 2027 session does with the exemption.
The House and Governor Spanberger came into the final stretch with one non-negotiable: preserve the sales tax exemption. They got it.
The deal maintains the industry's sales tax exemptions, which are worth nearly $2 billion a year. Spanberger and House Democrats were against the Senate's initial bid to repeal the sales tax exemption, arguing it would amount to breaking a contract and could hinder Virginia's business climate.
The energy consumption tax — while a new cost for data centers — is structured differently from the sales tax exemption fight. It's a tax on electricity consumption, not on equipment purchases. It doesn't touch the core incentive that data centers used when making their original Virginia investment decisions. And with a cap at $600 million per year, the industry's exposure is bounded and predictable.
House lawmakers had consistently cited how data centers support 74,000 jobs in Virginia and generate more than $2 million in local tax revenue — arguments that ultimately carried the day on preserving the exemption itself. The Sales Tax People
The data center industry is not celebrating.
The Data Center Coalition asserted that Friday's deal — which would cost the industry $1.2 billion over two years — would "raise costs on Virginians and Virginia businesses, drive away investment and job creation, and tarnish Virginia's reputation as a reliable partner and a good place to do business." "The message to businesses in all industries is clear — Virginia is no longer a reliable partner," the trade group said. The Sales Tax People
That reaction is expected and somewhat ritualistic — industry groups always oppose new taxes. But the "no longer a reliable partner" framing is worth taking seriously, because it's the argument that will drive investment decisions at the margin.
A hyperscaler deciding between Virginia and Texas for its next campus doesn't just look at tax rates. It looks at political risk — the likelihood that the rules will change unexpectedly. Virginia's four-month budget war, even though it ended with the exemption preserved, injected uncertainty into what was previously one of the most stable investment environments in the country.
Whether that uncertainty changes actual investment decisions is something the December 15 subcommittee report will attempt to measure.
The data center fight dominated the headlines — but the $207 billion two-year budget contains significant spending and tax changes beyond the energy tax.
The budget puts $1.5 billion toward 4% pay raises for public school teachers and 3.5% raises for state employees, $137.6 million for additional Child Care Subsidy Program slots for families making up to 85% of state median income, and adds an additional $159 million in school construction grants. The Sales Tax People
It includes a permanent increase to the standard deduction — from $8,750 for single filers to $9,200 in taxable year 2027 and $9,300 in taxable year 2028, with joint filers increasing from $17,500 to $18,400 to $18,600. Nearly $1 billion has been allocated as a contingency reserve to cover anticipated gaps from reduced federal funding.
The budget gives all localities the option to hold a referendum to ask residents if they want to create a new 1% sales tax that would be used to fund school construction. It also includes the deal for the creation of a recreational retail marijuana market, with sales starting July 1, 2027.
That local 1% school construction sales tax option is quietly significant for businesses. If localities across Virginia begin holding referendums and approving new 1% sales taxes, the rate landscape in Virginia could shift significantly over the next several years — adding address-level compliance complexity for any business selling into multiple Virginia jurisdictions.
For businesses operating in or selling into Virginia, here's exactly what changes — and when.
The data center energy consumption tax:
Data center operators will pay $0.011 per kWh consumed monthly, collected by the State Corporation Commission. This is an operator-level tax — not a sales tax collected from customers. Data centers need to understand their monthly kWh consumption and build the new cost into their financial models immediately. The tax applies for the two-year budget period beginning July 1, 2026.
The sales tax exemption — unchanged:
Data centers that qualify under the existing rules — $150 million investment, 50 jobs — continue to receive the sales and use tax exemption on computer equipment and software purchases. No change to their sales tax compliance setup for equipment purchases.
The local 1% school construction option:
Watch for referendums in your operating jurisdictions. If a locality where you have customers or operations approves a new 1% school construction sales tax, your rate for that jurisdiction increases by 1 percentage point. These referendums could happen at any point — build a monitoring process into your Virginia compliance calendar.
The December 15 subcommittee report:
This is the next major milestone in Virginia's data center tax story. Whatever the subcommittee recommends about the sales and use tax exemption will shape the 2027 legislative session — and potentially trigger another fight about the exemption's future. Data center operators should engage with the subcommittee process now rather than waiting for its findings.
We said it in February when this story started, and it's still true now: Virginia's resolution sets a template for how other states handle the data center exemption question.
The success of Virginia's approach — levying a new tax on energy consumption rather than eliminating the equipment exemption — could become an example for other states.
Georgia is staring at $2.5 billion in data center exemption costs. Pennsylvania is weighing whether to touch its own exemption as part of its budget fix. Texas is expanding its data center footprint aggressively while other states watch.
Every one of those states now has a Virginia model to reference: preserve the investment incentive, create a new consumption-based revenue stream, study the long-term picture, and revisit in two years. It's not a perfect solution — the industry hates it and the Senate only got part of what it wanted. But it avoids the political and economic risk of abrupt exemption elimination, and it generates real revenue without breaking the promises Virginia made to the industry in 2008.
Whether other states follow the model — or go further — will be one of the defining sales tax stories of 2027.
Operating a data center in Virginia or a tech business affected by Virginia's new energy consumption tax? Book a free consultation with our team at sales.tax. We'll walk through exactly what the new tax means for your cost structure and compliance obligations beginning July 1.
Salina, Oklahoma has about 3,500 residents.
Today, they're deciding something that will shape their town's budget for years to come.
Salina voters will decide June 16 whether to approve a one-cent sales tax increase aimed at funding a variety of municipal projects and services. The proposition would raise the city's sales tax rate from 4% to 5%. Morgan Lewis
A one-cent increase sounds small. In percentage terms, it isn't. Going from 4% to 5% is a 25% increase in the city's own sales tax rate — even though the actual dollar impact on most purchases is modest.
To understand the stakes, you need the full rate picture — not just the city's portion.
The current 9.875% sales tax rate in Salina consists of 4.5% Oklahoma state sales tax, 1.375% Mayes County sales tax, and 4% Salina city tax. Zamp
If voters approve the increase, Salina's combined rate moves from 9.875% to 10.875% — pushing the small Mayes County town well above Oklahoma's statewide average and into territory more commonly seen in major metro areas.
For comparison: Oklahoma's base state sales tax rate is 4.5% — meaning more than half of what Salina shoppers pay in sales tax is already local, not state. A successful vote today would push that local share even higher. Avalara
Unlike many sales tax measures that go toward a single big-ticket item — a stadium, a hospital, a transit system — Salina's proposal is a grab bag of smaller municipal needs.
Projects identified in the proposal include park improvements, cemetery preservation and enhancement, the purchase of snow removal equipment, road maintenance and repaving, long-term infrastructure upgrades, and emergency services.
That's a genuinely practical list — the kind of unglamorous, necessary maintenance that small-town budgets struggle to fund without a dedicated revenue source. Snow removal equipment isn't exciting, but a town without it faces real operational problems every winter. Road repaving isn't a headline-grabbing initiative, but deferred maintenance compounds into much larger costs down the line.
Salina's situation illustrates something true of small municipalities across Oklahoma and much of the country: sales tax is often the only meaningful local revenue lever available.
Oklahoma cities and towns generally cannot impose their own income tax. Property tax revenue in many small Oklahoma communities is limited by both modest property values and state constitutional caps on rate increases. That leaves sales tax as the primary tool city councils have to fund anything beyond what state and county allocations already cover.
This is why a town of 3,500 people is voting on a measure that, in a large city, might not even make local news. For Salina, this single vote determines whether snow removal equipment gets purchased, whether the cemetery gets the preservation work it needs, and how aggressively road repairs can be scheduled over the coming years.
One detail from local coverage is worth noting — not because it's dramatic, but because it's quietly telling.
Local news outlets tried gathering resident opinions on the proposition ahead of the vote, but many people in Salina declined on-camera interviews. TaxHero
That kind of reluctance to speak publicly about a local tax vote is common in small towns — where everyone knows everyone, and a recorded opinion about taxes can follow you at the grocery store, the church potluck, or the next city council meeting. It doesn't tell us how the vote will go. But it's a reminder that local tax measures, even small ones, carry social weight in tight-knit communities that bigger cities don't experience the same way.
For the handful of retailers, restaurants, and service businesses operating in Salina, today's vote has a direct and immediate compliance implication if it passes.
Oklahoma's Tax Commission publishes rate change notices on a regular schedule, and local rate changes approved by voters typically take effect on the first day of a subsequent calendar quarter — most commonly the next October 1, January 1, April 1, or July 1 following certification, depending on how quickly the city files its notice with the state.
For Salina businesses, that means: if the measure passes today, the new 5% city rate won't necessarily apply tomorrow. It will take effect on the next scheduled quarterly date after the Oklahoma Tax Commission processes the certified result. Businesses should watch for the official notice from the OTC rather than assuming an immediate change.
For any business that operates point-of-sale systems across multiple small Oklahoma municipalities, this is a useful reminder of a broader pattern: Oklahoma has hundreds of cities and towns, each capable of independently raising or lowering its own local sales tax rate through a simple majority vote. The Oklahoma Tax Commission tracks and publishes city-by-city sales tax collections every month — a reflection of just how granular local rate-setting authority is across the state. Kiplinger
Salina's vote today is a small story in absolute terms. But it's a representative one.
Across the country, thousands of small municipalities are quietly holding similar votes — rarely covered by national media, rarely generating the kind of attention that LA County's Measure ER or Virginia's data center fight commands, but collectively shaping the patchwork of local sales tax rates that businesses operating across multiple jurisdictions have to track.
For a business selling into dozens or hundreds of small towns across several states, Salina's vote is a reminder of the scale of the compliance challenge: there is no single "Oklahoma rate." There are hundreds of city rates, each independently set, each capable of changing through a vote like today's — often with minimal advance notice reaching businesses outside the immediate community.
The outcome of today's Salina vote will be known within hours. The deeper lesson — that local rate changes happen constantly, in places too small to make national news — applies everywhere, every week.
Operating a business in Oklahoma or any state with hundreds of small local taxing jurisdictions, and want to make sure you're tracking every rate change before it catches you off guard? Book a free consultation with our team at sales.tax. We'll help you build a system that catches local rate changes — even the ones too small to make the news.
One week from today, most monthly sales tax returns are due across the country.
Because June 20, 2026 falls on a weekend, many states extend monthly filing deadlines to Monday, June 22, 2026. Quicktaxcalc
For monthly filers, that's the May return — covering every taxable transaction from May 1 through May 31. For quarterly filers, Q2 closes on June 30, with returns due in late July — but the next two weeks are the time to get your records clean.
And for businesses that have been expanding into new states in 2026, this may be the first time some of those new obligations are actually due.
Here's everything you need to know before June 22.
June sits at the intersection of two compliance cycles simultaneously.
Monthly filers have their standard May return due on June 22. But June also closes Q2 — meaning quarterly filers are wrapping up the April through June period, with returns due July 20 in most states.
As businesses expand into new states, filing obligations stack up fast. Monthly in one state. Quarterly in another. A non-standard quarter somewhere else. Miss one deadline and penalties start compounding — even when the tax itself was calculated correctly. TaxCloud
The businesses most at risk right now are those that crossed a new economic nexus threshold during Q1 or Q2 and registered in a new state — but haven't fully mapped the first return's due date in that state. A new registration doesn't tell you when your first return is due. You have to figure that out separately. And missing the first return in a new state tends to draw more scrutiny than a late filing in a state where you have a long compliance history.
Most states have due dates on the 20th of the month — and because June 20 falls on a weekend, most states extend to the next business day: Monday, June 22. Sales Tax Calculator
The states on the standard June 22 deadline include Alabama, Arkansas, Colorado, Connecticut, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maryland, Michigan, Minnesota, Mississippi, Missouri, Nebraska, New Jersey, New York, North Carolina, North Dakota, Oklahoma, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, West Virginia, Wisconsin, and Wyoming.
That's the majority of the country. If you file in any of these states, June 22 is your date.
Ohio is the only state with deadlines on the 23rd of the month. Maine is the only state with deadlines on the 15th of the month — already passed. Massachusetts is the only state with deadlines on or before the 30th every month. Washington has deadlines on or before the 25th, and Kansas, New Mexico, and Vermont have deadlines on the 25th or the next business day. Sales Tax Calculator
Here's the non-standard breakdown for June:
Already passed — June 15: Maine. If you file in Maine and haven't filed yet, you're already late. Address this immediately — the penalty clock started June 16.
June 22: The vast majority of states — see the list above.
June 23: Ohio only.
June 25: Kansas, New Mexico, Vermont, and Washington.
June 29: Arizona.
June 30: Alaska, California monthly filers, Massachusetts, and Hawaii.
Nevada joined the standard 20th-of-the-month group in 2026, moving away from its previous month-end schedule. If you've been filing Nevada on the last day of the month out of habit, your June deadline is June 22 — not June 30. This is one of the most common late filings in 2026 for businesses that haven't updated their calendars. Sales Tax Calculator
If you file quarterly, your Q2 return isn't due until late July — July 20 in most states. But June is the month to prepare, not July.
Here's what quarterly filers should be doing this week:
Review your Q2 sales by state. Pull your April, May, and June transaction data by jurisdiction. Identify every state where you collected sales tax and confirm you have records clean enough to file accurately by July 20.
Check for new nexus states. Did your sales cross the $100,000 economic nexus threshold in any new state during Q2? If so, you may have a filing obligation in that state for Q2 — and you may not be registered yet. Registration takes time. Start now, not July 15.
Renew expired exemption certificates. Any resale or exemption certificate that expired during Q2 needs to be renewed before you file. Filing a return that claims exempt sales without valid certificates on file is an audit trigger.
Verify rate changes applied correctly. Several states updated local rates on April 1. Confirm your system applied those changes from the first day of Q2 and that your Q2 collections reflect the correct rates throughout the period.
Prepare for July 1 changes. We've covered the wave of rate changes hitting July 1 — Illinois local rates, Alabama grocery tax suspension ending, Washington transitional relief expiring, Utah home cook exemption beginning. Your Q3 collections start July 1. Make sure your systems are updated before the first transaction of the quarter.
Not all late penalties are equal — but none of them are cheap. Here's what's at stake in the states where your exposure is highest.
Washington carries the steepest penalties in the country. Late filing and payment penalties in Washington are 9% after the due date, 19% after the last day of the month following the due date, and up to 29% after the last day of the second month following the due date. A missed June 25 Washington deadline that slides into August triggers a 29% penalty on top of whatever tax you owe. TaxCloud
California imposes a 10% penalty on tax due for late filing, with additional interest accruing daily. For high-volume California sellers, a missed deadline is expensive fast.
Texas applies a 5% penalty for returns 1-30 days late, jumping to 10% for returns more than 30 days late, plus 1.5% interest per month on unpaid tax.
Illinois charges a 2% penalty on tax not paid by the due date, plus a 20% penalty if the return is not filed within 30 days of the due date.
New York imposes a 10% penalty for late filing, with additional penalties for businesses with a pattern of late filings.
The common thread: every state charges both a late filing penalty and interest on unpaid tax. Missing a deadline doesn't just mean a fine — it means that fine grows daily until you file and pay.
In 2026, sales tax compliance risk is accelerating. States are tightening enforcement, reducing filing discounts, and relying more heavily on automated matching between registrations, returns, and payments. If your filing calendar lives in spreadsheets or email reminders, the margin for error is shrinking. TaxCloud
The single most common mistake for businesses that have expanded into new states: not knowing when the first return is due.
When you register for sales tax in a new state, the state assigns you a filing frequency — monthly, quarterly, or annual — based on your expected sales volume. That assignment doesn't always come with a clear notice about when your first return is due. And the first return is often due sooner than you think, because registration frequently backdates to the point when you crossed the nexus threshold — not the day you registered.
If you registered in any new state during Q1 or Q2 of 2026 and aren't sure when your first return is due, find out today. The June 22 deadline may apply to your first-ever return in a state you just registered in last month.
Here's everything that needs to happen before June 22 for monthly filers:
1. Confirm your deadline in every state where you're registered. Don't assume. Verify the June deadline for each state — particularly Nevada (now June 22, not month-end), Maine (already passed), and Washington (June 25).
2. Reconcile your May transaction data. Monthly filers need clean records of May 1-31 transactions by jurisdiction before filing accurate returns. If your data isn't reconciled, start today.
3. File even if you have zero sales to report. Most states require you to file a return on time even if you collected zero sales tax in the period. A zero return is not the same as no return — missing it still triggers a late filing penalty in most states.
4. Pay at the same time you file. In most states, the payment and the return are due on the same day. Filing without paying — or paying without filing — still creates a late penalty on whichever piece is missing.
5. Confirm your Nevada deadline has moved. If Nevada is in your filing list and you've been on month-end autopilot, update your calendar to June 22. One week is enough time — but only if you act now.
6. Address Maine immediately. If you file in Maine and missed the June 15 deadline, file as soon as possible. The penalty for late filing in Maine starts at 1% per month up to 25% of the tax due — and it's already accruing.
Seven days. Clean your data, confirm your deadlines, and get your returns filed. The penalty for missing June 22 isn't worth whatever you were prioritizing instead.
Not sure whether your June filings are on track — or concerned that your expanding multi-state footprint has filing obligations you haven't fully mapped? Book a free consultation with our team at sales.tax. We'll audit your filing calendar, identify every June deadline that applies to your business, and make sure nothing falls through the cracks.
The general sales tax rate on the gross receipts from the sale of or charges for tangible personal property, digital goods, and taxable services will increase to 7.0% for periods beginning on and after October 1, 2026. Mass.gov
This is not a surprise. It's the second step of a planned two-year increase that the D.C. Council approved in 2024. The rate went from 6% to 6.5% on October 1, 2025, and it goes from 6.5% to 7% on October 1, 2026. Hands Off Sales Tax
The first increase already happened. The second one is 107 days away.
If you sell anything into Washington D.C. — physical goods, software, digital content, taxable services — your rate is going up in October. Here's everything you need to know before that happens.
D.C.'s general sales tax rate is one of the broadest in the country. Unlike most states, which have long lists of exemptions and special categories, D.C. applies its general rate to an unusually wide range of goods and services.
The rate applies to the gross receipts from the sale of or charges for tangible personal property, digital goods, and taxable services. Mass.gov
In practical terms, that covers:
Certain categories such as restaurant meals, hotel stays, and parking are taxed at higher special rates — those don't change with the general rate increase. Numeral
The items that remain exempt — unprepared food, prescription drugs, medical devices, and sales to qualifying exempt organizations — stay exempt regardless of the rate change.
The story behind this rate increase is worth understanding — because it explains why the October 1 date is firm and why no further delay is expected.
D.C.'s Budget Support Act of 2024 originally scheduled the rate increase in a single jump from 6% to 7% on October 1, 2025. But the D.C. Council later passed the Sales Tax Increase Delay Amendment Act of 2025 — which split the increase into two steps and pushed the full 7% rate back by one year.
The general sales tax rate remained 6.0% through September 30, 2026 — then increases to 7.0% for periods beginning on and after October 1, 2026. Madrasaccountancy
The delay was a one-time concession to give businesses more time to prepare. There is no further delay legislation pending. October 1 is the date.
One of D.C.'s compliance advantages — and it has few of them — is its simplicity.
Washington D.C. applies a uniform rate with no additional county, city, or special district taxes. This means businesses charge the same rate regardless of where the customer is located within the district. Because there are no local taxes, Washington D.C. is one of the simplest jurisdictions for sales tax compliance — you do not need to calculate multiple local rates or manage layered jurisdiction rules. Avalara
After October 1, the complete D.C. rate picture looks like this:
The general rate increase affects the first category only — the others are set by separate legislation and remain unchanged.
This is the detail that catches the most out-of-state sellers off guard — especially software companies and digital product businesses.
The District of Columbia treats SaaS, digital goods, and cloud software as taxable services. SaaS — both B2B and B2C — is taxed at the standard rate. Digital downloads and media, including e-books, streaming, and apps, are also taxable. Sales Tax Calculator
Official D.C. Office of Tax and Revenue guidance confirms that digital applications and software — whether canned, prepackaged, or customized — are taxable as data processing services. Sales Tax Calculator
That means if you sell a SaaS subscription to a D.C.-based business or consumer, you're collecting 6.5% right now and you'll be collecting 7% starting October 1. The fact that your customer is a business — not a consumer — doesn't change anything. D.C. taxes B2B SaaS the same as B2C SaaS.
If you've been assuming your software sales into D.C. aren't taxable — or that B2B transactions are exempt — that assumption is wrong and likely has been for years.
Before you can worry about collecting the right rate, you need to know whether you have an obligation to collect at all.
If you have physical nexus in Washington D.C., or establish economic nexus by having $100,000 or more in gross sales or 200 or more transactions with D.C. residents, you must register and collect the correct tax. Mass.gov
The $100,000 or 200-transaction threshold is the same dual-trigger structure that most states use — and both triggers are still in place in D.C. unlike states like Illinois that have eliminated the transaction threshold. Cross either one and you have a collection obligation.
For remote sellers of SaaS, digital goods, or taxable services — this is where exposure quietly accumulates. A software company selling subscriptions to D.C.-based businesses may cross the $100,000 threshold without ever tracking it, assume their sales are exempt because they're B2B, and end up with years of uncollected sales tax on the books.
The October 1 rate increase is a good trigger to audit whether you have D.C. nexus and whether you've been collecting correctly.
If you sell through certain online platforms — including Amazon, eBay, or Etsy but not Shopify — those platforms are considered marketplace facilitators. Washington D.C. law requires marketplace facilitators to collect and remit tax on your behalf. Mass.gov
But not every platform qualifies as a marketplace facilitator under D.C.'s rules. If you sell through a platform that doesn't meet the definition — or through your own website alongside a qualifying platform — your direct sales are your own compliance obligation.
The October 1 rate change will be handled automatically by qualifying marketplace facilitators for transactions they process. But your direct sales, your own website transactions, and any platform that doesn't qualify as a facilitator under D.C. rules — those are your responsibility to update.
The general rate increase isn't the only D.C. tax change relevant to businesses in 2026.
The Hotel Surtax Amendment Act of 2025 extended the temporary increase in the sales and use tax rate on hotel rooms, lodgings, and accommodations from 14.95% to 15.95% through September 30, 2027. Madrasaccountancy
That means hotels, short-term rental operators, and accommodation platforms serving D.C. customers are operating under a 15.95% rate — not the standard general rate — through at least September 2027. The rate was initially increased in 2022 and has now been extended twice.
If you operate lodging in D.C. or book accommodations for clients in D.C., the 15.95% rate applies regardless of what happens to the general rate in October.
The October 1 effective date is 107 days away. That sounds like plenty of time — but given how the compliance work actually flows, starting now is the right call.
1. Confirm your D.C. registration status. If you sell taxable goods or services into D.C. and meet the nexus threshold, verify you're registered with the D.C. Office of Tax and Revenue through MyTax.DC.gov. If you're not registered and should be, this is the time to fix it — before the rate change adds a new layer of liability on top of existing exposure.
2. Audit your product and service taxability. D.C.'s taxable service list is broad and includes categories that many sellers assume are exempt. Review every product and service you sell into D.C. against the OTR's taxable and non-taxable services list. Pay particular attention to SaaS, digital goods, data processing services, and bundled offerings.
3. Contact your tax software vendor. Ask your vendor specifically when they will push the updated D.C. rate for October 1. Most major platforms update automatically — but verify rather than assume, and get a timeline in writing.
4. Update any manually managed rate tables. If you manage D.C. rates in a spreadsheet, accounting system, or custom billing platform, schedule the rate update for October 1 now — not September 30 at midnight.
5. Review your filing schedule. D.C. sales tax returns are due by the 20th of the following month — filed and remitted through MyTax.DC.gov. Your October returns — covering October 1-31 at the new 7% rate — will be due November 20. Make sure your systems are capturing the rate correctly from the first day of October. Mass.gov
6. Consider a historical compliance review. If you sell SaaS or digital goods to D.C. customers and haven't been collecting sales tax, the October rate change is a natural moment to address that exposure. Voluntary disclosure with the D.C. OTR typically results in a limited lookback period and reduced or eliminated penalties — far less costly than a future audit.
Washington D.C. moving to 7% on tangible goods, digital products, and SaaS is a microcosm of what's happening across the country.
States and jurisdictions are expanding what they tax and raising the rates they charge. Digital goods that were tax-free a decade ago are now taxable in most jurisdictions. SaaS that was in a gray area five years ago now has clear guidance in most states — and it's almost always taxable. Services that were exclusively B2B and assumed to be exempt are increasingly being pulled into the taxable column.
D.C.'s trajectory — 6% to 6.5% to 7% over two years, with a broad taxable base that already includes digital goods and SaaS — is where a growing number of states are heading. The compliance lesson is the same everywhere: the rate you're collecting today may not be the rate you're required to collect in October. And the products you're treating as exempt may not be exempt where your customers are located.
Selling into Washington D.C. and want to make sure your rate is updating correctly on October 1 — or concerned you may have historical SaaS or digital goods exposure that needs to be addressed before the new rate kicks in? Book a free consultation with our team at sales.tax. We'll review your D.C. compliance setup, confirm your registration status, and help you get ahead of October 1 before it becomes a problem.
Four months. Three failed sessions. One "data center diva" insult.
And on Friday, June 12, Governor Abigail Spanberger ended it.
"Today, the House of Delegates put forward a substantive, specific budget proposal to deliver on so many priorities Virginians share," Spanberger said Friday. "I appreciate Speaker Don Scott, Appropriations Chairman Luke Torian, and the members of the House who came to the table in good faith to make it happen. It is a proposal I am proud to support."
The governor added: "Looking forward, I am confident that the General Assembly will send a budget to my desk that I can review and sign — on time. Because there is no other option." Taxfyle
The data center sales tax exemption — worth $1.6 billion annually and the single issue that has paralyzed Virginia's budget since February — survives. For now.
But the Senate hasn't agreed yet. And there are 15 days left.
The new House budget proposal — unveiled Friday and immediately backed by the governor — takes a fundamentally different approach to the data center fight than anything proposed before.
The revised House proposal removes the environmental requirements that had been included in earlier House budgets — provisions that would have required energy efficiency measures and restrictions related to carbon-emitting power generation for data centers seeking the tax exemption.
Instead of conditions, the House is proposing accountability through study.
The new House budget proposes creating a commission of stakeholders and lawmakers to study the impacts and benefits of the data center industry in Virginia — required to report to the General Assembly by November 1, 2026.
Speaker Don Scott described the commission's scope directly: "Full investigation into energy costs, financial impacts, air quality, water conservation, renewable energy, and community impacts — with a report due November 1. So the 2027 General Assembly can pass real, lasting reform. Or if the governor would like, we can come back right after that report is out in November for a special session."
In plain terms: the exemption stays. A commission studies everything. The 2027 legislature — armed with real data — decides what comes next.
The governor's endorsement of the House plan puts enormous pressure on the Senate. But Senate Finance Chair Louise Lucas isn't there yet.
Senate Majority Leader Scott Surovell said the House proposal "is a good first step, but we have a ways to go and we look forward to continuing the dialogue with them to ensure we have a budget to put on the governor's desk by June 22."
Lucas was more pointed: "The House and Governor insist on studying the impact of data centers when the issue has already been studied by the legislature. Virginians are dealing with the negative consequences of data centers today. They expect action now rather than waiting another year and want us to protect their interests." Savant Labs
The Senate's core position hasn't changed: a study commission is a delay tactic, not a solution. The Senate wants real, immediate action — whether that means ending the exemption, capping it, or structurally changing how it works. A commission that reports by November and maybe prompts a special session is not what they came to Richmond to accomplish.
But the Senate is now isolated. The House has a proposal. The governor is backing it. The Senate is the last holdout — with 15 days left.
Understanding the proposed commission matters because it's the vehicle through which Virginia's data center tax question will ultimately be resolved — whether through the commission's recommendations or through whatever the 2027 legislature does in response.
Speaker Scott described the commission's mandate: "It will be a full investigation into energy costs, financial impacts, air quality, water conservation, renewable energy, and community impacts — so the 2027 General Assembly can pass real, national reform." Quaderno
The commission would include stakeholders and lawmakers — meaning data center operators, utilities, environmental groups, local governments, and legislators would all have seats at the table. Its November 1 report would give the 2027 session a factual foundation for whatever changes come next.
The proposal also includes a $225 million reserve fund intended to help offset potential federal funding reductions — a nod to the fiscal uncertainty that has been a backdrop to the entire budget fight. SmartAsset
The budget itself is substantial. It includes nearly $350 million in increased funding for higher education, nearly $140 million in new funding for subsidized childcare, over $76 million in new funding for affordable housing, and $1.8 billion in state support for public education for 2026-2028 — including 3% raises, special education, at-risk students, school meals, and school construction. Savant Labs
This isn't a skinny budget designed just to keep the lights on. It's a full, substantial spending plan — and the governor called it one she's "proud to support."
Here's exactly what has to happen in the next 15 days:
June 18 — House returns to Richmond.
The House will vote on its budget proposal. With the governor's backing and Speaker Scott's leadership, passage in the House is expected.
June 22 — Senate returns.
This is the moment of truth. Senate Democrats — led by Lucas — will either accept the House proposal, propose amendments, or hold firm on their position. Given the governor's endorsement of the House plan, the Senate faces enormous political pressure to accept something close to what the House is offering.
June 22-28 — Conference negotiations.
If the Senate proposes changes, a conference committee reconciles the differences. Both chambers then vote on the final agreed budget.
June 30 — Hard deadline.
A signed budget or Virginia's first-ever government shutdown. Spanberger has made clear she believes a deal will happen. "There is no other option," she said. Taxfyle
We've covered this story since February. But now that we can see the likely resolution, it's worth stepping back to understand what the four-month fight was actually about — because it matters for how Virginia handles this issue in 2027 and beyond.
The Senate's position was never really about the $1.6 billion in foregone revenue. It was about accountability. Virginia created an exemption in 2008 that was projected to cost $1.54 million per year. It now costs more than 100,000% of that projection. Nobody was held accountable for that explosion. Nobody was required to justify the ongoing cost. The industry just kept growing and the exemption kept costing more — automatically, without any legislative review.
The Senate wanted to break that cycle. The House and governor wanted to preserve the economic flywheel while building a framework for accountability going forward.
The commission is the compromise. It doesn't end the exemption. But it creates — for the first time — a formal mechanism for Virginia to understand exactly what it's getting and what it's giving up. The 2027 legislature will have real data to work with, not projections.
Speaker Scott framed it this way: "We're not in a position to demonize any industry that's been good partners with us, but we are in a position to make sure that we hold them accountable. The question is not how we got here. The question is how we fix it — but fix it responsibly, in a non-disruptive way." AccurateTax
If the House budget passes — which now appears likely — here's the practical compliance picture for data centers and tech businesses in Virginia:
The exemption continues unchanged through at least 2027. Data centers that qualify under the existing rules — $150 million investment, 50 jobs — continue to receive the sales and use tax exemption on computer equipment and software purchases. No system changes needed. No new tax obligations.
The commission creates 2027 uncertainty. The November 1 report will almost certainly recommend some form of change to the exemption — whether a cap, a phase-down, new conditions, or a tiered structure. Data center operators should be preparing now for what a modified exemption landscape looks like starting in 2027.
The "honor our commitments" argument won this round. The governor's position — that Virginia should not retroactively change the rules on companies that invested based on existing incentives — carried the day. But the commission's findings may determine whether that argument holds in 2027 for new investments.
For tech businesses buying data center services in Virginia: No immediate cost changes. The services you're purchasing through Virginia-based data centers continue at current prices — the cost increase that would have come from removing the exemption is not happening in this budget cycle.
Virginia's resolution — if it holds — establishes a model that other states wrestling with similar exemption fights are watching closely.
Georgia, which faces a $2.5 billion data center exemption cost in fiscal 2026. Texas, which is expanding its own data center footprint aggressively. Pennsylvania, which is weighing whether to end its own data center exemption to fill a $6.8 billion deficit.
None of those states want to be the first to eliminate an exemption that's attracted billions in investment — and all of them are feeling the same fiscal pressure Virginia has been navigating. The "commission to study, legislature to act" model gives states a politically viable path: acknowledge the problem, gather real data, and defer the hard decision to a future session with better information.
Whether that model produces better outcomes than acting immediately is something Virginia's 2027 session will determine. But as a way to break a four-month budget impasse with 15 days to spare, it appears to be working.
Operating a data center or tech business in Virginia and want to understand exactly what the commission's findings might mean for your tax exposure starting in 2027 — or how to prepare for a potential exemption modification before the 2027 session? Book a free consultation with our team at sales.tax. We'll help you model the compliance implications of every likely outcome so you're not caught off guard when the commission reports in November.
Same week. Same basic ask. Wildly different result.
While LA County's Measure ER squeaked across the finish line by roughly 13,000 votes and Contra Costa County voters flatly rejected a sales tax increase, Fargo, North Dakota did something that looks almost old-fashioned by comparison.
Fargo residents approved a one-cent sales tax extension on June 9 — with 72.9% of voters in favor, extending the tax through 2048. The measure required at least 60% approval to pass.
Not a squeaker. Not a coin flip. A landslide — for a sales tax measure that asks voters to keep paying a tax they've been paying for 18 years, for another 20.
What did Fargo do differently? The answer is genuinely instructive for any city government — and for any business trying to understand why some local sales tax measures sail through while others barely survive or fail outright.
Fargo's infrastructure sales tax was first approved in 2006, with collections starting in 2009. The 20-year tax was set to expire at the end of 2028. The June 9 vote extends it through 2048.
The tax helps fund street, water, wastewater, flood protection, and drought improvement projects throughout the city of Fargo.
Fargo's total sales tax is 2.25%, including 1% for flood control that expires in 2084 and a quarter-cent tax that pays for public safety operations and projects.
This wasn't a new tax. It wasn't even technically an increase. "This is not a new sales tax," City Commissioner Denise Kopack said. "It is the extension of an old sales tax." Voters were being asked to keep the status quo — not to add anything new to their bill.
The Fargo Forward Coalition says the 1% tax has generated $34 million annually since its 2008 inception — more than $600 million total.
But the number that probably mattered more to voters wasn't the total revenue. It was the personal savings.
City Engineer Tom Knakmuhs said residents would pay $4,000 per property for street mill and overlay projects without the sales tax. The tax cuts that cost in half. For street reconstruction projects, the tax reduces costs for property owners by 86%.
That's an extraordinarily concrete number to put in front of voters. Not "this funds infrastructure" — but "this saves you 86% on the bill you'd otherwise get for your street being rebuilt." When a tax measure translates directly into a number a homeowner can compare against their own potential out-of-pocket cost, the math becomes very easy.
One argument shows up again and again in successful local sales tax campaigns — and Fargo leaned into it heavily.
"This is really about residents, businesses and nonresidents all supporting our infrastructure together," said Assistant City Administrator Brenda Derrig. The tax lowers utility bills and special assessments while sharing the cost of infrastructure projects with nonresidents who shop in Fargo.
The Fargo Forward Coalition put it simply on its campaign website: "With just one penny — visitors, commuters and shoppers help pay for the streets and utilities they use."
This is the core appeal of sales tax as a local funding mechanism, and it's a message that travels well: a sales tax spreads the cost of infrastructure across everyone who uses it — not just the property owners who live there year-round. Fargo, as a regional retail and commercial hub for a much larger area of North Dakota and Minnesota, has a particularly strong version of this argument. People drive in from surrounding towns to shop, eat, and do business in Fargo — and every one of those purchases now contributes another 20 years to the city's infrastructure fund.
Here's an argument that emerged closer to the vote — and it significantly raised the stakes beyond Fargo's city limits.
A failure to extend the tax would have affected more than just Fargo. Communities like West Fargo and Horace buy water from Fargo. Without an extension, water bills in each city could have gone up by $20 a month, according to Fargo Forward Coalition co-chair Tami Norgard.
This transformed the vote from a purely local question into a regional one. Fargo voters weren't just deciding their own infrastructure funding — they were effectively deciding whether neighboring cities' residents would see their water bills increase. That's a powerful frame, and it likely contributed to turnout and support beyond Fargo's immediate boundaries of self-interest.
There's a structural detail here that's worth understanding for any government considering a similar measure.
North Dakota law bars local governments from promoting ballot measures, meaning the city of Fargo could not advocate for the sales tax renewal itself.
So a separate group did it instead. The Fargo Forward Coalition — a group of Fargo businesses and residents — formed specifically to promote the June 9 measure, holding public events and building grassroots support.
This is a common workaround in states with similar restrictions: city staff can explain the facts (what the tax funds, what happens if it expires), but a private coalition does the actual persuading. Fargo's coalition clearly did its job — 73% approval doesn't happen by accident.
Local media weighed in too — an editorial board urged voters to "selfishly vote yes," framing the extension as something that would directly reduce their own costs.
The most effective argument in any tax renewal campaign is often the simplest: what happens if it fails?
"If this expires, the funding goes away, but the work does not stop," said Assistant City Administrator Brenda Derrig.
Streets still need to be repaired. Water systems still need maintenance. Flood protection infrastructure — critical in a city that sits on the Red River and has experienced serious flood events — doesn't become less necessary because a funding source disappears. The choice voters faced wasn't "tax vs. no tax." It was "shared sales tax vs. higher property taxes and utility bills falling entirely on residents."
As City Commissioner Brenda Derrig put it during deliberations: "This is a choice between shared sales tax or a burden on local residents and businesses. We are managing multigenerational assets, and stability is key."
With the extension approved, city engineers are already looking ahead to two more decades of projects.
City of Fargo Engineer Tom Knakmuhs said future infrastructure priorities include road and infrastructure improvements from 32nd Avenue in south Fargo to Main Avenue near downtown. The tax is primarily used for existing infrastructure — new developments will not receive funding from it. It's up to the discretion of the city how the tax revenue is split between roads, water, or sewer projects each year.
The 20-year runway gives Fargo's infrastructure planners something most cities don't have: long-term funding certainty for the basics — roads, water, sewer, flood control — without needing to revisit the question again until 2048.
Put side by side, the contrast between this week's results is striking.
LA County's Measure ER — a new half-cent increase, for a specific new purpose (healthcare), with a non-binding spending plan, in a county where combined rates are already approaching or exceeding 10%. Result: passed by roughly 13,000 votes out of nearly 1.9 million cast — essentially a coin flip.
Contra Costa's Measure B — a new sales tax increase, with contested ballot language that a judge had to order rewritten, for anticipated future costs that hadn't yet materialized. Result: rejected, 41% to 59%.
Fargo's measure — an extension of an existing tax that's been in place for 18 years, with concrete, verifiable savings numbers (86% cost reduction on street projects), framed around regional fairness (visitors and neighboring cities benefit too), with specific, named projects voters could picture. Result: approved, 72.9% to 27.1%.
The pattern across all three: voters respond to specificity, track record, and tangible personal benefit. They respond less well to "trust us, we'll figure out the spending plan later" — even when the underlying need (healthcare funding, infrastructure funding) is legitimate in every case.
For any city, county, or district weighing a sales tax ballot measure, Fargo's result offers a template:
1. Extensions outperform new taxes. Voters who have lived with a tax for years and can see what it built are far more receptive than voters being asked to take on something new.
2. Concrete numbers beat abstract framing. "86% cost reduction on your street's reconstruction" is more persuasive than "funds infrastructure improvements."
3. Regional spillover arguments work. If your tax affects neighboring jurisdictions, say so explicitly — it broadens the coalition of people with a stake in the outcome.
4. A dedicated, binding purpose matters. Fargo's tax has a clear, narrow purpose — infrastructure. It's not a general fund tax that could theoretically be spent on anything. Voters trust dedicated funds more than general ones.
5. Build a coalition early. Fargo Forward Coalition started months before the vote, with public events and a clear campaign. Measures that show up on the ballot without organized advocacy tend to underperform.
For businesses in Fargo, the practical impact is simple: nothing changes. The 2.25% combined sales tax rate — including the 1% infrastructure tax — continues uninterrupted through 2048. No system updates needed. No new rate to configure.
But the broader lesson applies everywhere: local sales tax measures are not going away, and the ones that pass tend to share specific characteristics. If you operate in a jurisdiction where a sales tax measure is on an upcoming ballot, understanding whether it looks more like "Fargo" (extension, dedicated purpose, concrete numbers, regional framing) or more like "Contra Costa" (new tax, contested language, abstract future costs) can help you anticipate whether a rate change is actually coming — or whether voters are likely to say no.
Operating a business in a jurisdiction with an upcoming sales tax measure and want to understand what a potential rate change would mean for your compliance? Book a free consultation with our team at sales.tax. We'll help you stay ahead of local rate changes — whether they're extensions, new measures, or anything in between.
Mark your calendar.
The Massachusetts Legislature announced today — June 11, 2026 — that the state's annual sales tax holiday will be held on Saturday, August 8 and Sunday, August 9. On those two days, the state's 6.25% sales tax will be waived for most retail items.
That's 58 days away. And for the millions of Massachusetts shoppers already planning big-ticket purchases — appliances, electronics, furniture, back-to-school gear — the countdown starts now.
For retailers and ecommerce businesses selling into Massachusetts, the compliance clock starts today.
A law passed in 2018 mandates a sales tax holiday weekend in Massachusetts every August — typically a slower time for retailers. The Legislature sets the specific dates through a joint resolution each year, no later than June 15.
Advocates say the holiday helps small businesses. Critics say it only changes the timing of big-ticket purchases that customers were going to make anyway. The state said the 2025 sales tax holiday generated $3.65 million in indirect tax revenues due to increased economic activity.
Whatever side of that debate you're on, the practical reality is the same: two days, no sales tax, and a surge of consumer spending that Massachusetts retailers have learned to plan around every August.
Massachusetts has one of the broadest and most straightforward sales tax holiday rules in the country.
Most retail items that cost under $2,500 are tax-free that weekend — whether purchased in a store or online. The Sales Tax People
The $2,500 limit applies per item, not per transaction. If you're buying several items at once and the total goes over $2,500, all items are still eligible for the exemption as long as each individual item is $2,500 or less. The Sales Tax People
That's a genuinely generous rule — and one that separates Massachusetts from most other states' back-to-school holidays, which typically cap exemptions at much lower thresholds and restrict qualifying categories to clothing and school supplies.
In Massachusetts, the exemption is broad by design. It covers:
The sales tax holiday exemption applies to sales of tangible personal property bought by individuals for personal use or consumption only.
The exclusions are specific — and worth knowing before you or your customers assume everything qualifies.
The following items remain taxable and do not qualify for the exemption: meals, motor vehicles, motorboats, telecommunications services, gas, steam, electricity, tobacco products, marijuana or marijuana products, and alcoholic beverages.
A few notable details:
Items over $2,500 — fully taxable, not partially. If a single item costs more than $2,500, sales tax is due on the entire price — not just the amount over the threshold. A $2,600 refrigerator is fully taxable. A $2,499 refrigerator is fully exempt. The cliff is hard. The Sales Tax People
Business purchases — fully taxable. Purchases by corporations or other businesses and purchases by individuals for business use remain taxable during the holiday. The exemption is for personal use only. A business owner buying a laptop for their company doesn't qualify — even if it's purchased on their personal credit card. The Sales Tax People
Layaway — doesn't qualify. Layaway sales do not qualify for the sales tax holiday exemption. The item must be purchased and paid for during the holiday weekend. The Sales Tax People
Meals and restaurant food — fully taxable. If you grab lunch while shopping, your meal is still subject to the full Massachusetts meals tax. The holiday is for retail goods, not food service.
This is the detail that ecommerce sellers need to pay close attention to.
Purchases made online for eligible items during the sales tax holiday also qualify for the exemption.
But the timing rules are specific.
An item will qualify for the sales tax holiday exemption if you order and pay for an eligible item over the internet during Eastern Daylight Time on August 8 or 9. No sales tax is due on that purchase, even if delivery of the item occurs after the sales tax holiday weekend. The Sales Tax People
The key date is the order and payment date — not the delivery date. A customer who orders a qualifying laptop on August 9 and receives it on August 15 pays no tax. A customer who orders on August 10 — the Monday after the holiday — pays the full 6.25%.
For ecommerce sellers, this creates a specific compliance obligation: your system needs to recognize transactions placed during the August 8-9 EDT window as tax-exempt — even if fulfillment happens days later.
This is the rule most out-of-state sellers miss.
All businesses must take part in the sales tax holiday if the business normally makes taxable sales of tangible property in Massachusetts or to purchasers in Massachusetts and is open for business on August 8 and 9.
Participation isn't optional. If you sell taxable goods into Massachusetts — whether from a storefront in Boston or an ecommerce warehouse in Nevada — and you make sales on August 8 or 9, you are required to apply the exemption to qualifying transactions.
There is no opt-out. A business that continues collecting 6.25% on qualifying items during the holiday weekend is over-collecting — taking tax from customers that the law says they shouldn't be paying.
6.25% sounds modest. But Massachusetts shoppers use the holiday strategically — timing major purchases to maximize the savings.
| Item | Price | Tax Saved |
|---|---|---|
| MacBook laptop | $1,299 | $81.19 |
| 65" OLED TV | $1,799 | $112.44 |
| Refrigerator | $1,499 | $93.69 |
| Washer + Dryer (each under $2,500) | $2,400 total | $150.00 |
| Back-to-school haul | $500 | $31.25 |
| Full home refresh | $6,000 across items | $375.00 |
A family replacing a refrigerator, buying a new TV, and outfitting a kid for college could realistically save $200-$400 in a single weekend. That's real money — and it drives real traffic to retailers who market the holiday effectively.
For businesses selling in Massachusetts — in-store or online — the holiday creates specific compliance obligations that require preparation before the weekend arrives.
1. Confirm your system applies the exemption automatically. Your POS or ecommerce platform needs to stop collecting Massachusetts sales tax on qualifying transactions during the August 8-9 window. This should happen automatically on a schedule — not through manual intervention during a high-volume shopping weekend. Verify with your software vendor now, not the week before.
2. Identify your non-qualifying items. Review your product catalog for items that remain taxable during the holiday — meals, alcohol, tobacco, motor vehicles, items over $2,500. Make sure your system applies the correct treatment to each category.
3. Configure the $2,500 per-item threshold correctly. The threshold is per item, not per transaction. Your system needs to apply the exemption at the line-item level — a $2,499 item is exempt even if it's part of a $10,000 order. A $2,501 item is fully taxable even if the rest of the cart is $5.
4. Handle online orders with post-holiday delivery. For ecommerce sellers, configure your system to recognize that the tax treatment is determined by the order date — not the ship date or delivery date. An order placed at 11:58 p.m. on August 9 (EDT) is exempt. An order placed at 12:01 a.m. on August 10 is taxable.
5. Train your staff. Customers will ask questions during the weekend — especially about the $2,500 threshold, business purchase rules, and online order timing. Make sure your team knows the answers before August 8.
6. Document your holiday-period transactions. Keep clean records of sales made during the holiday window. If Massachusetts audits your August returns, you need to demonstrate that your tax-exempt holiday transactions were legitimately exempt — not just zero-rated by accident.
Massachusetts isn't the only state with an August sales tax holiday — but its rules are among the most consumer-friendly.
Ohio's back-to-school holiday runs August 7-9 — covering clothing under $75, school supplies under $20, and school instructional materials under $20. Kentucky's runs August 7-9 — covering clothing, school supplies, and computers. Maryland's runs August 9-15 — covering apparel and footwear under $100. WREG.com
Massachusetts stands apart from all of them with its $2,500 per-item threshold and broad "most tangible personal property" category. While Ohio shoppers are looking for $18 notebooks and $70 sneakers, Massachusetts shoppers are buying refrigerators and laptops.
That's why Massachusetts's holiday generates more per-shopper economic activity than most other state holidays — and why retailers here see a more pronounced sales spike than their counterparts in states with narrower exemptions.
For a full rundown of every state's 2026 sales tax holiday dates and qualifying items — including how Massachusetts compares to all the others — visit our complete 2026 sales tax holiday guide.
Two days. No state sales tax. Most items under $2,500.
For shoppers, it's simple. For retailers, it requires preparation — but it's manageable if you start now rather than the week before.
The businesses that struggle with Massachusetts tax-free weekend are those that treat it as a consumer marketing event rather than a compliance event. The exemption is mandatory. The rules are specific. And getting them wrong — in either direction — creates liability or customer service problems that outlast the holiday weekend.
58 days is enough time to get this right.
Selling into Massachusetts and want to make sure your systems are configured correctly for the August 8-9 holiday — or managing sales tax holidays across multiple states this summer? Book a free consultation with our team at sales.tax. We'll audit your holiday compliance setup and make sure you're collecting correctly across every state holiday this August.
The votes are still being counted. But the trend is clear.
LA County's Measure ER — a half-cent sales tax increase to fund public healthcare — took the lead in the vote count on June 8 and appears firmly on track to pass. Quaderno
Vote counting continues through June 26, with final certification required by July 2. Updates are dropping today at 5 p.m. AccurateTax
Barring a dramatic reversal in the remaining ballots, LA County's sales tax is going up.
And for every business selling into the largest county in the United States, the compliance clock starts now — not in October.
The number is simple. The implications aren't.
Measure ER is a temporary half-cent (0.5%) increase in the Los Angeles County sales tax for five years — estimated to generate approximately $1 billion per year to support healthcare and other essential services. Quizlet
In practice:
That 0.5% difference affects every single taxable transaction in LA County — every retail sale, every delivery, every service transaction subject to sales tax. Multiply it across millions of daily transactions in a county of 10 million people, and you're looking at $1 billion a year in additional tax collected from consumers and businesses.
Here's the compliance complexity that most businesses don't realize until it's too late.
LA County contains 88 incorporated cities — and many of them have their own additional local sales tax on top of the county base rate.
The county's base sales tax rate is 9.75%, while the cities of Lancaster and Palmdale already have sales tax rates above 11%. Quaderno
Measure ER's half-cent adds to whatever combined rate already applies in each city — not just to the county base. That means:
There is no single "LA County rate." There are 88 city rates plus an unincorporated county rate — all of which shift upward by 0.5% when Measure ER takes effect.
If you're collecting a flat "LA County rate" across all your California transactions, you're already making errors. Measure ER makes fixing that more urgent.
Physical retailers in LA County: Your point-of-sale system needs to be updated before the first transaction of October. The rate change applies to all taxable sales at your location — every product category that isn't specifically exempt.
Ecommerce sellers shipping to LA County: Every order shipped to an LA County address becomes subject to the higher rate in October. If your tax software calculates rates by ZIP code or address, it needs to pull the updated California rate tables when they go live. Not all platforms update automatically — verify with your vendor.
Marketplace sellers (Amazon, Etsy, Shopify): Most major marketplace facilitators collect and remit California sales tax on your behalf. But verify that your platform is applying rates at the address level — not just a statewide average. LA County's complexity requires ZIP-code-level accuracy.
Service businesses in LA County: If you provide taxable services — certain repairs, parking, specific personal services — the rate increase applies to those transactions as well. Review your service taxability under California rules and make sure your invoicing reflects the correct October rate.
Out-of-state sellers with California nexus: If you have economic nexus in California — $500,000 in annual California sales — you're responsible for collecting the correct rate for every delivery address in the state, including the updated LA County rates. Your compliance obligation doesn't change based on where you're headquartered.
October 2026 sounds like a long time away. It isn't — not if you're managing a complex POS environment, multiple sales channels, or a large customer catalog.
Here's the timeline that gives you the best chance of a clean transition:
Now — June:
July:
August:
September:
October 1 (or whenever the effective date is confirmed):
For ecommerce sellers specifically — here are the highest-population LA County cities where your delivery addresses are most likely to cluster, and what their combined rates will look like after Measure ER:
| City | Current Rate | Post-Measure ER |
|---|---|---|
| Los Angeles (city) | 10.25% | 10.75% |
| Long Beach | 10.25% | 10.75% |
| Glendale | 10.25% | 10.75% |
| Santa Monica | 10.25% | 10.75% |
| Culver City | 10.25% | 10.75% |
| Pasadena | 10.25% | 10.75% |
| Torrance | 10.25% | 10.75% |
| Burbank | 10.25% | 10.75% |
| Unincorporated LA County | 9.75% | 10.25% |
| Lancaster | 10.25%+ | 10.75%+ |
| Palmdale | 10.25%+ | 10.75%+ |
These are estimates based on current rates plus Measure ER's 0.5% addition. Verify final combined rates through the California Department of Tax and Fee Administration's rate lookup tool when official rates are published closer to the effective date.
One more thing worth understanding — especially if your customers ask.
Measure ER is estimated to generate approximately $1 billion per year to support healthcare and other essential services. The measure also includes independent oversight and public reporting on how funds are used. Quizlet
But Measure ER is a general tax — not a special tax with legally dedicated revenue. The Board of Supervisors approved a spending plan directing the money toward healthcare. That spending plan is not legally binding. Quaderno
The oversight committee and public reporting requirements are real — but the supervisors retain discretion over how general fund revenue is actually spent. Critics hammered this point throughout the campaign. It's worth knowing because it will come up in conversations with customers who ask why they're paying more.
Measure ER's near-passage — in a county that has approved multiple tax measures in recent years and where some cities already exceed 11% combined rates — tells a story about where California's local tax landscape is heading.
The California State Association of Counties estimates federal cuts will cost the 58 counties up to $9.5 billion. "For most California counties, raising local taxes to absorb the impacts of federal cuts is not feasible," said Graham Knaus, chief executive of the association. The Sales Tax People
LA County found a way to do it — barely. Other California counties are watching. Sacramento County, San Diego County, and others facing similar healthcare funding gaps may bring their own measures to the November 2026 ballot.
If you sell into California broadly, LA County's Measure ER may be the first of several local rate changes heading your way before year-end. The time to build a flexible, address-level California rate management process is now — before the next county puts a measure on the ballot.
Selling into LA County and want to make sure your systems are ready for the October rate change — or concerned about California compliance more broadly as more counties consider their own measures? Book a free consultation with our team at sales.tax. We'll review your California footprint, identify every jurisdiction where your rates are about to change, and make sure you're collecting correctly before October hits.
It was losing. Then it wasn't.
LA County's Measure ER — a proposed half-cent sales tax increase to fund public healthcare — was trailing since election night on June 2. Then on June 8, "yes" votes moved ahead of "no" votes for the first time.
As of Monday June 8, 946,757 voters — or 50.35% — supported the proposed sales tax increase, while 933,753 voters — or 49.65% — opposed it. The margin: approximately 13,000 votes.
With 148,000 ballots still left to count, the final result may not be known until at least Tuesday afternoon — and vote counting updates are expected through June 26, with official certification by July 10.
Nothing is final. But for the first time since polls closed, Measure ER is winning.
The reason Measure ER flipped from losing to winning is predictable in California elections — and worth understanding.
Measure ER was able to narrow its deficit since initial Election Day results as later mail ballots tended to skew toward Democratic voters, according to poll-watchers. "If that trend continues, it's possible that ER could pass," said Zev Yaroslavsky, director of the Los Angeles Initiative at the UCLA Luskin School of Public Affairs.
This pattern — conservative-leaning in-person votes counted first, progressive-leaning mail ballots counted later — is standard in California primary elections. It's why California race calls often take days or weeks after election night.
The 148,000 remaining ballots are almost certainly mail ballots. If they continue skewing Democratic at the same rate as those already counted, Measure ER's lead grows. If the remaining pool is more mixed, the margin could narrow back toward a "no" outcome.
Nobody knows yet. That's why this story is still live.
For anyone just tuning in — here's the proposal in plain terms.
Measure ER — the Essential Services Restoration Act — would raise LA County's sales tax rate from 9.75% to 10.25% for five years, generating an estimated $1 billion a year for the county's general fund.
County supervisors approved a spending plan directing those dollars to offset cuts to Medi-Cal under the Trump administration's One Big Beautiful Bill. But that spending plan is not legally binding — a detail that critics of Measure ER hammered throughout the campaign.
That last point matters: voters are being asked to approve a general tax — not an earmarked, dedicated fund. The supervisors have said they'll spend the money on healthcare. They're not legally required to.
The Yes on ER campaign, called Restore Healthcare for Angelenos, was backed largely by nonprofit health clinics. The No campaign was led by the Howard Jarvis Taxpayers Association, which argued sales tax in LA County is already too high and that raising it again is "unreasonable and unfairly harsh" for those who can't afford it.
The fact that Measure ER is squeaking by — rather than passing comfortably — tells a story about where LA County voters are right now.
"Number one, we're spent," said Fernando Guerra, a pollster who has tracked LA County elections for decades. "Number two, we don't trust the general decision-making. Number three, when we've given you specific dollars for specific issues, you haven't done it."
LA County residents have approved multiple tax measures in recent years. A permanent half-cent increase for homelessness services passed in November 2024 — Measure A. That increase took effect April 1, 2026, raising most LA County combined rates to 9.75%. Measure ER would add another half-cent on top.
Supervisor Kathryn Barger, the only dissenting vote when the board placed Measure ER on the ballot, said: "This proposed half-cent increase would push us even higher, making our county less affordable for families and less appealing for consumers to shop and businesses to operate."
The measure passed anyway — barely. If it holds.
For the 10 million residents and millions of businesses operating in or selling into LA County, a "yes" outcome has direct practical implications.
The new rate: If Measure ER passes, LA County's sales tax rate increases from 9.75% to 10.25% in most jurisdictions — with some cities already carrying higher rates due to their own local add-ons.
When it takes effect: If the "yes" vote holds, LA County would begin imposing the additional 0.5% sales tax in October 2026. That gives businesses approximately three to four months after certification to update their systems.
What needs to change: Every business collecting sales tax on transactions in LA County — whether in a physical store or shipping to LA County addresses — needs to update their rate from 9.75% to 10.25% in October. That means POS system updates, tax software configuration changes, and for ecommerce sellers, verifying that their platform is pulling the correct updated rate for LA County ZIP codes.
The cities where it's more complex: LA County contains 88 incorporated cities. Many have their own additional local sales tax on top of the county rate. In those cities, the combined rate is already above 9.75% — and Measure ER's half-cent would add to whatever that city's current combined rate is. Sellers need to verify the post-Measure ER rate for each specific delivery address in the county, not just apply a blanket countywide rate.
Ecommerce sellers specifically: If you ship goods to customers anywhere in LA County — one of the largest consumer markets in the country — and you're using address-level tax calculation, you'll need to confirm your software updates the LA County rate automatically when the change takes effect. Not all tax software updates local rates in real time. Verify with your vendor.
Win or lose, Measure ER's near-passage sends a signal that extends beyond LA County.
A half-cent sales tax measure for healthcare, in a traditionally progressive county, trailing on election night and then squeaking to a potential win on mail ballots — that's not a comfortable mandate. It's a warning sign for local governments that have come to rely on ballot-box tax increases as a funding mechanism.
Experts say affordability concerns may be eroding support even among LA County's traditionally tax-friendly voters. When a measure like this barely passes in LA County — or potentially doesn't — it signals that the political conditions for easy sales tax increases have changed, even in deep-blue jurisdictions.
For the national sales tax picture: every close result like this makes other county governments think twice before putting a sales tax measure on the ballot. The message voters are sending isn't "never raise our taxes." It's "we need to trust you, and we need to see where the money goes."
Updates to the vote count are expected today — June 9 — and daily through June 26. The race could shift again.
The California Secretary of State's Office is required to certify the final vote tallies by July 10, marking the official end of the 2026 primary election. The Sales Tax People
If Measure ER holds its lead through certification, the October 2026 effective date kicks in and businesses have roughly 90 days to update their systems. If the lead flips back to "no" as remaining ballots are counted, LA County's sales tax stays at 9.75% and the supervisors face a harder conversation about how to fund the healthcare programs they promised.
Either way, the story isn't over. Check back as count updates drop — the next update is expected this afternoon.
Selling into LA County and want to make sure your sales tax setup is ready for a potential rate change in October? Book a free consultation with our team at sales.tax. We'll review your California footprint and make sure you're set up correctly — whatever the final Measure ER result turns out to be.
July 1 is the most important date on the sales tax calendar.
Twice a year — January 1 and July 1 — state and local governments synchronize their tax changes. Rates go up. Rates go down. New exemptions kick in. Old ones expire. Entire new tax categories launch.
This July 1 is busier than most.
Most state tax changes take effect either January 1 or July 1 — the start of the fiscal year for most states — and this cycle brings confirmed changes in Alabama, Illinois, Texas, Arkansas, North Carolina, Oklahoma, Vermont, Washington, and Utah. TaxHero
If you sell into any of these states, here's what's changing — and exactly what you need to do before the first transaction of July 1.
This one catches businesses off guard every time.
Alabama's Governor Kay Ivey signed Act 2026-604 into law in April, suspending the state's 2% sales tax on SNAP-eligible food items for two months starting May 1. That grocery tax holiday ends at midnight on June 30. Effective July 1, the 2% state rate on qualifying food resumes. Savant Labs
If you're a grocery retailer or food seller in Alabama, your systems were updated on May 1 to stop collecting the 2% state rate. On July 1, you need to reverse that change and start collecting again.
Alabama remains one of approximately nine states that still levies a state-level sales tax on groceries. The holiday was temporary. The tax is back.
Action required: Revert your POS and tax calculation systems to collect Alabama's 2% state grocery tax effective July 1. Don't forget that local grocery taxes remained in effect throughout the suspension — so only the state layer is changing.
We covered this in depth two weeks ago, but it bears repeating because the scope is significant.
A broad wave of local sales tax rate changes is hitting dozens of Illinois municipalities, business districts, and transit districts on July 1. The Illinois Department of Revenue has published its official bulletin identifying every affected jurisdiction.
Illinois's IDOR is direct about what businesses must do: adjust your cash register and any computer program so that beginning on July 1, 2026, you will collect and pay the correct sales tax. Contact your software vendor if you use software to create your forms. SmartAsset
The affected jurisdictions include cities across the state — from Addison to Wyanet — plus new business districts, county rate changes, and transit district updates. The full list includes McLean and Whiteside counties, plus new business districts in Bartonville, Breese, East Dundee, Montrose, and Rock Island.
For ecommerce sellers, the obligation goes deeper than just updating a statewide rate. Business district taxes apply based on the delivery address — meaning a package delivered to one side of a street may have a different rate than one delivered to the other side.
Action required: Cross-reference your Illinois customer delivery addresses against the IDOR bulletin. Update your POS and tax software before July 1. If you haven't done this yet, you have 22 days — start now. Full details in our earlier Illinois article.
Texas doesn't change its statewide 6.25% rate on July 1 — but local rates across the state are shifting.
The Texas Comptroller of Public Accounts announced multiple local sales and use tax rate changes effective July 1, 2026, impacting city, special purpose district, and combined area rates across the state. At the city level, Weston in Collin County adopted a 1.5% street maintenance tax, increasing its total local rate to 7.75%, while Taft in San Patricio County abolished its 1.75% street maintenance tax. Four Special Purpose Districts are newly imposing sales taxes, including Crawford Municipal Development District at 0.5%, Falls County Emergency Services District No. 1 at 1.5%, and Henderson County Emergency Services District No. 3 at 2%. TaxJar
Texas updates its local rates on a quarterly basis — January 1, April 1, July 1, and October 1. The July 1 cycle is typically the busiest, as it aligns with the state's fiscal year start and voter-approved measures from spring elections taking effect.
Action required: If you sell into Texas and use address-level tax calculation, verify your software is pulling the updated Texas rate tables for July 1. Pay particular attention to special purpose district boundaries — these are among the most commonly missed rate changes in Texas compliance.
The Arkansas Department of Finance and Administration has announced multiple local sales and use tax rate changes effective July 1, 2026, including newly enacted taxes, rate increases, rate decreases, and annexation-related adjustments affecting cities and counties statewide. Municipalities including Van Buren and El Dorado will implement rate increases, while Cross County and Jackson County will see rate decreases. Newly enacted local taxes will take effect in Chester and Perry, and numerous jurisdictions — including Siloam Springs, Pea Ridge, Fort Smith, Springdale, Dardanelle, Lakeview, Garfield, Highfill, Decatur, Ozark, and Powhatan — will apply updated rates due to annexations. Quaderno
Arkansas is one of the states with the most active local tax change cycles in the country. The combination of newly enacted taxes, rate adjustments, and annexation-driven boundary changes means that sellers need to verify not just the rate but the applicable jurisdiction for every Arkansas delivery address.
Action required: Pull the DFA's July 1 rate change bulletin and cross-reference your Arkansas delivery addresses. Annexation changes are particularly tricky — a customer whose address was in an unincorporated area may now be inside a city limit with a new local tax.
North Carolina's statewide rate of 4.75% holds steady — but local rates are shifting in multiple jurisdictions effective July 1.
North Carolina local sales tax rate changes take effect July 1, 2026 — businesses selling into the state should verify their current rates for each county and municipality where they have customers.
North Carolina has 100 counties, each with its own local rate. Most are at 2.25% on top of the state rate, bringing the combined rate to 7% — but variations exist, and July 1 changes affect that landscape.
Action required: Verify your North Carolina combined rates by county for July 1. Check the NC Department of Revenue's rate notice for the specific jurisdictions affected.
Oklahoma updates its local sales tax landscape on July 1 as well.
Oklahoma local sales tax rate changes take effect July 1, 2026, with multiple jurisdictions implementing new or adjusted rates. Savant Labs
Oklahoma has one of the most complex local sales tax structures in the country — cities, counties, and special districts all impose their own rates, and the combination varies significantly across the state. The Oklahoma Tax Commission publishes updated rate tables quarterly.
Action required: Verify your Oklahoma combined rates through the OTC's rate lookup tool before July 1. If you're using tax calculation software, confirm it has incorporated the Q3 2026 Oklahoma rate tables.
Vermont has been advancing legislation to impose a retail delivery fee — and if it passes, July 1 is the proposed effective date.
Vermont's House Bill 863 would impose a 30-cent retail delivery fee on taxable tangible personal property delivered in the state, effective July 1, 2026 — with no small-seller exemption, meaning all retailers registered for Vermont sales tax would be responsible.
The bill's status as of today is still pending — but the July 1 date is in the legislation. If it passes in the next few weeks, compliance obligations begin immediately.
Action required: Monitor Vermont's legislative status closely. If HB 863 passes, you'll need to add a separately stated 30-cent delivery fee to all qualifying Vermont shipments beginning July 1 — with no grace period.
Washington's ESSB 5814 — which expanded the state's retail sales tax to digital advertising, IT services, custom software, and related categories — took effect October 1, 2025. The preexisting contract transitional relief period runs through June 30, 2026.
That means July 1 is the date when every remaining transitional exemption expires.
Starting July 1, 2026, all qualifying contracts that were previously protected under the transitional relief period are now fully subject to Washington's retail sales tax and retailing B&O tax — with no remaining carveouts for preexisting agreements.
If you've been relying on the transitional relief for any Washington service contracts, that protection is gone on July 1. Every qualifying service transaction into Washington is now taxable — period.
Action required: Review every Washington service contract currently operating under transitional relief. Update your billing to collect retail sales tax on all qualifying transactions beginning July 1. If you haven't applied for the penalty relief program we covered last week for prior uncollected tax, do so before new obligations layer on top of existing ones.
This one is good news for a change.
Effective July 1, 2026, Utah enacted a state sales tax exemption for sales of food and food ingredients or prepared food sold by a home cook, including homemade food products sold at a direct-to-sale farmers market or direct-to-sale location.
If you're a home cook selling food in Utah — at farmers markets, from your home, or at other direct-to-sale locations — your qualifying food sales are no longer subject to Utah state sales tax starting July 1.
We covered the full details of this exemption in our dedicated Utah home cook article. The short version: update your POS to stop collecting state sales tax on qualifying home cook food sales. Local taxes may still apply depending on your jurisdiction.
July 1 isn't just about rate changes. It's also the end of Q2 — and quarterly filers have returns coming due in late July.
Your Q2 reporting period covers April 1 through June 30. That means:
The most common Q2 mistake: businesses that crossed an economic nexus threshold in a new state during April, May, or June — and haven't registered yet. Registration isn't retroactive protection. If you had nexus in a state during Q2 and didn't register, you owe the tax from the moment you crossed the threshold.
July 20 is the standard due date for most quarterly Q2 returns — that's 41 days away. The time to identify and fix Q2 compliance gaps is now, not July 19.
Here's everything that needs to happen before the first transaction of July 1:
One more thing worth understanding: most local sales tax changes cluster around July 1, not January 1.
Generally, state tax changes take effect January 1. But local tax changes — driven by voter-approved measures, fiscal year starts, and local ordinances — cluster heavily around July 1. TaxHero
That means businesses that do a thorough rate review in December and assume they're good for the year are typically missing half the picture. The biannual review — December for January 1, June for July 1 — is the minimum cadence for any business selling into multiple jurisdictions.
July 1, 2026 is 22 days away. That's enough time to get this right — but only if you start now.
Not sure whether all your July 1 rate changes are covered — or concerned that your tax software isn't pulling the right updated tables? Book a free consultation with our team at sales.tax. We'll audit your rate setup, identify every July 1 change that affects your business, and make sure your systems are updated before the deadline hits.
Six days ago, Virginia's Senate Finance Chair Louise Lucas posted a confident message to social media.
"The good news is that we're getting close to an agreement on how to pay for core services. We will have a budget before June 30th and you can take that to the bank!" TaxJar
Today, the smoke coming out of Richmond looks a lot darker.
Based on comments from Sen. Lucas and Senate Majority Leader Scott Surovell posted on June 6, it's not looking great for the State Senate, House of Delegates, and Gov. Abigail Spanberger to reach agreement on a new two-year budget by the end of this month — which is the fiscal deadline to get this done, or potentially face a partial government shutdown starting July 1.
Currently, the plan is for the House of Delegates to reconvene on June 18, followed by the State Senate on June 22.
That's 8 working days before a government shutdown that has never happened in Virginia's modern history.
Here's the detail that makes Virginia's situation genuinely remarkable.
Virginia's revenue forecast jumped by $1.5 billion just last week — June 2, 2026.
The state is collecting more money than projected. Significantly more. And yet Virginia is simultaneously careening toward its first-ever government shutdown — not because it doesn't have enough money, but because lawmakers can't agree on whether to give $1.9 billion of it away every year to one of the most profitable industries in human history.
This is not a fiscal crisis. It's a philosophical one.
We've been tracking this story since February. For readers just tuning in, here's the complete picture.
In 2008, Virginia created a sales and use tax exemption for data centers. The exemption was projected to cost $1.54 million when it passed. In fiscal year 2025, it cost Virginia $1.6 billion — up 118% from the prior year alone, driven by the AI-fueled data center construction boom. TaxHero
Data centers that invest $150 million and create at least 50 jobs are currently exempt from paying sales and use tax on their computer equipment, software, and hardware purchases. Shopify
The exemption worked spectacularly — Virginia is now the data center capital of the world. And that success created a fiscal problem that has paralyzed the state budget for four months.
The Senate's approach includes over $1 billion in new revenue from letting the data center sales and use tax exemption expire in January 2027. Senate Finance Chair Lucas put it bluntly: "For years, Virginia has been writing a blank check to some of the world's most valuable corporations — a check that started at $1.54 million and has grown to $1.6 billion — while families struggle to pay for childcare, health insurance, and a place to live."
The House and Governor Spanberger disagree. Spanberger's office said she was wary of "going back on Virginia's commitments to businesses that have invested in the Commonwealth."
Lucas fired back on X: "Gov. Spanberger thinks our chicken isn't cooked — then what is the Senate supposed to pluck out of our budget? Raises for teachers, health insurance assistance, transit support, a tax rebate, or childcare slots?" Hands Off Sales Tax
That exchange — two Democratic leaders publicly clashing over a sales tax exemption — captures exactly how broken the negotiations have become.
The scale of what's at stake deserves a moment of attention.
Virginia forfeited $1.6 billion in tax revenue through data center exemptions in fiscal 2025 — up 118% on the prior year. Good Jobs First, a nonprofit promoting corporate and government accountability, warns these incentives have become essentially automatic. Virginia's qualification threshold requires just $150 million in capital investment and 50 new jobs — modest compared to the billions spent on today's hyperscale facilities. AccurateTax
For comparison: the entire original projection for this exemption was $1.54 million per year. The actual cost is now more than 100,000% above that projection.
As Senate Majority Leader Scott Surovell pointed out: the exemption was projected to cost the state about $1.54 million when it was passed in 2008. In 2025, it cost Virginia $1.6 billion. And that amount will escalate as the industry continues its explosive growth across Virginia — Dominion Energy told the State Corporation Commission that data centers have requested 70,000 megawatts of power, almost triple the utility's current peak load. Quizlet
The Senate's position: the exemption has done its job. Virginia is the data center capital of the world. The industry isn't going anywhere. It's time to pay taxes.
The House's position: the investment flywheel is still spinning — $80.6 billion invested in fiscal years 2024 and 2025 alone — and pulling the exemption now risks stopping it.
The Data Center Coalition countered that the state could lose out on an estimated $1.3 billion in net tax revenue over five years due to decreased investment if the exemption disappears — and that the industry has invested over $100 billion across the state in the last three years, generating over $5 billion in state and local tax revenue. Quaderno
Here's the math that should alarm everyone.
That's 8 calendar days between when both chambers are finally in the same room and when Virginia's government either has a budget or begins shutting down.
A continuing resolution — the federal government's typical fallback when budgets fail — is not clearly available under Virginia's constitutional framework. Most observers assume Democrats will find some way to avoid a shutdown, given they control the governorship, House, and Senate simultaneously. But "some way" is increasingly unclear. TaxJar
The regular session ended without a budget in March. A special session in April ended without a budget. Lawmakers recessed. Returned briefly. Recessed again. And the positions haven't moved.
The $1.5 billion revenue forecast revision published June 2 should have made a deal easier. It didn't.
Here's why: the Senate wants to use the revenue from ending the data center exemption to fund specific programs — teacher pay raises, healthcare assistance, transit support, childcare slots. These aren't abstract budget line items. They're commitments senators have made to constituents.
The revenue surplus gives the House more flexibility to argue that those programs can be funded without touching the data center exemption. The Senate's counter is that relying on a one-time revenue surge to fund ongoing program commitments is fiscally irresponsible — that permanent revenue sources should fund permanent programs.
Both arguments are legitimate. Neither is moving.
Virginia has never shut down its government in modern history. Here's what July 1 without a budget actually means:
State agencies cannot legally spend money beyond the most essential constitutional functions. No discretionary spending. No new contracts. No program expansion.
State employees face paycheck uncertainty — payroll requires budget authority that doesn't exist without a signed budget.
Local school districts that depend on July state funding disbursements face immediate cash flow crises. School boards across Virginia have already been warned to prepare contingency plans.
State contractors stop getting paid — halting road maintenance, IT support, facility management, and hundreds of other contracted services.
Courts and law enforcement continue under essential services provisions — but with reduced administrative support and no budget clarity for ongoing programs.
"Unlike in the federal government, a lot of things start shutting down here in the commonwealth," Del. Terry Kilgore warned. The Sales Tax People
The federal government can limp along on continuing resolutions for months. Virginia cannot.
Scenario 1 — Deal by June 28. The most likely outcome. Negotiations between June 18-22 produce a compromise — almost certainly some version of the governor's middle path: a new consumption or energy tax on data centers rather than full exemption elimination. Both sides get something. Virginia avoids shutdown.
Scenario 2 — Emergency short-term measure. If negotiations collapse again after June 18, lawmakers could theoretically pass an emergency spending authorization to keep the lights on while talks continue. This isn't clearly available under Virginia's constitution — but the political pressure to avoid shutdown would be enormous.
Scenario 3 — Shutdown begins July 1. The historically unprecedented outcome. Both chambers return June 18-22, fail to reach agreement in 8 days, and Virginia enters July 1 without a budget for the first time in modern history. The political fallout for Democrats — who control every lever of state government — would be severe and lasting.
Most observers believe Democrats will ultimately find a way to avoid scenario three. But "ultimately" is doing a lot of work in that sentence when the deadline is 22 days away and the negotiations are sending up black smoke. TaxJar
For businesses operating in Virginia — or selling into the state — the next 22 days are the most important in Virginia's tax policy in years.
If you're a data center operator: Every scenario except full exemption elimination leaves your current compliance structure intact through at least 2026. But a consumption or energy tax — the most likely compromise — would require entirely new compliance infrastructure. Start understanding what an energy-based tax would mean for your cost structure now.
If you're a tech business buying data center services: A cost increase for data centers flows directly to their customers. Cloud computing, hosted software, and managed services pricing in Virginia could shift depending on the outcome.
If you're any business in Virginia: A shutdown beginning July 1 doesn't stop tax collection — that continues as an essential function. But it creates economic uncertainty and disruption that ripples through every industry. State contracts go unpaid. Government spending stops. The economic signal is deeply negative even if the practical disruption is initially limited.
If you sell into Virginia from out of state: Watch the July 1 date carefully. A Virginia shutdown doesn't change your sales tax obligations — but it changes the state's capacity to process registrations, respond to inquiries, and handle administrative matters.
22 days. 8 working days once lawmakers return. One sales tax exemption standing between Virginia and its first government shutdown.
The next update from Richmond will be the most important one yet.
Operating a business in Virginia or with significant Virginia sales tax exposure and want to understand how each possible budget outcome affects your compliance obligations? Book a free consultation with our team at sales.tax. We'll walk through every scenario and make sure you're ready for whatever comes out of Richmond before June 30.
If you rent out your entire home on Airbnb or VRBO in Rhode Island, your tax obligations changed on January 1, 2026.
And if you haven't updated your setup yet, you've been under-collecting for five months.
Effective January 1, 2026, a new 5% tax applies to the short-term rental of a residential dwelling rented in its entirety in Rhode Island. At the same time, the state's local hotel tax rate increased from 1% to 2% — applying to all short-term rentals including hotels and rentals through hosting platforms like Airbnb and VRBO.
The result: beginning January 1, 2026, both whole-home and room-only short-term rentals in Rhode Island are now subject to a total combined 14% lodging tax rate.
14%. On top of every qualifying stay. Every night. Since January.
Rhode Island's short-term rental tax landscape was already complicated before 2026. Here's the full picture of what existed and what changed.
Before January 1, 2026 — whole-home rentals:
Before January 1, 2026 — room-only rentals (hotels, single rooms):
After January 1, 2026 — whole-home rentals:
After January 1, 2026 — room-only rentals:
This closes a longstanding loophole whereby partial home short-term rentals were previously taxed at a significantly higher rate (13%) than whole-home short-term rentals (8%) without any policy justification for the distinction. WTHR
The gap is now gone. Both types of short-term rentals carry the same 14% total tax burden.
The distinction between whole-home and room-only rentals is the central compliance question — and getting it wrong means collecting the wrong tax.
The new 5% whole-home short-term rental tax covers houses, condos, mobile homes, and other residential dwellings, including vacation rentals and those offered through online hosting platforms such as Airbnb and VRBO. Sales Tax Institute
The key is whether the entire residential dwelling is being rented — not just a room or portion of it. If a guest books your entire property and has exclusive use of the whole home, that's a whole-home rental subject to the new 5% tax.
No single short-term stay would be subject to both the 5% state hotel tax and the 5% whole-home short-term rental tax. The two taxes are mutually exclusive — which type applies depends on whether the rental is whole-home or room-only. TaxCloud
Here's a compliance detail that catches operators off guard every time a new tax takes effect.
The applicable tax is determined based on the date of occupancy rather than the booking date. Avalara
In plain terms: if a guest booked their stay in December 2025 but checked in on January 5, 2026 — the new 14% rate applies. The fact that the booking happened before the law changed doesn't matter. What matters is when the guest actually occupied the property.
This means operators who received advance bookings before January 1 and collected taxes at the old 8% rate may have under-collected on stays that occurred after the effective date. The gap between what was collected and what was owed is a liability that sits with the operator.
Rhode Island takes an unusually broad approach to what counts as taxable rental revenue — and many hosts don't know the full scope.
In Rhode Island, all charges for occupancy are taxable. This includes items such as cleaning fees, pet fees, rollaway bed fees, extra person fees, and similar charges. TaxJar
That means if you charge a $150 cleaning fee, a $50 pet fee, and a $75 per-night rate — all three components are taxable. Guests owe 14% on the total, not just on the nightly rate. Operators who have been collecting tax only on the nightly rate and treating fees as separate non-taxable charges have been under-collecting since January 1.
This is the most common question — and the answer is: sometimes, but not always completely.
For operators who use a short-term rental marketplace such as Airbnb or VRBO that collects guest payments, the marketplace is required to register with the Rhode Island Division of Taxation, collect lodging taxes, and remit them to the state on the owner's behalf.
So if you list exclusively on Airbnb or VRBO, those platforms are generally handling the tax collection and remittance for you on stays booked through their systems.
But there are important exceptions:
Regardless of whether you use a platform, the landlord must collect taxes from tenants on direct bookings and is responsible for any gaps in platform coverage. 10TV
Even if Airbnb handles your tax remittance, Rhode Island has a separate registration requirement that many hosts overlook.
In Rhode Island, short-term rental owners using marketplace platforms such as Airbnb or VRBO are required to register with the Rhode Island Department of Business Regulation. Operators must submit their owner's principal place of business or, if the owner is located out of state, an agent or property manager. TaxJar
Registration with the Division of Taxation and registration with the Department of Business Regulation are two separate requirements. Platforms handle the tax side for most hosts — but the business regulation registration is the host's own obligation, regardless of platform.
The whole-home short-term rental tax isn't the only new obligation Rhode Island created for vacation rental owners in 2026.
Rhode Island is implementing a property tax on non-resident owners of properties valued over $1 million, effective July 2026, unless they rent the property for at least 183 days annually. Fonoa
This is a separate, distinct obligation from the short-term rental lodging tax. It targets out-of-state owners of high-value vacation properties who aren't renting their properties enough to justify the favorable tax treatment that comes with being an active rental property.
If you're an out-of-state owner of a Rhode Island property valued above $1 million, July 2026 brings a new compliance question: are you renting it enough to avoid the new property tax?
There's a political dimension to Rhode Island's short-term rental tax that affects how the revenue flows to communities.
When the whole-home rental tax was proposed, Newport Mayor Xaykham Khamsyvoravong had a specific concern about where the revenue would go. "With a tax like this, we have an existing model. Maintaining that is important. That tax is directly related to the economic activity having a physical impact in their community," he said. WTHR
Newport is one of the most active short-term rental markets in Rhode Island — its historic mansions, waterfront properties, and summer tourism draw enormous vacation rental activity. The question of whether new rental tax revenue flows back to tourism-heavy communities or into statewide programs has been a persistent political tension.
For hosts in Newport, Narragansett, Westerly, and other coastal communities that drive most of the state's vacation rental activity — understanding where your tax dollars go isn't just academic. It's part of the community conversation about whether short-term rentals are net positives or negatives for local housing and infrastructure.
If you rent out a whole home in Rhode Island on Airbnb, VRBO, or any platform — or directly to guests — here's your checklist:
1. Verify your platform is collecting the right amount. Log into your Airbnb or VRBO host dashboard and confirm the total taxes being collected on Rhode Island bookings. The combined rate should be 14% — 7% state sales tax, 5% whole-home rental tax, and 2% local hotel tax. If your dashboard shows 8%, something hasn't updated correctly.
2. Check your direct booking process. If you accept any bookings outside of Airbnb or VRBO — through your own website, email, or phone — you're responsible for collecting and remitting 14% on every stay. Confirm you have a system in place.
3. Review your fee structure. All fees — cleaning, pets, extras — are taxable in Rhode Island. Make sure you're applying the 14% rate to your total charge, not just the nightly rate.
4. Register with the Rhode Island Department of Business Regulation if you haven't already — this is separate from tax registration and required regardless of whether your platform handles tax remittance.
5. Address any back-collection gaps. If you had January, February, March, April, or May occupancies at the old 8% rate, you may have under-collected. Consult a tax professional about how to handle the gap — proactive correction is always better than an audit.
6. Watch for the July non-resident property tax. If you own a Rhode Island property valued over $1 million and you're not a Rhode Island resident, understand the 183-day rental requirement that applies starting July 2026.
Renting out a whole home in Rhode Island on Airbnb or VRBO and not sure whether you're collecting the right amount — or whether your platform is handling the new whole-home tax correctly? Book a free consultation with our team at sales.tax. We'll review your specific situation and make sure your compliance is current before the next audit cycle.
The math in Virginia just got alarming.
Despite months of negotiations and even a special session, Virginia lawmakers remain deadlocked over a proposal to roll back tax breaks for data centers. The Virginia House is scheduled to return on June 18.
June 18. With a June 30 hard deadline.
That's 12 days to negotiate, draft, vote on, and pass a $212 billion two-year budget — or Virginia becomes the first state in modern history to shut down its government over a sales tax exemption fight.
We've been tracking this story since March. The positions haven't moved.
Del. Terry Kilgore summed it up plainly: "There's not been a lot of progress on the budget yet, the Senate and House are far apart. We only have until June 30, and unlike in the federal government, a lot of things start shutting down here in the commonwealth."
The regular session ended without a budget in March. A special session in April ended without a budget. Lawmakers returned briefly, recessed, and are now not coming back until June 18.
After a brief floor session in late April, state lawmakers recessed without a deal, leaving no clear timeline for when a compromise may be reached. Numeral
The only meaningful development since our last update: Virginia held a special congressional election on June 2, which shifted the state's U.S. House delegation dramatically. Virginia voters voted yes to change Virginia from having a 6-5 Democratic majority in the U.S. House of Representatives to one with an expected 10-1 Democratic majority — and negotiations on the budget may soon be more streamlined as a result. Whether that political shift changes the internal Democratic dynamics blocking a budget deal remains to be seen.
The single sticking point — the one that has blocked every budget conversation for four months — is unchanged.
At the center of the impasse is Virginia's sales tax exemption for data centers — a policy estimated to reduce state revenue by between $1.6 billion and $1.9 billion annually. Virginia's data center exemption allows companies to avoid paying sales and use taxes on certain equipment, software, and infrastructure used to operate data centers. To qualify, companies must invest $150 million in Virginia facilities and create 50 jobs. Avalara
The Senate wants to eliminate the exemption effective January 1, 2027 — eight years before its scheduled 2035 sunset.
The House and Governor Spanberger want to preserve it — with new clean energy requirements attached.
The House budget removes any reference to phasing out the tax exemption, preserving the 2035 sunset date. Instead, House leaders attached new requirements: data centers must meet certain clean energy and environmental investment standards to maintain the exemption. Madrasaccountancy
An option to tie the exemption to banning the use of fossil fuels as a primary source of power, matching energy needs with clean energy sources, transitioning from diesel backup generators to batteries, and using energy more efficiently still exists — but it hasn't produced a deal. Avalara
One dimension of this fight that hasn't gotten enough attention is the contractual angle — and it's genuinely complicated.
"We made promises to these data centers when they came here that 'you'd have this tax credit,' and we as Virginians need to fulfill our promises," said Del. Terry Kilgore. Mass.gov
This isn't just political rhetoric. Many data center operators entered Virginia specifically because of the exemption — signing long-term lease agreements, infrastructure contracts, and power purchase agreements with the expectation that the tax treatment they were promised would last through 2035.
Eliminating the exemption eight years early doesn't just change their tax bill. It potentially voids the economic assumptions underlying billions of dollars of investment decisions. The legal exposure from that — companies arguing Virginia breached an implicit or explicit commitment — is real, and it's part of why the governor is more cautious than the Senate about elimination.
Here's the competitive dimension that makes Virginia's decision genuinely consequential beyond its own borders.
Texas is positioning to overtake Virginia as the world's largest data center market by 2030. Hyperscaler capital expenditure approaches $700 billion for 2026. At least six other states are pursuing their own incentive rollbacks. Madrasaccountancy
If Virginia eliminates or substantially curtails its exemption, the investment decisions that would have gone to Northern Virginia — the next hyperscaler campus, the next AI infrastructure deployment — start going to Texas instead. Or Georgia. Or Indiana. Or wherever the next favorable tax environment emerges.
The Senate's position is that Virginia's dominance is sticky enough to survive the change. The House and governor's position is that it isn't worth testing. Neither side can prove their case in advance — which is why the impasse has lasted four months.
When lawmakers return June 18, here's what has to happen in 12 days:
That's four sequential steps in 12 days, after four months of failure to complete step one.
Supporters of the rollback say the data center industry is costing the state billions, while opponents warn that changing the rules could hurt future business investment. Those positions haven't moved in four months. The only thing that's changed is the deadline is now close enough to see. Mass.gov
Virginia has never shut down its government in modern history. Here's what July 1 looks like without a budget:
Del. Kilgore was direct about the stakes: "Unlike in the federal government, a lot of things start shutting down here in the commonwealth." Mass.gov
The federal government can limp along under continuing resolutions for months. Virginia can't. The constitutional requirement for a balanced budget means there is no fallback mechanism. Either there's a budget by June 30, or the lights go out.
For businesses operating in Virginia or selling into the state, the June 30 deadline creates three possible outcomes:
Scenario 1 — Deal before June 30. The data center exemption question is resolved — either eliminated, preserved with conditions, or replaced with a consumption tax. Compliance implications kick in depending on which version passes. Virginia avoids a shutdown.
Scenario 2 — Shutdown begins July 1. Virginia's state government enters unprecedented territory. Tax collection doesn't stop — Virginia's Department of Taxation continues operating as an essential function. But the broader economic disruption and uncertainty affects every business in the state.
Scenario 3 — Emergency continuing resolution. Virginia's constitution doesn't provide for a federal-style continuing resolution — but lawmakers could theoretically pass emergency legislation to extend current spending authority temporarily while negotiations continue. This hasn't been publicly discussed as a serious option, but if June 18 talks collapse quickly, it may become one.
The 12-day window starting June 18 is the most important period in Virginia's fiscal calendar in years. Whatever happens in that window will determine the state's data center tax landscape, its budget priorities, and its ability to fund government services — for the next two years.
Operating a data center, tech business, or any company with Virginia operations and want to understand what each possible budget outcome means for your sales tax obligations? Book a free consultation with our team at sales.tax. We'll walk through every scenario and help you prepare before June 30.
Contra Costa County asked. Voters said no.
Contra Costa County voters rejected Measure B — a proposed 0.625-cent sales tax increase — with just 41.1% support in early results from the June 2 primary election.
The measure needed a simple majority to pass. It wasn't close.
Voter turnout countywide hovered at 22% — meaning a small slice of the electorate decisively rejected a tax that would have raised an estimated $150 million a year for five years.
And the rejection carries a message that extends well beyond one Bay Area county.
Contra Costa County's board of supervisors placed Measure B on the June 2 primary ballot with a 4-1 vote, proposing a 0.625% general sales tax increase for five years to help address anticipated federal cuts to health care, supplemental food assistance, and other county services. TaxHero
If it had passed, the sales tax in Richmond would have increased from 9.75% to 10.375% — or slightly more than 10 cents on every dollar of eligible taxable purchases. Residents of El Cerrito and Pinole would have faced paying the highest combined rate in the county at 10.875%. TaxJar
For context: that's higher than almost anywhere in the country. And it would have landed on top of existing local and state taxes that have been climbing for years.
This story has a legal subplot most people missed — and it's directly relevant to how local governments use ballot language to influence outcomes.
Contra Costa County must change the ballot question for Measure B because the question written by county supervisors was biased to encourage a "yes" vote, a judge ruled April 1. Two residents challenged the wording as biased — and Contra Costa County Superior Court Judge Leonard Marquez agreed. Quizlet
The board voted to put the measure on the ballot, but two local voters filed a petition alleging that the language in the ballot question sought to influence voters in favor of the measure. Savant Labs
The court found the original wording argumentative and prejudicial — striking phrases that characterized a "no" vote as risking hospital closures — and ordering the rate expressed as "(0.625%)" for clarity. Shopify
A second legal challenge followed. Minor v. Connelly (Case No. N26-0554) targeted the official ballot arguments filed by Measure B proponents — including county supervisors — alleging the proponents' argument contained verifiably false claims about the projected revenue figures.
The measure went to voters already damaged by legal scrutiny of its own language.
Opponents made two arguments that resonated — and both are worth understanding because they're showing up in sales tax debates across California.
Argument 1: It's premature. Opponents noted the extra sales tax would take effect in October 2026 while the initial federal budget cuts aren't slated to go into effect until January 2027. "Measure B starts collecting in October 2026 — locking in five years of higher taxes before most impacts are even known," they stated.
Argument 2: It's a spending problem, not a revenue problem. Opponents stated that "Contra Costa County has a spending problem, not a revenue problem." They noted that Contra Costa County employee salaries and benefits have risen 47% since 2020 — and that Measure B could facilitate or directly bankroll more such increases. TaxHero
Both arguments are classic anti-tax-measure talking points. But in a county where combined sales tax rates were already approaching — and in some cities exceeding — 10%, they landed.
The Contra Costa result doesn't exist in isolation. It's part of a broader pattern of voter resistance to local sales tax increases that has been building across California.
In the same June 2 election, Los Angeles County is still counting votes on Measure ER — a half-cent sales tax increase for healthcare that pre-election polls showed running at 47% opposition and 45% support. The LA results won't be certified until July 10. TaxJar
The pattern: counties across California are turning to sales tax measures to backfill federal funding cuts — and voters are increasingly saying no, especially when combined rates push past 10%.
California already has a 7.25% statewide base rate — the highest statewide base in the country. Add county and city additions, and residents of many Bay Area communities are already paying 9.5% to 10.75% on most purchases. A new analysis ranked California 5th worst in the nation for cost-of-living burden. Shopify
At some point, the voter math changes. People who might have supported a half-cent increase five years ago — when their combined rate was 8.5% — resist the same increase when they're already at 10%.
Voter turnout countywide hovered at 22%.
That number matters in both directions. On one hand, low turnout means the result may not reflect the full county's preferences — dedicated opponent groups can punch above their weight when most voters stay home. On the other hand, low turnout on a sales tax measure that supporters framed as urgent healthcare funding suggests enthusiasm for the measure was weak even among those who backed it.
A measure with genuine broad support tends to drive its own turnout. Measure B didn't.
For businesses operating in Contra Costa County, the rejection means the status quo holds — for now.
Current combined sales tax rates across the county remain unchanged:
The October 2026 collection date that would have applied to Measure B is now moot. No system updates are needed. No rate change is coming — at least not from this measure.
But Contra Costa County still faces the same federal funding pressure that drove Measure B onto the ballot in the first place. The county was asking voters to supplement service cuts after anticipated federal cuts. Those cuts haven't been resolved. The county will need to address the gap somehow — and another ballot measure, a November placement, or spending cuts are all still on the table. Quaderno
The Contra Costa result — combined with polling on LA County's Measure ER — sends a clear message to county governments across California and beyond:
Voters will approve sales tax increases when they trust where the money is going, when the ballot language is fair, when the rate increase feels proportionate, and when the timing makes sense. When any of those conditions are missing, the answer is no.
Measure B's forerunner was 2020's Measure X — a 0.500% sales tax increase that passed with strong support. The same county that approved Measure X in 2020 rejected a slightly larger measure in 2026. Six years of stacking local taxes, rising costs, and widening distrust of government spending have shifted the electorate. AccurateTax
For local governments watching this result: the era of routinely passing sales tax measures to fill funding gaps is ending. The political conditions that made those measures easy to pass are gone in many California communities.
For businesses watching this result: every rejected measure is a reminder that local tax rates are a live policy debate — and that the rates you're calculating today may look different six months from now, depending on what ends up on the November ballot.
Operating a business in Contra Costa County or anywhere in California and want to make sure your sales tax rates are current and your compliance is set up correctly? Book a free consultation with our team at sales.tax. We'll review your California footprint and make sure you're calculating the right rate for every jurisdiction where you sell.
Virginia lawmakers are heading back to Richmond today.
They have 29 days.
Failure to enact a budget before July 1 would result in Virginia's first government shutdown in modern history — creating fiscal uncertainty for state agencies, local governments, and school divisions that depend on state funding.
And the only thing standing between Virginia and that shutdown is a single sales tax exemption that nobody in the state can agree on.
Virginia has yet to finalize its 2026-27 state budget, with negotiations completely stalled over the commonwealth's data center sales and use tax exemption — a policy estimated to reduce state revenue by between $1.6 billion and $1.9 billion annually. 95.3 MNC
The regular session ended without a budget. A special session in April ended without a budget. Lawmakers have remained at an impasse since the regular 2026 General Assembly session ended, despite Democrats controlling both chambers of the legislature and the governor's office. Indiana Capital Chronicle
Same party. Complete deadlock.
Here's the detail that makes this story genuinely remarkable.
Virginia revenues are actually surging despite the budget standoff. The state is collecting more tax money than projected. The fiscal emergency driving this fight isn't a revenue shortfall — it's a philosophical disagreement about whether a $1.9 billion annual tax giveaway to one of the most profitable industries in history is still worth the price. Bipartisan Policy Center
A poll by Hart Research found 65% of likely Virginia voters oppose the current data center tax exemption, while 67% support ending it. A separate Washington Post poll reported nearly identical findings. 96.3XKE
Two-thirds of Virginia voters want the exemption gone. Every chamber of state government is controlled by Democrats. And yet — the budget is stalled because Democrats can't agree with each other.
The positions haven't moved since we first covered this story in March — which is exactly the problem.
The Senate, led by Finance Chair Louise Lucas, wants to eliminate the data center sales and use tax exemption entirely — effective January 1, 2027. "Data centers will employ very few permanent jobs for a sizable tax giveaway," Lucas said. The Senate argues ending the exemption early would generate nearly $1 billion in additional revenue over the biennium — money that could fund education, transportation, and infrastructure. WGN Radio
The House, backed by Speaker Don Scott, wants to preserve the exemption through its 2035 sunset date — with new conditions attached requiring data centers to meet clean energy and environmental standards. Governor Spanberger is siding with House Democrats who are going all in to preserve data center tax breaks, arguing data centers are the commonwealth's economic ace — providing billions in local tax revenue. Wkvi
Spanberger has repeatedly warned against allowing negotiations to go past June 30. "It's absolutely unacceptable if the General Assembly would allow for the state to go past July 1," she said. WGN Radio
To understand why this exemption is so hard to let go — and so hard to keep — you need to see the full data picture.
The data center tax break was implemented in 2008 under Democratic Gov. Tim Kaine. At the time, the Department of Taxation said it would cost $1.54 million per year — about $2.37 million in today's dollars. The actual figure for fiscal year 2025 was between $1.6 billion and $1.9 billion — more than 100,000% above the original projection.
But the industry's counter-numbers are equally staggering.
A letter from Virginia Economic Development Partnership Chair Jason El-Koubi said the industry has generated 74,000 jobs, $5.5 billion in labor income, and $9.1 billion in GDP to Virginia's economy annually. In fiscal years 2024 and 2025 combined, data center companies reported investing $80.6 billion in Virginia and claiming $3.2 billion in sales tax exemptions.
The 2026 VEDP report estimated the data center industry generated $2.1 billion in total tax revenue in fiscal years 2024 and 2025 — meaning the industry is generating more in total tax revenue than it saves through the exemption. The Hill
The Senate says that's exactly why Virginia can afford to end the exemption — the industry is too entrenched to leave. The House says that's exactly why the exemption should stay — the investment flywheel is still spinning and pulling it would slow down.
Virginia shutting down July 1 isn't a hypothetical. It's a real operational scenario that state agencies are actively preparing for.
Without a budget, funding decisions remain uncertain for local governments, school systems, and state agencies that rely on state allocations. "It's a big issue for our localities — school boards, counties — they've got budgetary constraints also," said Del. Terry Kilgore.
Virginia is constitutionally required to pass a balanced budget. Without one, the state cannot legally spend money on anything beyond the most essential operations. State employees face uncertainty about paychecks. Local school districts that rely on state funding for July disbursements would face immediate cash flow problems. State contractors stop getting paid.
Senate Finance Chair Lucas, despite her hard line on the data center exemption, said she expects a deal before June 30. "Virginia will have a budget by June 30. We will have to get this right for Virginians." Indiana Capital Chronicle
Both sides are saying the right things publicly. The question is whether the private negotiations happening right now in Richmond can bridge a gap that has survived a full legislative session and a failed special session.
Three options remain on the table as lawmakers return today:
Option 1 — Senate wins. The exemption is eliminated effective January 1, 2027. Data centers operating under existing agreements are given some transition period. The Senate gets the $1 billion in additional biennium revenue it wants. The House and governor accept the outcome to avoid a shutdown.
Option 2 — House wins. The exemption survives to 2035 with new clean energy conditions attached. The Senate accepts the conditions as a partial win — getting environmental accountability without the revenue hit.
Option 3 — The governor's middle path. Spanberger has floated a consumption-based energy tax on data centers as a compromise — taxing the electricity data centers consume rather than the equipment they buy, potentially generating revenue while preserving the investment incentive structure. This option gives both sides something: the Senate gets new revenue, the industry keeps the equipment exemption that drives investment decisions. The Hill
Of the three, Option 3 is the most likely path to an agreement — but the details of an energy consumption tax would need to be worked out from scratch, which takes time Virginia is quickly running out of.
The outcome of Virginia's budget fight has direct compliance implications — not just for data centers, but for any tech business operating in or selling into Virginia.
If the exemption is eliminated: Data centers purchasing or leasing computer equipment and software in Virginia will owe 5.3% state sales tax plus applicable local rates beginning January 1, 2027. For large facilities replacing servers every three to five years and running equipment budgets in the tens of millions, that's a material new cost requiring immediate contract and pricing adjustments.
If the exemption survives with conditions: Data centers need to understand the new environmental compliance requirements and whether their current operations qualify. An exemption with conditions attached is only valuable if you meet those conditions — and failing to meet them retroactively could trigger back-tax liability.
If a consumption tax is adopted: A new energy-based tax structure would require entirely new compliance infrastructure. Billing, metering, rate calculation, and remittance processes that don't currently exist would need to be built from the ground up.
For all tech businesses in Virginia: The broader signal is clear. Virginia is requiring balanced budgets — meaning lawmakers must agree on expected revenue before finalizing spending decisions. Whatever resolution emerges from these negotiations, the era of Virginia's data center exemption operating unquestioned and uncapped is over. The political and fiscal pressure to generate revenue from the industry will not disappear regardless of how June 30 resolves. WGN Radi
29 days.
Lawmakers are in Richmond today. Negotiations are expected to be intense through the next two weeks. Both chambers need to vote on a final budget. The governor needs to sign it. And it all has to happen before July 1 — or Virginia enters territory it has never been in before.
The sales tax world will be watching.
Operating a data center, tech business, or any company with significant Virginia operations — and want to understand how the budget resolution could affect your sales tax obligations starting July 1? Book a free consultation with our team at sales.tax. We'll walk through every scenario and help you prepare for whatever Virginia's legislature decides in the next 29 days.
Tennessee shoppers were hoping July 1 would bring relief at the register.
It won't.
Advocacy groups lobbied aggressively to include a partial elimination of Tennessee's 4% grocery tax in the 2026 state budget. The final document emerged from the legislative committees without any language addressing the retail grocery tax. Sales Tax Institute
Despite bipartisan support, multiple competing bills, and months of public debate — Tennessee's grocery tax survives into fiscal year 2027 unchanged.
Here's how it happened, why it matters, and what comes next.
Tennessee finds itself in a genuinely strange position.
Tennessee has no income tax — the Hall Tax on investment income was eliminated in 2021, making Tennessee one of only nine states with no income tax of any kind. 10TV
The trade-off: Tennessee's 7% state sales tax rate ties for the highest in the country alongside Indiana and Mississippi, and local additions push most residents to pay 9.25% to 9.75% on most purchases.
And unlike most states, Tennessee taxes food.
A family spending $800 a month on groceries in Memphis pays roughly $48 a month — or $576 a year — in sales tax on groceries alone. That cost would be zero in Florida or Texas.
Tennessee is one of only about ten states in the country that still imposes a statewide sales tax on groceries. That distinction has become politically toxic in both parties — which is exactly why so many bills were filed this session. Fox 59
The volume of grocery tax legislation introduced in 2026 was remarkable. Multiple bills. Multiple approaches. Both parties.
At least three bills sought to eliminate Tennessee's 4% state sales tax on food and food ingredients entirely — HB 1530, HB 1842, and HB 2007. All three would have taken effect July 1, 2026.
But that wasn't all. Some proposals would limit exemptions to specific populations — exemptions for WIC-eligible items and income-qualified families. At least two new food tax holidays were introduced — one would exempt groceries for consumers aged 65 or older, another would exempt groceries on the fifth day of every month. Avalara
The most unusual proposal: HB 1722/SB 1695 would establish a sales tax holiday for food and food ingredients one day per month — specifically exempting grocery sales between 12:01 a.m. and 11:59 p.m. on the fifth day of any month. The fifth is payday for many Tennessee employees, which appears to explain why that date was chosen. Avalara
Different visions. Different approaches. One common problem — nobody could agree on how to pay for any of them.
The grocery tax generates serious money.
The grocery tax generates approximately $800 million per year for Tennessee — funding infrastructure, public safety, clean water, and education.
Republicans filed a bill to eliminate the tax but did not include a specific replacement funding mechanism. Democrats filed their own bill but tied it to closing corporate tax loopholes — a mechanism Republicans rejected.
"Removing $800 million from the state budget without replacing it means one thing: cuts," said Rep. Aftyn Behn, D-Nashville. Tax Foundation
That's the fundamental impasse. Everyone agrees the grocery tax is regressive and politically unpopular. Nobody agrees on what fills the $800 million hole it leaves behind.
Republicans argued the state budget has grown nearly 59% under Governor Lee — implying there's room to absorb the loss. Democrats countered that cutting revenue without a replacement plan is irresponsible. Neither side moved.
The result: the final budget document emerged from legislative committees without any language addressing the retail grocery tax. Sales Tax Institute
While state lawmakers were deadlocked, Nashville's mayor was fighting a separate but related battle — and losing.
Nashville Mayor Freddie O'Connell wants to reduce or eliminate the city's 2.75% local grocery tax, but state law currently prevents metro governments from doing so. Every city in Tennessee is allowed to lower its grocery tax rate — except metro governments like Nashville. WFYI
O'Connell asked state leaders to change that law so the city can reduce or eliminate its local grocery tax. A resolution asking the state legislature to make the change was introduced at Metro Council. WFYI
The irony is striking: Nashville is one of the fastest-growing cities in the country, generates enormous state tax revenue, and its mayor wants to cut a local tax — but a quirk in state law uniquely blocks him from doing what every smaller Tennessee city is legally permitted to do.
That fight didn't advance in 2026 either. It will be back in 2027.
To understand the stakes, it helps to see the full picture of what Tennessee residents pay on food.
Groceries in Tennessee are subject to a 4% state sales tax, plus applicable local taxes. The general state sales tax rate is 7% — but the grocery rate is a reduced 4%. Fox 59
Local add-ons vary by county and city. In most parts of the state, the combined grocery tax rate runs between 5% and 6%. In some areas it pushes higher.
Prepared or heated food sold for immediate consumption — restaurant meals, hot bar items, and similar purchases — is taxable at the full standard rates, not the reduced grocery rate.
The distinction matters for retailers that sell both qualifying groceries and prepared foods. Getting the classification wrong — applying the grocery rate to prepared food or vice versa — is one of the most common audit triggers for Tennessee food businesses.
For grocery retailers, convenience stores, and food businesses in Tennessee, the failure to eliminate the grocery tax means the current compliance framework stays in place — for now.
What you need to know for 2026:
The classification line between "grocery item" and "prepared food" remains the primary compliance risk. Tennessee taxes prepared or heated food sold for immediate consumption at the full standard rates — not the reduced grocery rate. Businesses that sell both — delis, bakeries, gas stations with hot food sections, grocery stores with prepared food departments — need to apply different rates to different items in every transaction.
The grocery tax fight in Tennessee is not over. It's been deferred — again.
The same dynamics that produced a dozen bills in 2026 will produce them again in 2027. The revenue problem hasn't been solved. The political pressure hasn't eased. And Tennessee remains one of the last southern states still taxing food while neighboring states like Arkansas have already eliminated their grocery taxes entirely.
Tennessee has periodically offered temporary grocery tax holidays — including a three-month suspension from August through October in one recent year — but the base tax has remained in place. The appetite for temporary relief is there. The appetite for permanent elimination is also there. The missing ingredient is a revenue replacement plan that both parties can accept. 10TV
Until that plan exists, Tennessee shoppers keep paying. And Tennessee retailers keep applying two different rates to the two halves of their store.
Running a food business in Tennessee and want to make sure your grocery versus prepared food classifications are set up correctly — or planning for what a future exemption would mean for your compliance system? Book a free consultation with our team at sales.tax. We'll review your product taxability and make sure you're compliant under current rules and ready for whatever 2027 brings.
Nobody got much sleep in Springfield last night.
Illinois lawmakers approved a $56 billion state budget in the early morning hours of Monday, June 1, 2026 — passing the spending plan around 4 a.m. after an all-night session that stretched through the weekend. Mass.gov
The budget totals $55.9 billion and is supported by a similar amount of revenue. No Republicans voted for the plan. Numeral
To get it across the finish line, Democrats had to temper their expectations. Many had called for taxes on big corporations and billionaires and for Illinois to untie itself from parts of the federal tax code. Instead, the measure freezes corporate net operating loss and taxes social media companies, digital assets, fantasy sports, tobacco, and sports betting on prediction market websites. Galvix
Here's every new tax that matters — and what businesses need to know right now.
This is the headline — and it's genuinely unprecedented at the state level.
Social media companies would be taxed on a progressive scale starting with platforms with 100,000 to 499,999 users paying 10 cents per month for each user, all the way up to platforms with at least 1 million users paying a $165,000 fee plus 50 cents for each user each month. TaxCloud
The tax is based on the number of users in Illinois — not revenue, not profits, not advertising dollars. Just users.
That structure is intentional. It targets scale. The bigger your Illinois user base, the more you pay — and for platforms with tens of millions of users, the numbers get large fast.
A similar tax in Chicago is already tied up in court. Illinois is proceeding at the state level regardless. Expect immediate legal challenges.
Who's affected: Any social media platform with users in Illinois. That includes the obvious names — Meta, TikTok, X, Snapchat, LinkedIn — but potentially also smaller platforms, community networks, and any app with social features that meets the threshold definition.
The compliance question nobody has answered yet: How do you count "users in Illinois"? IP address? Billing address? Self-reported location? The legislation will need to define this clearly, and until it does, compliance will be ambiguous for platforms with large but geographically distributed user bases.
New taxes on digital asset sales are expected to generate $65 million for the state alongside fantasy sports taxes.
Illinois is joining a growing number of states that are treating cryptocurrency transactions as taxable events at the state level. The specifics of the digital asset tax structure — rate, calculation method, applicable transaction types — are still being parsed from the legislation passed overnight.
Who's affected: Businesses and individuals who buy, sell, or exchange digital assets in Illinois. If you operate a crypto exchange, process crypto payments, or manage digital asset portfolios for Illinois clients, this is a new compliance obligation to track closely.
What to watch: Whether the tax applies to exchanges, conversions, or only sales to fiat currency — and whether there are de minimis thresholds for small transactions. These details will determine the practical compliance burden significantly.
The state would create a licensing structure for fantasy sports operators and impose a 15% tax on each business. TaxCloud
Fantasy sports has been in a legal and regulatory gray zone in Illinois for years. The new budget formalizes both the licensing framework and the tax — which means DraftKings, FanDuel, and every other daily fantasy operator doing business with Illinois residents now has a defined obligation.
The 15% rate applies to operators — the platforms — not individual participants. But as with most operator-level taxes, the cost will almost certainly flow through to users in the form of reduced prize pools, higher entry fees, or adjusted payout structures.
Who's affected: Fantasy sports operators doing business in Illinois. If you run a fantasy sports platform or marketplace with Illinois participants, this is a new licensing and tax requirement.
The budget also taxes sports betting on prediction market websites.
Prediction markets — platforms where users bet on the outcomes of real-world events — have been expanding rapidly. Illinois is now explicitly taxing this activity, creating a new compliance category for an industry that has largely operated without clear state-level tax treatment.
This is a fast-moving regulatory space. Platforms like Kalshi and Polymarket have been growing their user bases aggressively, and state legislatures are scrambling to determine how to tax activity that sits at the intersection of financial speculation, gambling, and information markets.
The budget includes new taxes on tobacco products as part of its revenue package. Galvix
Illinois already has one of the higher tobacco tax rates in the country. The budget adds to that burden — a reliable revenue move that generates relatively little political opposition in 2026 compared to broader consumption tax proposals.
Who's affected: Tobacco retailers, distributors, and manufacturers operating in Illinois. Wholesale and retail price structures will need to be updated to reflect the new rate.
Buried in the budget is one piece of genuinely good news for Illinois consumers and businesses.
The budget freezes the 1.3-cent gas tax increase that was slated for July 1, pushing it to January. Numeral
Illinois adjusts its motor fuel tax annually based on the consumer price index. The July 1 increase had already been calculated and announced. By freezing it until January, the legislature is giving Illinois drivers a six-month reprieve on what would have been a small but real cost increase.
For businesses with vehicle fleets — delivery companies, logistics operators, construction firms — this freeze matters. It's not a dramatic amount per gallon, but across thousands of fill-ups over six months, it adds up.
There's one more sales tax development in the budget that deserves attention.
The budget calls for transferring $150 million in sales tax revenue from gas to the General Revenue Fund once public transportation is fully funded — opening that revenue up to be spent on any purpose.
This is a structural change in how Illinois allocates gas-related sales tax revenue. Currently, a portion of sales tax collected on gasoline is earmarked for transportation. The budget redirects $150 million of that into the general fund — giving the legislature more flexibility in how the money is spent, but reducing the dedicated transportation funding pool.
Republicans criticized the move, with Rep. Ryan Spain saying: "If you're a driver who is irritated by the high price of gas that you're paying, you should be extra irritated knowing where the funds are going." Quizlet
The budget passed at 4 a.m. It's now law. But most of the new tax rates and effective dates are still being extracted from hundreds of pages of legislation passed overnight.
Here's what businesses should be doing right now:
1. Social media platforms and apps — determine whether your Illinois user count crosses any of the progressive thresholds. If it does, understand that a new per-user monthly obligation may apply and watch for the legal challenges that are almost certain to follow.
2. Crypto businesses and exchanges — identify your Illinois-based transactions and begin tracking data that would be needed to calculate a digital asset tax obligation. Watch for the Department of Revenue's implementing guidance.
3. Fantasy sports operators — the licensing requirement is new. If you operate a daily fantasy platform with Illinois participants and aren't currently licensed, that process needs to start immediately.
4. Tobacco retailers and distributors — update your cost structures for the new tax rate as soon as the specific rate is confirmed in the implementing legislation.
5. All Illinois businesses — note the gas tax freeze through January and the General Revenue Fund diversion. Both affect your operating cost picture and your customers' disposable income.
The full picture will become clearer over the next few days as the legislative text is analyzed and the Department of Revenue begins issuing guidance. But the framework is clear: Illinois used its overnight budget session to significantly expand its tax base into digital and social media territory — joining a small but growing group of states that are treating the digital economy as a taxable asset rather than a tax-free zone.
Operating a business in Illinois or selling services to Illinois customers and not sure how the new budget taxes affect your compliance obligations? Book a free consultation with our team at sales.tax. We'll walk through every new obligation that applies to your business and make sure you're set up correctly before the effective dates hit.
Everyone is talking about the One Big Beautiful Bill.
Most of the conversation has been about income tax rates, tips, overtime, and Medicaid. But buried inside the bill is a change that directly affects how much your state and local sales tax matters on your federal return — and almost nobody is talking about it.
The One Big Beautiful Bill Act raised the cap on the state and local tax deduction from $10,000 to $40,000 for taxpayers making $500,000 or less in modified adjusted gross income for 2025.
For 2026, the cap increases further to $40,400 for taxpayers making $505,000 or less.
For millions of Americans who itemize their federal tax returns, that's a massive change — and sales tax is directly in the middle of it.
The state and local tax deduction — SALT — allows taxpayers who itemize their federal returns to deduct certain state and local taxes they've already paid. Before 2017, there was no cap. The Tax Cuts and Jobs Act introduced a $10,000 cap, which dramatically reduced the value of the deduction for taxpayers in high-tax states.
The One Big Beautiful Bill raised that cap to $40,000.
Here's what most people miss: the SALT deduction isn't just for property taxes and income taxes. Itemizing taxpayers will be able to deduct up to $40,000 in local property taxes and either state and local income taxes or sales taxes already paid. 95.3 MNC
It's an either/or choice on the income tax versus sales tax side. Taxpayers can deduct their state income taxes — or they can deduct their state and local sales taxes. Not both.
For residents of states with no income tax — Texas, Florida, Washington, Nevada, Tennessee, Wyoming, South Dakota, Alaska, and New Hampshire — that choice is easy. There's no state income tax to deduct. Sales tax is all they have.
The $10,000 SALT cap made the sales tax deduction largely irrelevant for most taxpayers. If your property taxes alone ate up most of the $10,000 cap, there was nothing left for sales taxes. The math didn't work.
At $40,000, the math works again.
The concentration of SALT deduction benefits has shifted to higher earners in states that lack income taxes or have filers claiming sales tax deductions on large one-time purchases — vehicles, properties, or major renovations — which increases the value of the deduction significantly.
Think about what that means in practice. A Texas family that bought a new car, did a major home renovation, and purchased significant appliances in 2025 may have paid thousands of dollars in sales tax on those transactions. Under the old $10,000 cap, they probably couldn't deduct any of it — their property taxes used up the cap. Under the new $40,000 cap, those sales tax payments become deductible — potentially generating a meaningful federal tax reduction.
There are two ways to calculate the sales tax deduction for federal purposes:
Option 1: Actual sales taxes paid. Keep every receipt. Add up every dollar of sales tax you paid during the year. Deduct that amount — subject to the $40,000 SALT cap combined with property taxes.
Option 2: IRS optional sales tax tables. The IRS publishes optional tables that calculate an estimated sales tax deduction based on your income, filing status, state, and number of exemptions — without requiring you to track receipts. You can then add actual sales tax paid on major purchases (vehicles, boats, aircraft, homes, and home building materials) on top of the table amount.
For most taxpayers, Option 2 is simpler. For taxpayers who made large purchases in 2025 or 2026, Option 1 — or Option 2 plus actual receipts for major purchases — may yield a larger deduction.
Not every taxpayer benefits equally. The SALT cap increase is most valuable for specific groups.
Residents of no-income-tax states. The SALT deduction benefit is concentrated in higher earners in states which lack income taxes — filers who claim sales tax deductions rather than income tax deductions, especially on large one-time purchases like vehicles, properties, or renovations. With the cap at $40,000, high-spending taxpayers in Texas, Florida, and Washington have a meaningful new deduction available. Fox 59
High earners in high-tax states. Prior analysis showed that a large concentration of SALT deduction benefits went to taxpayers in California, Connecticut, Maryland, and New York — states that remain among those benefiting most from the increased limit. For these taxpayers, the higher cap restores a deduction that was severely curtailed since 2017.
Taxpayers who made major purchases. The sales tax on a $50,000 vehicle, a $30,000 home renovation, or a major appliance purchase can be substantial. At the old $10,000 cap, that sales tax was rarely fully deductible. At $40,000, it often is.
Middle and upper-middle income households. The cap phases out for taxpayers with MAGI greater than the income threshold — reduced by 30% of the excess until it reverts to $10,000. The full cap is available for incomes up to $500,000 in 2025 and $505,000 in 2026. This means the deduction is broadly available across middle and upper-middle income brackets. 95.3 MNC
This change isn't permanent — and that matters for planning.
From 2026 to 2029, both the cap and income threshold increase by 1% annually. In 2030, the SALT cap reverts entirely to $10,000.
That reversion creates a 2030 cliff that is already generating significant political controversy. The $10,000 cap was one of the most politically contentious parts of the original Tax Cuts and Jobs Act — particularly for taxpayers in high-tax states. The $40,000 cap raises it for five years, then drops it back. Expect another major congressional fight over SALT in 2029.
For taxpayers making timing decisions about large purchases — vehicles, major renovations, significant equipment — the 2026-2029 window is the most favorable environment for sales tax deductibility in nearly a decade.
The SALT cap increase doesn't just affect federal returns — it has downstream effects on state budgets and behavior that the sales tax world is still processing.
States that have used high income taxes to fund government are watching closely. When the federal SALT deduction was capped at $10,000, the effective cost of living in a high-tax state went up — because taxpayers couldn't offset as much of their state tax burden against federal liability. With the cap at $40,000, that dynamic shifts.
States like Missouri that are currently debating eliminating their income tax and replacing it with an expanded sales tax are watching the SALT changes carefully. If residents of no-income-tax states are now getting significantly more federal tax relief through the sales tax deduction, the argument for switching from income to consumption taxation gets more financially attractive for certain taxpayer segments. Fox 59
The OBBBA's state conformity implications are complex — states that begin income tax calculations with federal taxable income may automatically inherit some OBBBA provisions, while others will need to explicitly conform or decouple. Those decisions are playing out in state legislatures right now. Fox 59
Here's a practical reality: the sales tax deduction is one of the most consistently overlooked tax benefits available to itemizing taxpayers.
Even before the SALT cap increase, taxpayers in no-income-tax states who itemized could deduct their sales taxes. Many never did — either because they didn't track receipts, didn't know the IRS optional tables existed, or assumed the deduction wasn't worth calculating.
At $40,000, that calculation has changed. IRS data show that while overall state and local sales tax deduction claims fell from 2017 to 2022 after the TCJA cap was introduced, the benefit shifted to primarily households earning more than $100,000 per year. The OBBBA broadens the pool of taxpayers for whom the math works again. Fox 59
If you itemize and live in a no-income-tax state — or if you made significant purchases in 2025 or 2026 — this deduction is worth revisiting with your tax professional before your next return.
The OBBBA's SALT changes also have implications for how businesses think about state tax strategy.
Businesses that pay significant state and local taxes — including sales taxes — as part of their operations need to understand how the new federal treatment affects their overall tax position. Pass-through entities, sole proprietors, and self-employed individuals whose personal returns reflect business sales tax payments may see material changes in their federal liability under the new cap structure.
The interplay between the OBBBA's individual provisions and business tax obligations is genuinely complex — and the guidance from state revenue departments on how to handle OBBBA conformity is still evolving in many states.
Have questions about how the One Big Beautiful Bill's SALT changes affect your sales tax deductibility — or how state conformity decisions might change your compliance obligations? Book a free consultation with our team at sales.tax. We'll walk through what the OBBBA means for your specific situation and make sure you're capturing every deduction available.
Washington state did something unusual this spring.
It admitted that one of its own tax laws was too confusing for businesses to comply with — and then offered to forgive the penalties for anyone who comes forward to pay what they owe.
Washington's Department of Revenue is temporarily waiving financial penalties for taxpayers struggling to comply with the state's new tax on digital advertising and other technology services, acknowledging the transition has been "challenging for many businesses."
The window is open. But it won't stay open forever.
Application deadline: September 30, 2027.
If you've been selling digital ads, IT services, custom software, or similar services to Washington customers since October 2025 and haven't been collecting sales tax — you likely owe back tax. And this program is your best path to resolving it without the penalty on top.
The story starts with a law most digital businesses never saw coming.
Effective October 1, 2025, Washington's Engrossed Senate Substitute Bill 5814 expanded the state's retail sales tax to a broad range of services that had never been taxable before.
If any of the following apply to your business, this penalty relief program is worth a close look: you sell services that became taxable under ESSB 5814 — including digital advertising, IT support, custom software, website development, staffing, security, or live presentations in Washington. These categories have been subject to retail sales tax since October 1, 2025. Madrasaccountancy
To put that in plain terms: if you run a digital marketing agency, sell advertising placements, develop custom software, provide IT support, place temporary staff, or run live presentations or online seminars — and any of your customers are in Washington — your services became taxable eight months ago.
The law took effect October 1, 2025, but transitional rules applied to certain preexisting contracts through March 31, 2026. Starting April 1, 2026, unaltered qualifying contracts are subject to Washington's retail sales tax and retailing B&O tax. TaxCloud
And it happened fast. The Department of Revenue issued interim guidance for security services on September 12 — just 19 days before the October 1 effective date. Many businesses never got the memo at all.
Washington didn't create this program out of generosity. It created it because the law created genuine confusion — and the state would rather collect the tax than spend years fighting businesses that had legitimate reasons not to know they owed it.
Washington acknowledged the transition has been "challenging for many businesses." Sales Tax Calculator
That's an understatement. The services covered by ESSB 5814 span an enormous range of industries — digital advertising, IT support, custom software, website development, staffing, security services, live seminars and workshops. Many of these categories had never been subject to Washington retail sales tax. Many sellers — especially those outside Washington selling remotely to Washington customers — had no idea the law existed.
The Tax Foundation described Washington's digital ad sales tax as "a legal and economic minefield." A security services firm filed a constitutional challenge to the law's effective date, arguing businesses weren't given adequate time to prepare — before ultimately dropping the case. TaxCloud
The penalty relief program is Washington's acknowledgment that it moved fast, communicated late, and left a lot of businesses scrambling. The offer: come forward, pay the tax and interest you owe, and the penalties go away.
The terms of the relief program are specific. Understanding exactly what's covered — and what isn't — determines whether it makes sense for your business.
What's covered: The program covers uncollected retail sales tax and unpaid use tax for the new categories of taxable services created by ESSB 5814. Eligible reporting periods run from October 1, 2025 through December 31, 2026.
What's waived: Penalties only. The program waives penalties only. The underlying tax and all accrued interest remain due.
What's not waived: Evasion, negligence, and tax avoidance penalties are not eligible for relief via this program. If you knew about the tax and deliberately didn't collect it, this program doesn't protect you.
The application deadline: Applications must be submitted via the DOR's Voluntary Disclosure Application system on or before September 30, 2027. Applications are reviewed in the order received.
The agreement process: Once the DOR determines a taxpayer qualifies, it will issue a Penalty Relief Agreement that the taxpayer must sign and return within 30 days. After execution, the DOR will work with the taxpayer to determine the appropriate tax liability and issue a formal assessment.
To understand the value of this program, you need to understand what Washington's penalties look like without it.
Late filing and payment penalties in Washington are: 9% after the due date, 19% after the last day of the month following the due date, and up to 29% after the last day of the second month following the due date. Avalara
That's a penalty that compounds quickly. On a $50,000 back-tax liability, a 29% penalty adds $14,500 on top — before interest. For businesses with larger Washington revenue streams, the numbers scale fast.
The penalty relief program eliminates that layer entirely. You still owe the tax. You still owe the interest. But the 9% to 29% penalty stack goes away if you apply and qualify.
The categories of businesses most likely to have unresolved exposure under ESSB 5814 are specific — and they're common.
Digital advertising agencies and platforms. If you sell display advertising, search engine marketing, social media advertising, programmatic ad placements, or lead generation services and have Washington clients — you've had a sales tax obligation since October 1, 2025.
IT service providers. Managed service providers, helpdesk services, network support, cybersecurity firms, and similar businesses serving Washington customers are covered.
Custom software developers. If you build custom software or customize prewritten software for Washington clients, that's taxable. Off-the-shelf software was already taxable in Washington — custom development is now too.
Website developers. Custom website design, development, and support services are explicitly covered under ESSB 5814.
Staffing agencies. Temporary staffing services into Washington are taxable under the new law.
Seminar and training providers. Live presentations, including lectures, seminars, workshops, or courses where participants attend either in person or via telecommunications in real time, are taxable — with some carveouts being added in late 2025 and 2026 for certain in-person-only presentations. Quicktaxcalc
Remote sellers. Remote sellers with Washington buyers purchasing covered services are on the hook for use tax even if they didn't collect it at the point of sale. This isn't just a Washington-business problem. If you're in California, Texas, New York, or anywhere else and have Washington clients buying your covered services — you have exposure. Madrasaccountancy
There's one more layer that caught many businesses off guard.
When ESSB 5814 passed, Washington included a transitional rule for businesses with existing contracts: those preexisting contracts were temporarily exempt from the new sales tax through March 31, 2026 — giving businesses time to renegotiate or restructure agreements.
Starting April 1, 2026, unaltered qualifying contracts are subject to Washington's retail sales tax and retailing B&O tax. However, if a qualifying existing contract was altered after October 1, 2025, it became subject to the retail sales tax and retailing B&O tax when the contract was altered.
What counts as "altering" a contract? Adding, removing, or exchanging the parties subject to the contract — among other substantive changes. Businesses that modified existing agreements for any reason after October 1, 2025 may have triggered taxability earlier than they realized — and the penalty relief program covers that exposure too. TaxCloud
If your business falls into any of the categories covered by ESSB 5814, here's the action plan:
1. Determine your Washington revenue from covered services since October 1, 2025. Pull your billing records for Washington clients in covered service categories. Calculate the total taxable revenue for the period October 2025 through December 2026.
2. Calculate the tax owed. Washington's retail sales tax rate varies by jurisdiction — base rate plus applicable local rates. Use the DOR's rate lookup tool for each customer's location.
3. Assess whether you're registered. Unregistered businesses should review eligibility under the separate Voluntary Disclosure Program before applying for penalty relief under this program. If you've never registered with Washington's Department of Revenue, the penalty relief program has a sister program specifically for you.
4. Submit your application. Applications go through the DOR's Voluntary Disclosure Application system. The process results in a Penalty Relief Agreement, a draft assessment for your review, and a final invoice. Information submitted as part of the application and any executed Penalty Relief Agreement is treated as confidential in accordance with Washington law. Tax Foundation
5. Pay what's owed. A final invoice is posted to the applicant's My DOR account. Full payment is due by the date listed on the invoice. Additional interest and late penalties may accrue if payment is not made by that date. Tax Foundation
6. Update your going-forward compliance. Register for Washington retail sales tax, configure your billing system to collect the correct rate on covered services, and start remitting on your regular filing schedule. The penalty relief program covers the past — but it doesn't automatically fix the future.
September 30, 2027 sounds like a long time. It isn't — not if you're calculating back-tax liability across 15 months of transactions, registering with the DOR, and going through the formal agreement process.
More importantly, the penalty relief program doesn't protect you from audit. Washington's enforcement systems are running. If the DOR identifies your business through its data matching systems before you apply, the window to resolve this on favorable terms closes.
The businesses that benefit most from voluntary disclosure programs are the ones that come forward early — before the state comes to them.
Selling digital advertising, IT services, custom software, or related services to Washington customers — and not sure whether you have back-tax exposure under ESSB 5814? Book a free consultation with our team at sales.tax. We'll review your Washington revenue, calculate your potential liability, and help you navigate the penalty relief program before the state finds you first.
July 1 is five weeks away.
And if you sell into Illinois — whether from a storefront, a warehouse, or an ecommerce platform — your sales tax rates may be about to change.
Effective July 1, 2026, certain Illinois taxing jurisdictions have imposed a new local sales tax or changed their local sales tax rate on general merchandise sales.
The Illinois Department of Revenue is direct about what businesses need to do: update your cash register and any computer program so that beginning on July 1, 2026, you will collect and pay the correct sales tax. Contact your software vendor if you use software to create your forms. Savant Labs
That's not a suggestion. It's a compliance requirement. And the window to act is now.
Illinois has a layered sales tax structure. The state base rate of 6.25% stays the same on July 1. What's changing is the local layer — the rates imposed by individual cities, counties, business districts, and transit authorities on top of the state base.
The affected local tax types include business district sales tax, county public safety tax, home rule municipal sales tax, Metro-East Mass Transit District sales tax, and non-home rule municipal sales tax. Galvix
That covers a wide range of local jurisdictions — meaning the July 1 changes aren't confined to one part of the state. They're spread across Illinois, affecting sellers in multiple regions simultaneously.
Two counties and 48 other municipal governments in Illinois have already increased rates since January 1, 2026 — with McLean County seeing the largest population-area increase at 1 percentage point. July 1 brings another wave. Numeral
The Illinois Department of Revenue's official bulletin identifies the specific jurisdictions with rate changes effective July 1. Here's a sample of what's changing:
Home rule or non-home rule sales tax rates are changed in the following jurisdictions: Addison, Anna, Arlington, Bartlett, Blue Island, Bull Valley, Charleston, Colfax, Colona, Cornell, Danvers, Deer Creek, De Pue, Dover, Farmer City, Glen Carbon, Hamel, Harrisburg, Highwood, Hudson, Kenilworth, Knoxville, Ladd, Le Roy, Morton, Mount Carmel, New Athens, Newman, Richmond, Sherman, Sleepy Hollow, South Elgin, Spring Grove, Spring Valley, St. Anne, Tonica, Troy, Westmont, Williamsfield, Wonder Lake, Woodson, and Wyanet.
Sales tax rates in McLean and Whiteside counties are also changing. New business districts starting to charge sales tax include: Bartonville Business Development District No. 1, Janson Ford Business District in Breese, Downtown and Dundee Crossing Business District in East Dundee, Montrose Business District, and Parkway I-280 Business District in Rock Island.
Notable specific changes from the IDOR bulletin include:
To verify your new combined sales tax rate — state and local — go to the MyTax Illinois Tax Rate Finder at mytax.illinois.gov and select rates for July 2026. That's the authoritative source for your specific address or delivery location. Savant Labs
The rate change bulletin sounds straightforward: check the list, update your rates, done.
In practice, it's more complicated — especially for ecommerce sellers and marketplace facilitators.
Sales made by remote retailers who meet the $100,000 tax remittance threshold are subject to business district sales taxes if the property is shipped or delivered to an address in the business district. Sales made over a marketplace by marketplace facilitators who meet the $100,000 threshold are subject to business district sales tax on sales shipped or delivered to an address in the business district. Avalara
That means if you sell online and ship to customers in Illinois — and you've crossed the $100,000 economic nexus threshold — you're responsible for collecting the correct business district rate for every delivery address. Not just the city or county rate. The specific business district rate, if the delivery address falls inside one.
Illinois has hundreds of business districts. Rates vary not just by city but by block. A business district that spans four blocks in one direction but not the other can mean two different tax rates on two orders delivered to addresses a few hundred feet apart.
The Illinois sales and use tax rates range from 6.25% to 11.0%, depending on the location — a spread of nearly 5 percentage points driven entirely by local variation. July 1 widens that variation further.
There's a separate but related July 1 issue for businesses that sell food in Illinois.
The Illinois Department of Revenue will issue a separate bulletin specifically regarding municipal and county rates for Municipal and County Grocery Occupation Taxes that take effect July 1, 2026. Savant Labs
This is the downstream consequence of Illinois eliminating its state grocery tax on January 1, 2026 — a move we covered earlier this year. When the state removed its 1% grocery tax, it simultaneously gave municipalities the option to impose their own 1% local grocery tax. Roughly 600 of Illinois' 1,300+ communities opted in — with many taking effect January 1 and others scheduled for July 1.
If you sell qualifying grocery items in Illinois, you're dealing with two separate rate change events: the general merchandise rate changes covered in the main bulletin, and the grocery-specific changes covered in the forthcoming separate bulletin. Both take effect July 1. Both require system updates. Both require different handling of different product categories.
This is exactly the kind of compliance complexity that causes businesses to under-collect or over-collect — often without realizing it until an audit surfaces the discrepancy years later.
The Illinois Department of Revenue is unusually explicit about business obligations in this bulletin. Here's what they require:
1. Update your point-of-sale systems. Every cash register, point-of-sale terminal, and tax calculation tool must reflect the new rates before the first transaction on July 1. Collecting the old rate after a rate change takes effect means under-collecting from customers and under-remitting to the state — a liability that sits with the business, not the customer.
2. Contact your software vendor. IDOR specifically instructs businesses to contact their software vendor if they use software to create their forms. Rate changes don't update automatically in all systems — especially custom-built or legacy point-of-sale platforms. Assume your system needs manual verification unless you know for certain it auto-updates. S
3. Verify every affected delivery address. For ecommerce sellers, "update your rates" is more complex than it sounds. You need to verify whether your customer delivery addresses fall inside any of the affected jurisdictions — including business districts with their own separate rates that may not be obvious from city or ZIP code alone.
4. Report correctly on your returns. If a sale was subject to a sales tax rate different from the current rate, report that sale on Line 8a of Forms ST-1 and ST-2. Note: Line 8a is used only to report sales subject to a different sales tax rate — no other use is permitted. Savant Labs
5. Watch for the grocery bulletin. The separate IDOR bulletin covering grocery occupation tax changes is forthcoming. If you sell food in Illinois, don't assume the general merchandise bulletin covers your full compliance obligation — it doesn't.
The July 1 changes aren't happening in isolation. Illinois has already been through a significant compliance event this year.
On January 1, 2026, Illinois eliminated its 200-transaction economic nexus threshold — meaning out-of-state sellers now trigger nexus based solely on the $100,000 revenue threshold, with no transaction count safe harbor. That same day, the state grocery tax was eliminated at the state level. Dozens of local jurisdictions changed their rates on January 1 as well.
July 1 is the second wave. Illinois updates its local tax rates twice a year — January 1 and July 1 — which means businesses selling in the state face a biannual compliance review cycle just to stay current.
Tax rates in Illinois are generally updated on January 1 and July 1 each year — a pattern that requires businesses to build a standing process for verifying Illinois rates at each update cycle, not just reacting when a notice arrives. Mass.gov
Five weeks sounds like enough time. For businesses with complex systems, multiple locations, or large ecommerce catalogs — it may not be.
The practical timeline works backward from July 1:
Miss any step and you're either over-collecting from customers — a customer service problem — or under-collecting from them — a tax liability that accrues with interest and penalties.
Selling in Illinois and not sure whether your addresses are affected by the July 1 rate changes — or whether your systems are set up to handle Illinois's address-level rate complexity? Book a free consultation with our team at sales.tax. We'll review your Illinois footprint, identify affected jurisdictions, and make sure your compliance is locked in before July 1.
If you own or operate a self-storage facility in Washington state, you have a tax obligation that didn't exist three months ago.
Starting April 1, 2026, income from the rental or lease of storage space at self-service storage facilities is subject to Washington's Business and Occupation (B&O) tax under the Service and Other Activities classification.
The first quarterly payment deadline for self-storage facilities is July 25, 2026. Fox 59
That's 64 days away. And many operators are still running their businesses the same way they always have — unaware that a new tax obligation has been quietly accruing since April 1.
For decades, self-storage rental income in Washington was treated the same as any other real estate rental.
Prior to April 1, 2026, the rental income derived from self-storage facilities was considered rental of real estate and therefore not subject to B&O tax. That meant self-storage operators sat entirely outside Washington's B&O tax system — no filing, no remittance, no compliance burden on the rental income side. Fonoa
That changed with the passage of Engrossed Senate Substitute Bill 5794. The new law specifically changed this treatment by adding the business of renting or leasing individual storage space at self-service storage facilities to the class of business activity that must pay B&O tax. Fonoa
In passing ESSB 5794, the Legislature cited its interest in having a balanced tax system and modified existing exemptions in furtherance of its public policy interests. Fox 59
Translation: the exemption that protected self-storage income from B&O tax was eliminated. The Legislature decided storage facilities should be taxed like other service businesses — not like landlords.
Before getting into the specifics, it helps to understand what Washington's B&O tax actually is — because it works differently from sales tax and catches a lot of out-of-state business owners off guard.
Washington has no state income tax. Instead, it taxes businesses on their gross receipts through the B&O tax. The critical distinction: Washington's B&O tax on gross income applies regardless of whether a business operates at a profit or loss. The B&O tax base is not reduced by deductions for labor, materials, taxes, or other business costs. Fox 59
You pay B&O tax on every dollar of gross rental income — before expenses, before depreciation, before debt service. A facility running at a loss still owes B&O tax on its revenue.
For a self-storage business operating on thin margins, that structure matters. The tax isn't calculated on what's left over — it's calculated on what comes in.
The rental or lease of individual self-service storage space is subject to B&O tax at a rate of 1.5% or 1.75%, depending on the aggregate gross income of the business and its affiliates from the prior year. 10TV
The rate is applied to gross rental income — every dollar collected from tenants for storage unit rentals from April 1 onward. Operators with higher prior-year revenue pay the higher rate. Smaller operators pay the lower rate.
For a facility generating $1 million in annual rental revenue, the annual B&O tax obligation is $15,000 to $17,500. For a larger operation with $5 million in revenue, that's $75,000 to $87,500 per year — a meaningful new cost that wasn't there on March 31.
The new B&O tax applies specifically to rental income. But self-storage businesses often have other revenue streams — and the rules are different for each.
Rental income — B&O taxable, NOT subject to sales tax. Income from the rental or lease of self-service storage units is taxable under the Service and Other Activities B&O tax classification. You do not have to collect sales tax on the rental or lease income.
Retail sales (boxes, locks, packing tape, moving supplies) — subject to both retailing B&O tax AND sales tax. Income from sales of tangible personal property is taxable under the Retailing B&O tax classification, and you must collect sales tax.
Lien sales of defaulted unit contents — it depends. When a self-service storage business sells the contents of a storage unit to consumers, they must collect and remit retail sales tax. When sold to a reseller who provides a valid reseller permit or exemption certificate, no sales tax is required — but you must keep copies of all exemption documents.
The bottom line: rental income and retail sales are taxed under different classifications, at different rates, with different collection obligations. A storage facility that also sells packing supplies is juggling two separate B&O classifications and a retail sales tax obligation simultaneously.
Here's the compliance wrinkle that's catching the most operators off guard.
Before April 1, many self-storage businesses in Washington were on Active Non-Reporting (ANR) status — a filing classification that allows businesses below certain revenue thresholds to avoid regular filing requirements. Since storage rental income wasn't subject to B&O tax, many operators qualified and simply didn't file.
That changed on April 1.
Self-storage businesses no longer qualify for Active Non-Reporting status if their annual income is more than $125,000, even if they do not make retail sales. If you are currently on ANR status and your gross annual income is more than $125,000, you must update your filing frequency.
For most self-storage facilities — which routinely generate well above $125,000 in annual rental income — ANR status is gone. These businesses now need to file quarterly excise tax returns, add the Service and Other Activities classification to their account, and remit B&O tax on all rental income earned since April 1.
The first quarterly payment covers April, May, and June — three full months of rental income that has been accruing since the law took effect. Here's the action checklist:
1. Register if you aren't already. If you are not already registered with the Washington Department of Revenue, you must complete a business license application. You cannot file a B&O tax return without an active registration. WTHR
2. Add the new tax classification to your account. You will need to add the Service and Other Activities classification when you electronically file your next excise tax return. Log in to My DOR, click Get Started, click File Return in the Excise Tax Return panel, and click Add/Delete Tax Classifications.
3. Calculate your Q2 2026 gross rental income. Total all rental income received from April 1 through June 30. This is your B&O tax base for the first quarterly return.
4. Apply the correct rate. Determine whether your prior-year aggregate gross income puts you at the 1.5% or 1.75% rate. If you're unsure, start with 1.75% — you can true up if the lower rate applies.
5. File and pay by July 25. B&O tax returns must be filed online through Washington's Department of Revenue's MyDOR system. The July 25 deadline is firm. Late filing triggers penalties and interest. Fox 59
6. Update your ANR status if needed. If you were previously on ANR status and your annual income exceeds $125,000, update your filing frequency through My DOR or by calling the Department of Revenue at 360-705-6705 before you attempt to file.
The self-storage B&O tax is part of a larger pattern of Washington expanding its tax base in 2025 and 2026.
ESSB 5794 was one of several bills that eliminated or narrowed longstanding tax preferences. The same legislation also ended the B&O tax exemption for precious metals and bullion sales starting January 1, 2026 — Washington now taxes sales of precious metal bullion and monetized bullion as tangible personal property, imposing both retail sales tax and retailing B&O tax where applicable. WABX 107.5
Washington state relies on a combination of sales and B&O taxes rather than an income tax — and as the state faces ongoing budget pressure, the Legislature has been systematically narrowing exemptions that have historically sheltered certain industries from the tax base. Avalara
Self-storage is the latest industry to lose its exemption. It won't be the last.
If you own or operate any real-estate-adjacent business in Washington — parking facilities, marinas, RV parks, or other businesses that have historically been treated as real estate rentals — the self-storage change is a signal worth paying attention to.
The Legislature's decision to reclassify storage rentals as a service rather than a real estate transaction reflects a deliberate policy shift: activities that function like service businesses should be taxed like service businesses, regardless of whether they involve physical space. That logic could extend to other property-adjacent revenue streams that currently enjoy B&O tax protection.
The time to understand your exposure is before the Legislature acts — not after.
Operating a self-storage facility in Washington and not sure whether you're registered, which rate applies to your business, or how to handle the July 25 deadline? Book a free consultation with our team at sales.tax. We'll walk through your specific situation, calculate your Q2 exposure, and make sure your first filing is done correctly.
Most sales tax news is about what states are starting to tax.
This one is different.
Utah Governor Spencer Cox signed Senate Bill 217 into law in March 2026, expanding sales and use tax exemptions for locally produced foods — including a brand new exemption for food sold by home cooks. SmartAsset
Effective July 1, 2026, Utah has enacted a state sales tax exemption for sales of food and food ingredients or prepared food sold by a home cook, including homemade food products sold at a direct-to-sale farmers market or direct-to-sale location. The Sales Tax People
It's a small law with a big meaning — and it reflects a broader national shift in how states are thinking about the cottage food economy, local food systems, and the people who quietly feed their communities out of their home kitchens.
The exemption is specifically built around Utah's existing framework for home-based food producers — a category the state has been carefully defining and expanding over the past several years.
Utah's Home Consumption and Homemade Food Act serves as an alternative to the Cottage Food Law for those who want to produce food from their home kitchen. It allows an individual with a business license to sell certain homemade foods without the seller needing to be registered with the Utah Department of Agriculture and Food.
The tradeoff for that lighter regulatory footprint: transparency. Foods produced under the Home Consumption and Homemade Food Act face more restrictions on how and where they can be sold. If selling at a farmers market, products can only be displayed in a separate market section specifically marked with signs that read: "Food items offered for sale in this section of the farmers market are homemade and have not been certified, licensed, regulated or inspected by state or local authorities." TaxHero
The new sales tax exemption builds directly on top of that framework. If you're a home cook selling food under Utah's existing rules — at a direct-to-sale farmers market, at your home, or at other approved direct-to-sale locations — your sales are now exempt from Utah state sales tax as of July 1.
The exemption covers food and food ingredients or prepared food sold by a home cook, including homemade food products sold at a direct-to-sale farmers market or direct-to-sale location. The Sales Tax People
In practical terms, that's a broad category. Home-baked goods, preserves, jams, sauces, dried herbs, homemade pasta, fermented foods, specialty condiments — the kinds of things you find at a farmers market booth run by a neighbor rather than a commercial food producer.
The exemption covers both raw food ingredients and prepared foods sold by home cooks. That's notable because prepared food is typically taxable in most states — the exemption carves home-cook prepared food out of that general rule specifically.
The exemption is targeted — it doesn't sweep all food sales into a tax-free category.
In Utah, grocery staples are typically taxed at a reduced rate of 3.0%. Prepared or heated food sold for immediate consumption is generally taxable at the full combined rate. Taxfyle
The home cook exemption is specific to the home cook context — meaning commercially produced food, food sold by licensed food businesses, and standard retail grocery sales don't qualify. It also applies only to the state portion of Utah's sales tax. Local jurisdictions may still apply their own rates, though most of Utah's local sales tax structure mirrors the state's treatment of food.
The bill's intent goes beyond a tax break. It's part of a broader legislative push to support Utah's local food ecosystem and reduce friction for small-scale food producers who are already operating under a lighter regulatory framework.
Senate Bill 217 also removed a signage requirement for direct-to-sale farmers markets and clarified when a producer or producer's designated representative may sell a homemade food product at a direct-to-sale location — making it easier for producers to use representatives to sell their products without being physically present. The Sales Tax People
The sales tax exemption is one piece of a package designed to make it easier, simpler, and less costly to sell homemade food in Utah. For a home cook who is already operating on thin margins — selling $200 worth of jam and baked goods at a Saturday farmers market — even a small tax obligation creates administrative complexity that discourages participation. Removing it entirely reduces the friction to near zero.
Utah's exemption is niche — but the sector it supports is growing fast nationally.
The cottage food industry — home-based food production sold directly to consumers — has expanded significantly in every state over the last decade. Pandemic-era cooking, the local food movement, and growing consumer interest in knowing where their food comes from have all contributed to more home cooks taking their products to market.
Every state now has some form of cottage food law, though the rules vary enormously on what can be sold, where, to whom, and in what quantities. Utah has been consistently on the progressive end of that spectrum — expanding permissions, reducing barriers, and now eliminating the sales tax burden on these sales entirely.
For a state that still taxes most grocery staples at 3%, zeroing out the rate on home-cooked food is a meaningful statement about where locally produced food fits in Utah's economic and cultural priorities.
If you sell homemade food in Utah — at a farmers market, from your home, or at other direct-to-sale locations — here's what changes on July 1:
If you're currently collecting sales tax on your home cook sales, update your process before July 1. Continuing to collect state tax after the exemption takes effect means collecting money you're not authorized to keep — which creates its own compliance issue.
Utah's home cook exemption is a small but meaningful data point in a larger national conversation about how states tax food.
As we've covered recently, Arkansas and Illinois both eliminated their state grocery taxes entirely on January 1, 2026. Alabama suspended its grocery tax for May and June. Tennessee is debating elimination. Virginia came close to removing its remaining 1% food tax before pushing the decision to 2027.
Utah's move adds a different dimension — not eliminating a broad grocery tax, but carving out a specific community of small-scale producers and saying: your food sales are different. They support local economies, local relationships, and local food systems. They shouldn't carry the same tax burden as a commercial retailer.
It's a philosophy more states may follow as the cottage food economy grows and legislators look for low-cost, high-goodwill ways to support local food producers.
Are you a home cook in Utah with questions about how the new exemption affects your sales tax obligations? Or a food business trying to understand where the line is between exempt home cook sales and taxable commercial food sales? Book a free consultation with our team at sales.tax. We'll walk through your specific situation and make sure you're set up correctly before July 1.
Texas doesn't have an income tax.
It funds its government on sales tax — and right now, that engine is running at full speed.
Texas collected $4.7 billion in state sales tax revenue in April 2026 — 9.8% more than in April 2025. That's not a one-month spike. It's the second consecutive month of growth well above the rate of general price inflation, and it's coming from virtually every corner of the economy. WREG.com
Sales tax is the largest source of state funding for Texas, accounting for 58% of all tax collections. When Texas sales tax grows nearly 10% year over year, it's not just a revenue story. It's an economic one. Avalara
Here's what the numbers actually tell us — and what they mean for businesses operating in the state.
The April numbers didn't come from one sector. They came from everywhere — which is what makes them significant.
The largest gains in April came from sectors driven primarily by consumer spending, with retail trade and services both doubling compared to April 2025.
Breaking it down by sector:
Consumer spending led the way. Within the retail trade sector, double-digit gains came from the general merchandise subsector — with strong results from big box retailers and warehouse clubs — as well as from electronic shopping. Growth in receipts from clothing and accessories stores and electronics and appliance stores was also notably strong.
Live entertainment surged. The growth in receipts from the service sector reflects a surge in spending on live entertainment — concerts, sporting events, and experiences that generate significant sales tax revenue in a state with no income tax alternative.
Restaurants kept growing. Receipts from restaurants were up 4.2% from a year ago, above the rate of inflation for food away from home — a sign that consumers are still eating out despite elevated prices.
Business spending stayed strong. Among the sectors influenced primarily by business spending, growth in receipts from the construction, wholesale trade, and manufacturing sectors remained robust. These are the indicators that reflect real economic investment — not just consumer sentiment.
The one soft spot: remittances from grocery stores were down slightly compared with the same month a year ago — likely reflecting consumers trading down to more budget-friendly options as food prices remain elevated.
One month can be an anomaly. Three months is a trend.
Total sales tax revenue for the three months ending in April 2026 was up 7.9% compared with the same period a year ago.
That's consistent, broad-based growth across a 90-day window — not a single-quarter blip driven by one sector or one event. And it follows March, which was already a strong month.
State sales tax collections in March grew at the fastest rate since February 2023, propelled by a robust Texas economy with growth once again well above the rate of general price inflation. The Sales Tax People
Two consecutive months of near-10% growth, both above inflation, both broad-based. That's not a coincidence — it's a signal about the underlying health of the Texas economy.
State collections are only part of the story. Texas also distributes a significant share of sales tax revenue directly to local governments — cities, counties, transit systems, and special purpose districts.
Acting Comptroller Kelly Hancock distributed $1.4 billion in local sales tax allocations for May — 7.7% more than in May 2025. These allocations are based on sales made in March by businesses that report tax monthly and sales made in January, February, and March by quarterly filers. Resalecertificate
That $1.4 billion flows directly to local infrastructure, public safety, transit operations, and community services across the state. When Texas sales tax grows, local governments feel the benefit — which is part of why the state's no-income-tax model has proven durable through economic cycles.
Understanding what these numbers mean requires understanding how Texas's tax structure works.
Texas has a base sales and use tax rate of 6.25%, which applies to retail sales, rentals, and leases. Local jurisdictions may impose an additional sales tax of up to 2%, creating a maximum possible combined rate of 8.25%. Baker Tilly
With no state income tax, sales tax carries an enormous share of the fiscal load. At 58% of all state tax collections, sales tax isn't just Texas's largest revenue source — it's the engine the entire state budget runs on. Avalara
That dependency means Texas watches its sales tax numbers more closely than almost any other state. When collections surge, the state has room to invest. When they soften — as happened during the pandemic and the 2015-16 oil price collapse — the budget pressure is immediate and significant.
Right now, collections are surging.
Here's what strong Texas sales tax growth means for businesses outside the state.
Remote vendors and marketplace facilitators with $500,000 or more in Texas sales in the previous year must collect and remit sales tax. This requirement also applies to businesses with a physical presence or employees in the state.
Texas's $500,000 economic nexus threshold is significantly higher than most states — which means smaller sellers have historically had more runway before triggering an obligation. But as Texas's economy grows and consumer spending expands, more out-of-state sellers are crossing that threshold for the first time.
If your business has been selling into Texas and your annual Texas revenue is approaching $500,000, now is the time to track your numbers carefully. Crossing the threshold without registering doesn't pause the obligation — it starts it, retroactively, from the moment you crossed.
Strong headline numbers can create a false sense of security — and that's worth naming directly.
Texas's sales tax growth is driven by the sectors that are growing. But it also reflects the tariff-inflated prices consumers are paying for goods in 2026. When a $1,000 TV now costs $1,150 because of tariff pass-through, Texas collects 6.25% on $1,150 instead of $1,000. Higher prices generate more sales tax revenue automatically — even if unit volumes haven't changed.
That dynamic inflates the growth numbers somewhat. It also means that as tariff situations evolve — and the legal landscape around them remains unsettled — sales tax revenue could soften if prices normalize, even without any change in consumer behavior.
For now, the trend is strong. But businesses and policymakers who read these numbers should understand what's inside them.
Texas isn't just a big state. It's a bellwether.
As one of the largest economies in the country — and one of the most watched examples of a no-income-tax model — Texas's sales tax performance shapes the national conversation about what consumption-based taxation can deliver.
States like Missouri and Alaska, which are currently debating whether to shift from income taxes to sales taxes, are watching Texas closely. The April numbers give ammunition to the argument that a well-structured sales tax on a growing economy generates substantial, broad-based revenue without an income tax.
What they don't capture is the complexity underneath — the 1,400-plus local jurisdictions, the compliance burden on multistate sellers, the volatility that comes when consumer spending slows. Texas makes the model look easy. It isn't.
Selling into Texas and not sure whether you've crossed the $500,000 economic nexus threshold — or whether your products are taxable under Texas's rules? Book a free consultation with our team at sales.tax. We'll review your Texas exposure, check your registration status, and make sure your compliance is set up correctly before the next filing deadline.
Alaska is one of only five states with no statewide sales tax.
That might be about to change — and in a way no other state has ever done before.
Governor Mike Dunleavy has proposed Alaska's first statewide, general-purpose sales tax since state legislators abolished Alaska's income tax in 1980. Numeral
The twist: the rate isn't fixed. Governor Dunleavy is proposing a seasonal sales tax — 4% from April through September, and 2% from October through March. If enacted, it would take effect January 1, 2027, and sunset in 2034.
A different tax rate depending on the time of year. It's never been done at the state level anywhere in the country.
Alaska's fiscal situation is the backdrop for everything happening here.
The state has no income tax and no statewide sales tax. It has historically funded government almost entirely through oil revenue — and that model is under serious strain.
Dunleavy's proposal is part of a comprehensive fiscal plan designed to bridge the next seven years by stabilizing state finances, limiting spending growth, and sharing responsibility through targeted, time-limited revenue measures that support investment and predictability. Numeral
Officials estimate the seasonal sales tax could generate $730 million annually — a significant new revenue stream for a state that has been drawing down its Permanent Fund to cover operating costs. Mass.gov
A required ten-year budget plan released alongside the proposal identified some $1.6 billion in unspecified new annual revenues needed starting in July 2027. Dunleavy said he expects the sales tax plan to raise revenues "pretty close to that mark." Sales Tax Calculator
The seasonal rate structure isn't random — it's deliberate.
Alaska's summer months bring a massive influx of tourists. Cruise passengers, sport fishermen, wildlife tourists, and outdoor adventure visitors flood the state from April through September, spending billions on lodging, gear, guided experiences, food, and souvenirs.
A 4% summer rate captures a significant portion of that tourist spending. A lower 2% winter rate eases the burden during the slower season when Alaskans are primarily buying from each other — heating oil, groceries, hardware, supplies.
The political logic: tourists help pay for Alaska's government without burdening year-round residents as heavily. It's a tax design built around who is actually in the state and spending money at any given time.
The proposal isn't a blanket tax on everything.
Medical care, rent, groceries purchased with federal SNAP or WIC benefits, jet fuel, insurance premiums, and business purchases would be among the items exempt from sales tax under Dunleavy's proposal. Madrasaccountancy
The exemption list is designed to protect essential goods and avoid the regressive tax burden that comes with taxing food and healthcare. It's also designed to avoid double-taxing business-to-business transactions — a structural concern that has complicated other states' sales tax expansions.
Alaska has a unique tax landscape that makes a statewide sales tax more complicated than it sounds.
More than 100 local governments in Alaska currently have their own local sales tax, which they administer themselves. Rates vary significantly across municipalities — some communities have no local tax, while others charge 5% or more.
Under the proposal, the Alaska Department of Revenue would take over administration of local sales tax collection — centralizing what is currently a fragmented, locally managed system. For businesses operating across multiple Alaska communities, that's a significant change in how they register, file, and remit.
Lawmakers raised this as one of their primary concerns during a House Finance Committee hearing — specifically that the statewide proposal could clash with existing revenue measures in cities and boroughs across the state.
Alaska's no-sales-tax identity is more than a policy position — it's a competitive advantage that businesses actively use to attract customers.
At the Alaska Fur Gallery in downtown Anchorage, co-owner Malena Hausinger said the store often closes sales specifically because Alaska has no sales tax. "When people are here in Anchorage, a lot of times we will close the sale because we have no sales tax," she said. "I don't think a sales tax would be my first choice, but I don't know that we really have many other options that would be financially feasible." Mass.gov
That's the tension in a sentence: businesses know the state needs revenue, but they've built their customer proposition around being tax-free. A 4% summer sales tax changes that pitch entirely — especially for high-ticket items like jewelry, art, outdoor equipment, and luxury goods that tourists buy specifically in Alaska because there's no tax.
The honest answer right now: probably not this year.
Leaders in the House said they're not optimistic Dunleavy's plans will pass this year — his last as governor. The proposal faces skepticism from both sides of the aisle, with Republican lawmakers questioning whether the revenue it raises justifies the structural changes it requires, and some Democrats concerned about its impact on lower-income Alaskans despite the exemptions. Madrasaccountancy
One Republican lawmaker put it bluntly during the Finance Committee hearing: "So why do we need this proposal, and what is the purpose of this proposal, when the proposal spends more money than it raises?" Avalara
But this isn't the first time Alaska has flirted with a statewide sales tax. Different lawmakers proposed a state sales tax in 2003, 2016, 2022, and 2023 — and it failed each time. If SB 227 fails, it probably won't be the last attempt.
The fiscal pressure that's driving this proposal isn't going away. Oil revenue will continue to fluctuate. The Permanent Fund has limits. And at some point, Alaska's no-tax model becomes mathematically unsustainable.
Alaska joining the sales tax club would be one of the most significant state tax developments in decades.
It would reduce the no-sales-tax states from five to four. It would set a precedent for seasonal rate structures that other tourism-heavy states could adopt. And it would mark the end of Alaska's identity as the ultimate tax-free state — a status that has shaped its retail economy, its tourism pitch, and its political culture for more than 40 years.
For businesses that sell to Alaska customers online — currently operating in a state with no economic nexus obligation at the state level — a new statewide sales tax means new registration requirements, new filing obligations, and a new compliance footprint to manage starting January 1, 2027 if the bill passes.
The legislative calendar is tight. Dunleavy privately told lawmakers in 2023 that he planned to introduce a sales tax — and then didn't. This time he followed through with actual legislation. But with the governor in his last year in office and the legislature divided on the proposal, SB 227 faces a difficult path. Sales Tax Calculator
The next few months will tell whether Alaska finally crosses the line it has been approaching — and retreating from — for more than two decades.
Selling to customers in Alaska and wondering how a new statewide sales tax would affect your business? Book a free consultation with our team at sales.tax. We'll help you understand what SB 227 would mean for your nexus, registration, and compliance obligations — so you're not caught off guard if it passes.
Virginia's entire state budget is being held hostage by a single sales tax exemption.
The data center tax exemption Virginia currently provides — worth $1.6 billion annually — remains unresolved as the Senate seeks to eliminate it entirely while the House wants to tie it to environmental compliance. The budget standoff has delayed the state budget, with a special session called to try to resolve the issue. TaxCloud
As of today, there is still no deal.
And the outcome will ripple far beyond Virginia's borders.
The story starts in 2008.
When legislators created the data center sales tax exemption in 2008, they were told it would cost up to $1.54 million a year — a modest price for bringing jobs to distressed communities. 10TV
The actual figure now exceeds the original estimate by more than 100,000%. Sales Tax Calculator
Under the current law, data centers that invest $150 million and create 50 jobs qualify for exemption from the 5.3% state sales tax on computer equipment and software. The exemption was originally set to sunset in 2035. Mass.gov
What lawmakers didn't anticipate in 2008 was that Virginia would become the most important data center market on earth. Virginia has bloomed into the data center capital of the world, with more server farms than any other state or country. In 2025 alone, the industry reported the state waived $1.9 billion in sales taxes. Numeral
The exemption worked — spectacularly. And that success created a fiscal problem that now threatens to blow up the state budget.
The Senate's position is unambiguous.
The Senate budget proposal eliminates the data center retail sales and use tax exemption effective January 1, 2027 — eight years before it was scheduled to sunset.
Senate Finance Chair Louise Lucas has taken a hard line stance, saying the incentive has grown dramatically as the data center industry expanded and that ending it would recapture billions in foregone revenue to fund public education, infrastructure, and transportation.
Lucas said she was not worried data centers would leave Virginia. "A lot of folks are saying they're going to be leaving. I don't believe that's going to happen." Galvix
Senate leaders argue the early expiration would generate nearly $1 billion in additional revenue over the biennium, redirecting those funds into transportation and water infrastructure projects.
The House of Delegates took a starkly different approach — removing any reference to phasing out the tax exemption and preserving the 2035 sunset date. Instead, House leaders attached new requirements: data centers must meet certain clean energy and environmental investment standards to maintain the exemption.
House Appropriations Chair Luke Torian told lawmakers: "The other body has taken the position that a budget cannot be finalized without eliminating the data center sales tax incentive. This is not a position the House can or should agree to." Avalara
The House argument is fundamentally about jobs and economic competitiveness. House Speaker Don Scott said: "I love the jobs that they create, and I love Virginia's economy to do well. We have to be realistic about what we're producing — good union jobs." Quicktaxcalc
Newly elected Governor Abigail Spanberger — a moderate Democrat who took office in January — has signaled caution about altering a policy widely credited with helping Virginia become the data center capital of the world. Tax Foundation
Spanberger has floated a middle path — a new "consumption" tax for data centers rather than ending the exemption completely, with firms potentially grandfathered in until 2035 or the exemption lowered rather than eliminated entirely.
The governor has until May 22 to make any final signatures or vetoes on bills. Negotiations on the budget may be resolved by June — the hard deadline, since Virginia's state government would shut down without a passed budget by June 30.
The data center industry isn't taking this quietly.
Nicole Riley, representing the Data Center Coalition, pushed back hard: "At a time when Virginia's economy is facing significant challenges, this would be a self-inflicted hit to our economy that will cost Virginia billions in economic impact and tax revenue, and jeopardize tens of thousands of jobs." Fox 59
Riley also argued that the state could lose out on an estimated $1.3 billion in net tax revenue over five years due to decreased investment in new facilities or renewed computer technology if the exemption disappears.
The counterintuitive argument: taxing the industry more could actually generate less total tax revenue, because data centers would slow their Virginia investments or take future projects to other states.
It's the classic economic incentive debate — and there's no clean answer. An assessment of Georgia's data center industry found that state's tax exemption attracted 30% of its data centers, after the state had previously assumed 90% of growth was due to tax incentives. The reliability of power, labor force, and other infrastructure weigh into site location as well. Virginia's dominant position in the market may be stickier than the Senate assumes — or it may not.
Virginia is not alone in asking these questions. The numbers have gotten too big to ignore everywhere.
At least six other states introduced or advanced legislation to roll back, repeal, or restrict data center tax incentives in the first six weeks of 2026 alone, with more than 300 data center bills filed across 30-plus states.
Georgia expects to lose $2.5 billion to data center sales tax exemptions in fiscal year 2026 — a figure 664% higher than the state's prior estimate of $327 million. That kind of revenue surprise changes political calculations fast.
The pattern is the same everywhere: states offered generous exemptions to attract a nascent industry, the industry grew far beyond anyone's projections, and now legislators are staring at billion-dollar tax giveaways and asking whether the trade-off still makes sense.
Virginia's resolution — whatever form it takes — will set the template for how other states answer that question.
If the Virginia Senate gets its way and the exemption ends January 1, 2027, the compliance implications are immediate and significant.
Data centers operating in Virginia would suddenly owe 5.3% state sales tax — plus applicable local rates — on every piece of computer equipment and software they purchase or lease. For facilities that replace servers every three to five years and run massive equipment budgets, that's not a rounding error. It's a material cost increase that will need to be reflected in contracts, pricing, and financial projections.
For the tech industry broadly, the Virginia fight is a signal: the era of generous, unquestioned sales tax exemptions for digital infrastructure is ending. The question is no longer whether states will revisit these incentives — it's when and how fast.
Operating a data center or tech business in Virginia — or a state currently reconsidering its own digital infrastructure exemptions? Book a free consultation with our team at sales.tax. We'll help you understand your current and future sales tax exposure before the rules change underneath you.
Pennsylvania has a problem — and it's bigger than most people realize.
The state's Independent Fiscal Office projects Pennsylvania's structural deficit will expand to $6.8 billion in fiscal year 2026-27 — even after accounting for new revenue proposals in Governor Shapiro's budget.
Pennsylvania is on track to spend more than it brings in this fiscal year. Governor Shapiro proposed spending $4.3 billion more than the state is projected to raise in revenue — part of a $53.2 billion budget proposal.
And there's a hard deadline: Pennsylvania's budget must be approved by June 30 or the state government faces a funding crisis. WTHR
Something has to give. And sales tax is one of the most likely levers lawmakers will reach for.
Before diving into what could change, it helps to understand where Pennsylvania stands.
Pennsylvania has a 6% statewide sales tax rate and an average combined state and local sales tax rate of 6.34%. Only Allegheny County and Philadelphia are permitted to add local sales taxes on top of the state rate. TaxJar
Pennsylvania raises tax revenue primarily through individual income taxes — 26.3% of total state and local revenue — property taxes at 25.7%, and other taxes at 22.3%. TaxJar
Critically, Pennsylvania taxes certain services that are specifically enumerated by law — but most services are exempt unless the legislature has explicitly named them as taxable. That means a vast portion of the modern service economy — legal services, accounting, consulting, marketing, personal care, home repair — currently escapes Pennsylvania's sales tax entirely. TaxCloud
That's the gap lawmakers are increasingly eyeing.
The scale of Pennsylvania's fiscal challenge is hard to overstate.
The IFO projects that Governor Shapiro's revenue proposals — including marijuana legalization, skill games taxation, and other new initiatives — would generate $652 million in fiscal year 2026-27 and $1.76 billion by fiscal year 2030-31. Despite all of that new revenue, a $6.8 billion deficit remains by the end of the period. Fox 59
In other words: the revenue proposals already on the table don't come close to closing the gap. And even without increasing spending over this year — an impossible feat given growing Medicaid obligations — Pennsylvania would still be poised to spend $1.2 billion more than it brings in next fiscal year. WTHR
Senate Republicans, who control the chamber, have been blunt. Senate President Pro Tempore Kim Ward said the IFO's findings point toward "massive, broad-base tax increases" as the only viable path forward if spending isn't dramatically curtailed. WTHR
When states face structural deficits of this magnitude, they have three options: cut spending, raise existing tax rates, or broaden the tax base. Pennsylvania has already tried the first two — and neither has solved the underlying problem.
Broadening the sales tax base — specifically by adding services that are currently exempt — is the option that generates the most revenue without raising the headline rate that voters and businesses immediately feel. Pennsylvania's Independent Fiscal Office has already determined exactly how much revenue the state could bring in by taxing a variety of currently exempt products and services — and the numbers are significant. Kiplinger
This isn't a new conversation in Harrisburg. Pennsylvania has debated service taxation for decades. What's different in 2026 is the size of the deficit, the tightness of the budget deadline, and the fact that neighboring states have already moved in this direction.
One specific piece of the sales tax puzzle is drawing serious attention in Pennsylvania right now.
The Shapiro administration's latest budget estimates show Pennsylvania could lose out on about $2 billion in sales tax revenue by mid-2031 due to a tax break for data centers — a figure that has grown dramatically from an original estimate of $89 million for fiscal year 2026-27.
The trajectory is familiar: Pennsylvania created a modest data center sales tax exemption in 2016, lawmakers removed the cap in 2021, and the exemption has exploded far beyond any original projection as the AI and cloud computing boom drove massive data center investment into the state.
State Representative Greg Vitali introduced a bill to repeal the exemption entirely, singling out Amazon and Microsoft as companies that don't need the break. But he told reporters he's uncertain the measure will clear the House, let alone the Senate and the governor's desk.
Data center developers and their supporters argue the sales tax exemption has enabled growth that employs thousands of construction workers and generates billions in economic activity — and that Pennsylvania's proximity to large population centers, plentiful electricity, available land, and skilled workforce are what attract development, not just the tax break. Tax Foundation
Sound familiar? It's the same argument playing out in Virginia — only Pennsylvania's deficit numbers make the pressure to act even more acute.
There's another sales tax development in Pennsylvania's budget fight that businesses and consumers should know about.
Governor Shapiro proposed diverting an additional 1.75% of sales and use tax revenue — equivalent to $319.6 million — to fund public transit agencies including SEPTA and Pittsburgh Regional Transit. Indiana Capital Chronicle
The governor's budget calls for generating an additional $1.5 billion over five years to subsidize public transit operations by increasing its share of state sales tax income. Fox 59
The political debate over this proposal is fierce. Supporters say SEPTA and Pittsburgh Regional Transit are in genuine crisis and need the funding. Critics argue that diverting sales tax revenue from the General Fund deepens the deficit problem rather than solving it — robbing one hole to patch another.
For businesses, the practical implication is this: if the General Fund loses $319.6 million in sales tax revenue to transit, something else has to replace it. That pressure flows directly back to the base-broadening conversation.
If Pennsylvania follows the path other states have taken — and the budget math suggests it may have no choice — the services most likely to enter the taxable column include:
The key constraint is political, not fiscal. Pennsylvania currently taxes only services that are specifically enumerated by statute. Adding new service categories requires explicit legislative action — which means every affected industry will lobby hard against inclusion, and every lobbyist in Harrisburg will be working overtime between now and June 30. TaxCloud
This is the part that makes 2026 different from prior Pennsylvania budget fights.
Pennsylvania has a history of budget impasses. Last year, lawmakers couldn't agree on a state budget for months — leading to a bitter standoff and negotiations stretching into November while schools and counties went unfunded. This year, both Governor Shapiro and legislative leaders have publicly committed to avoiding a repeat.
Both Senate and House leaders acknowledged the tough fiscal realities and said the first negotiations were a good first step in opening talks much earlier than last year. WTHR
June 30 is six weeks away. Whatever Pennsylvania's legislature decides about sales tax — base broadening, service taxation, the data center exemption, the transit diversion — it needs to happen by then.
For businesses operating in Pennsylvania, the window to understand your exposure before the rules change is short.
If you operate a service business in Pennsylvania that is currently exempt from sales tax, 2026 is the year to take that exemption seriously — because it may not survive the budget process.
The practical checklist:
Pennsylvania isn't the only state in this position. But the size of its deficit, the tightness of its deadline, and the groundwork already laid by the IFO make it one of the most likely states to act on sales tax expansion in 2026.
Operating a business in Pennsylvania and want to understand how a potential sales tax base expansion could affect your compliance obligations? Book a free consultation with our team at sales.tax. We'll review your current taxability exposure and help you prepare before the June 30 budget deadline changes the rules.
Today is the deadline.
Missouri Governor Mike Kehoe has until May 22 to decide whether the state's proposed constitutional amendment — which would give lawmakers power to expand the sales tax and phase out the income tax — will appear on the August 4 primary ballot or wait for the November 3 general election.
But there's a new wrinkle that wasn't there a week ago.
A lawsuit filed in Cole County Circuit Court is now seeking to knock the proposed amendment off the ballot entirely — arguing that legislators bundled too many subjects into one proposal and wrote misleading ballot language.
Missouri's biggest tax fight in a generation just got a lot more complicated.
The amendment, passed by the Missouri House 95-59 and approved by the Senate, would amend the Missouri Constitution to:
Missouri gets about 65% of its state revenue from income tax and about 22% from sales tax. The math is stark: to replace income tax revenue without expanding the sales tax base, the state would need to increase its sales tax rate by as much as 8.5%.
Which is why expanding what gets taxed — not just the rate — is central to the plan.
Kehoe's decision today isn't just procedural. It's strategic.
Governors who have used this power typically shift proposed ballot measures to the August primary, which usually has lower turnout. Lower turnout generally favors motivated, organized voter blocs — in this case, the business community and tax reform advocates who have been championing this proposal.
But the historical record cuts both ways. In 2020, Gov. Parson moved Medicaid expansion to August and it passed 53-47. But in 2018, lawmakers moved a right-to-work referendum to August — and voters overwhelmingly repealed it.
A recent poll from Torchlight Strategies found that around 37% of likely voters would support eliminating the income tax, while around 49% would oppose it. Those numbers suggest the amendment faces an uphill battle regardless of which election it lands on. Mass.gov
Just days ago, a new threat emerged that could sideline the debate entirely.
The lawsuit, filed by attorney Chuck Hatfield on behalf of a Missouri resident, argues that legislators bundled too many subjects into a single ballot proposal — a violation of Missouri's constitution, which generally requires ballot measures to address a single subject.
The lawsuit also challenges the ballot summary language approved by lawmakers, arguing it does not make clear that voters would be authorizing a broader sales tax expansion in order to replace income tax revenue. Galvix
The ballot summary asks voters whether the Missouri Constitution should be amended to "phase-out the individual income tax based on revenue growth," "reduce personal property and other local taxes when local revenues increase," "modify the sales and use tax to eliminate income tax and reduce local taxes," and "protect local funding for public schools and other purposes."
Critics say that's four separate policy questions bundled into one yes or no vote — and that average voters have no way of understanding that a "yes" on income tax elimination is simultaneously a "yes" on expanding sales taxes to services they've never paid tax on before.
The lawsuit asks the court to permanently block Missouri's Secretary of State from placing the measure on any ballot.
Governor Kehoe has tried to reassure Missourians worried about what a sales tax expansion could look like in practice.
Kehoe has said he would not support expanding the sales tax to agriculture, health care, or real estate. But given that there are no specific carveouts in the amendment itself, it would be up to Kehoe and the legislature to prevent those expansions — not voters. Shopify
That gap between the governor's promises and the amendment's actual language is precisely what opponents are hammering. The Missouri Bar and the Missouri Association of Realtors — two powerful groups with real experience in ballot campaigns — have both come out against the plan.
House Minority Leader Ashley Aune put it directly: "Where are we going to get that revenue? We're going to get that revenue off the backs of Missourians who are living paycheck to paycheck, seniors who already can't afford their medications or to stay in their homes." Mass.gov
The scale of what's being proposed is worth sitting with for a moment.
Missouri's individual income tax raises roughly $8.5 to $9 billion every year — about 60 to 65% of state general revenue. It is the largest source of funding for schools, public safety, and core state services. Avalara
Kehoe frames it simply: "Nine billion a year comes out of their pocket and goes to the government. We're proposing that they keep that money and make the decisions on how they spend that." Shopify
Opponents frame it just as simply: that $9 billion has to come from somewhere. And if it comes from an expanded sales tax, the burden shifts from income earners — where the tax is progressive — to consumers at the register, where the tax is the same for everyone regardless of what they earn.
For businesses operating in Missouri, this story has three active threads to follow simultaneously:
1. The ballot timing decision — today. Kehoe's choice between August and November affects how much time businesses have to understand and prepare for what a "yes" vote would mean for their tax obligations.
2. The lawsuit. If the Cole County court grants an injunction, the amendment could be pulled from the ballot entirely — at least temporarily. A ruling could come quickly given the deadline pressure.
3. The policy itself. The amendment gives a five-year window to expand sales taxes to make up for lost income tax revenue. Lawmakers would have to change policies to both lower the income tax and raise other taxes to make up for that loss. Service businesses currently exempt from Missouri sales tax — law firms, accounting practices, medical offices, real estate services, consultants — are all potentially in scope. The amendment doesn't tax any of them automatically, but it gives the legislature the authority to do so without returning to voters. Mass.gov
The five-year window starts the moment voters approve the amendment. The legislative pressure to act begins immediately after.
Missouri is ground zero for the biggest sales tax debate in the country right now. Whatever happens today — and in court — will set the trajectory for one of the most consequential tax votes any state has held in decades.
If you operate a business in Missouri — especially a service business currently exempt from sales tax — now is the time to understand what this proposal could mean for your compliance obligations. Book a free consultation with our team at sales.tax. We'll walk through your exposure and help you prepare for whatever the ballot brings.
You can't see them. They're not on your receipt. But you're paying them.
The Tax Policy Center estimates that tariffs imposed by the Trump administration will create an average burden of about $1,050 per U.S. household in 2026. TaxHero
The Federal Reserve Bank of New York found that U.S. firms and consumers bore roughly 90% of the economic burden of tariffs — not foreign producers. The Sales Tax People
Everyone is talking about tariffs. Almost nobody is talking about what they do to your sales tax bill.
Here's the part that matters for your business.
A tariff is a tax the U.S. federal government imposes on goods imported from other countries. It's paid by the U.S. company doing the importing — at the border, before the product ever reaches a store shelf or a customer's door.
Unlike sales taxes, which appear at the cash register, tariffs are imposed at the port and then managed at various stages of the supply chain. Because they get invisibly baked into the price of goods, they violate the principle of transparency — and their unintended consequences get masked. Taxfyle
The importer pays the tariff upfront. Then, to protect their margins, they raise their prices. That higher price flows to the wholesaler, then to the retailer, and ultimately to you — the consumer or business buyer — without any line item on the invoice that says "tariff."
The share of businesses passing on more than half of their tariff costs has risen to 34% in 2026 — more than doubling from 13% just a year ago. And 55% of executives are planning to raise prices further by up to 15% within the next six months.
They're both taxes. They're both ultimately paid by consumers. But they work in completely different ways — and confusing the two creates real compliance problems.
| Tariff | Sales Tax | |
|---|---|---|
| Who imposes it | Federal government | State and local governments |
| When it applies | At the border, on import | At point of sale, on retail transactions |
| Who pays it first | The importer | The seller collects from buyer |
| Visibility | Hidden in product price | Shown on receipt |
| Purpose | Trade policy tool | General government revenue |
| Who it targets | Imported goods only | Most goods and services |
Tariffs and sales tax are not interchangeable. One is a federal import duty at the border. The other is a state-level consumption tax at the point of sale. Both matter for your business — but they're not the same thing. Quaderno
This is where it gets specifically important for businesses managing sales tax compliance.
In many states, tariffs are included in the taxable base for sales tax. That means you may end up collecting sales tax on the tariff itself — a tax on a tax.
Here's how it works in practice. Say you import a product that costs $1,000. A 15% tariff adds $150 to your landed cost, bringing your cost to $1,150. You sell the product to a customer for $1,200. In most states, the customer owes sales tax on the full $1,200 — including the portion of your price that reflects the tariff you already paid at the border.
Instead of collecting $72.50 in sales tax on a $1,000 product at a 7.25% rate, you'd be legally required to collect $87 on the tariff-inflated price. That extra $14.50 per transaction may sound small, but across hundreds of orders it adds up fast — and getting it wrong is both a profit drain and an audit risk.
A handful of states have issued formal guidance. Most haven't — and that silence creates real ambiguity for businesses.
The California Department of Tax and Fee Administration has stated that tariffs charged to an importer and then passed on to a customer must be included in the taxable sales price for sales tax purposes.
Wisconsin takes a similar position: if an importer incurs a tariff on goods and then sells those goods to a customer along with a charge for the tariff, the tariff amount must be included in the sales price for tax purposes — even if separately stated. However, tariffs are not subject to sales or use tax when paid by the importer directly, if they are legally imposed on the importer and separately stated on the invoice. Quizlet
The Wisconsin distinction matters: the same tariff cost can be taxable or non-taxable depending on how it appears on the invoice and who is paying whom. Most businesses don't know this distinction exists.
Many states have not published official guidance on whether tariff charges should be included in the taxable sales price. That uncertainty is not a reason to ignore the issue — it's a reason to get ahead of it before an auditor does.
Tariffs and sales taxes share a structural problem: they're both regressive. They hit lower-income households harder than wealthier ones.
The average annual tariff cost to households in the bottom 10% of income is about $315 — representing a 0.8% reduction in after-tax income. For the top 10%, the average cost is $1,325 — but that represents only a 0.3% reduction in after-tax income. Less than half the relative burden.
Sales taxes work the same way. Lower-income households spend a larger share of their income on taxable goods, so they pay a larger percentage of their income in sales tax.
Stack the two together — tariff-inflated prices running through a sales tax calculation — and the burden on lower-income consumers compounds. It's one of the least-discussed aspects of the current trade environment, and it's happening quietly, at every checkout.
There's a legal dimension to the current tariff environment that businesses should be aware of.
The Supreme Court struck down President Trump's tariffs in February 2026, ruling they exceeded executive authority. Following the ruling, the administration replaced them with lower tariffs enacted under a different statute. SmartAsset
On May 7, 2026, the Court of International Trade also invalidated Section 122 tariffs. The administration is actively looking for other statutory authorities to reimpose tariffs.
The landscape is in flux. Tariff rates that apply today may change — through new legislation, new legal challenges, or new executive action. For businesses that have built tariff costs into their pricing models, rapid rate changes create immediate pricing and compliance questions. And for sales tax purposes, every pricing change that flows from a tariff adjustment also flows through to the sales tax calculation on each transaction.
If you import goods and sell them in the United States, here's where to focus:
The tariff conversation is everywhere right now. The sales tax dimension of it is almost nowhere. That gap is exactly where compliance problems live — and where businesses get caught off guard.
Importing goods and not sure how current tariff costs affect your sales tax obligations? Book a free consultation with our team at sales.tax. We'll review your pricing structure, your taxable base, and your exposure — and make sure you're not carrying a liability you didn't know about.
For most of the last decade, sales tax enforcement had a practical ceiling.
States could write the rules. They could send notices. They could audit. But they couldn't possibly review every business, every transaction, every filing. There simply weren't enough auditors.
That ceiling is gone.
State tax authorities are now adopting AI aggressively for enforcement. States like California, New York, and Texas have invested significantly in data analytics capabilities — and their systems can now detect underreporting by comparing filed returns with data from payment processors and marketplace facilitators, identify nexus violations by analyzing transaction patterns across state lines, flag suspicious exemption claims by cross-referencing certificate data with business activity records, and prioritize audit targets using risk scoring models that consider dozens of factors simultaneously. The Motley Fool
The era of flying under the radar on sales tax is ending. And businesses that have been relying on the odds — hoping no one would notice — are about to find out what it feels like when the odds change.
Two things happened at once that made AI-powered enforcement inevitable.
First, a March 2026 GAO report confirmed the IRS now runs 126 active AI applications across audit selection, fraud detection, and taxpayer services — up from just 10 in 2022. The federal government's aggressive pivot to AI-powered enforcement is setting both the technology standard and the expectation for state revenue departments watching from the sidelines. Salestaxsolutions
Second, states need money. Sales tax is the most visible, complex, and frequently audited area of compliance — and with every new jurisdictional rule, exemption, and threshold, the gap between what businesses owe and what they actually pay has only grown. AI gives revenue departments a way to close that gap without hiring thousands of new auditors. WGN Radio
South Carolina is joining a growing number of states using artificial intelligence to help select which taxpayers to audit, starting in 2026 — beginning with businesses. It won't be the last. Wkvi
Understanding what these systems are looking for is the first step to making sure you're not on their list.
At the federal level, the IRS uses AI in both the selection of tax returns for audit and to conduct the audit itself — identifying high-risk returns, especially those filed by large corporations, complex partnerships, high-wealth individuals, and users of digital assets. Bipartisan Policy Center
State revenue departments are building similar systems, tailored to sales tax. The AI doesn't read your return the way a human auditor does. It scores it — comparing your numbers against thousands of data points simultaneously:
Each of these factors gets weighted, scored, and ranked. The businesses that score highest go to the top of the audit queue.
This isn't theoretical. The numbers are moving.
IRS enforcement revenue rose 12% in the first five months of fiscal year 2026 — even as the agency cut roughly 25% of its workforce. IRS Commissioner Frank Bisignano attributed the gains directly to technology-driven productivity, telling the Senate Finance Committee that AI is helping collect more from non-compliant filers while processing returns faster for compliant ones.
State revenue departments are watching those results closely. As one industry expert noted: "Audits are increasing, and as AI becomes a more accepted and powerful tool, states are embracing the technology to identify unregistered or under-collecting taxpayers." The Sales Tax People
The practical implication: states don't need to audit more businesses to collect more revenue. They just need to audit the right ones. AI makes that targeting dramatically more precise.
Here's the compliance reality that most businesses aren't thinking about yet.
When auditors know that affordable AI tools are available to every business, the standard of care for compliance rises. "I didn't know" becomes a harder argument when the tools to know are widely accessible and inexpensive.
This is a meaningful shift in how audits play out. Historically, good-faith errors — miscalculating nexus thresholds, missing a rate change, misclassifying a product — were often handled with reduced penalties or payment plans when businesses could demonstrate they made a genuine effort to comply.
As AI tools become the industry standard for compliance management, regulators will increasingly expect businesses to be using them. A compliance failure that might have been excused five years ago as an understandable mistake becomes harder to explain when the tool that would have caught it costs less than a monthly software subscription.
Companies that fail to modernize sales tax compliance face significant risks: audit exposure from manual errors and outdated systems, revenue leakage from misapplied rules, and regulatory penalties from states that are aggressive with enforcement. As tax authorities increasingly use AI themselves, businesses without modern sales tax tools are at a permanent disadvantage. WGN Radio
It's worth being precise here, because AI compliance tools are powerful — but they have a hard limit.
AI tools cannot fix missing fundamentals. You still need valid resale certificates, proper registrations, and good records. AI can supercharge your sales tax compliance, but only if the basics are in place.
What AI does well:
What AI can't do:
AI models are only as good as the data and logic they're built on and must be managed carefully. If an AI system isn't updated for the latest regulatory changes, it may misclassify transactions or fail to trigger required compliance steps — and overreliance on automated determinations without sufficient human review can propagate errors at scale. newsy-today
There's an important option available to businesses that know they have historical exposure but haven't been audited yet.
In 2026, at least four states are offering tax amnesty or voluntary disclosure programs to encourage non-compliant businesses to become compliant. Voluntary disclosure agreements — where a business comes forward proactively to settle past-due taxes — typically result in dramatically reduced or eliminated penalties, and often a limited lookback period covering only two to four years rather than the full statute of limitations. Kiplinger
The math is straightforward: a voluntary disclosure before an AI system flags your business is far less expensive than an audit after it does. The window to act on your own terms closes the moment a state opens an audit.
If your business hasn't done a comprehensive sales tax compliance review recently, 2026 is the year to do it. The enforcement environment has materially changed, and the businesses most at risk are those still operating on the assumption that the odds are in their favor.
The checklist:
The states have upgraded. The question is whether your compliance program has kept pace.
Not sure where your business stands on sales tax compliance — or concerned you may have historical exposure before an AI audit finds it? Book a free consultation with our team at sales.tax. We'll review your nexus footprint, exemption certificates, and filing history, and help you get compliant on your terms before a state does it for you.
You check out online. You pay for the item. You pay sales tax. And now — depending on where you live — you may pay one more charge: a retail delivery fee.
It's not sales tax. It's not a shipping charge. It's a separate, government-imposed fee just for the act of having something delivered to your door.
Colorado was first to the table with a retail delivery fee in July 2022. Minnesota followed in July 2024. Now a growing list of states is watching those two experiments — and lining up to do the same. WTHR
For ecommerce businesses, this is the compliance trend that doesn't get nearly enough attention. And it's moving fast.
The short answer: roads are expensive, gas tax revenue is shrinking, and online shopping is exploding.
Highways, roads, and bridges have historically been maintained with fuel tax revenues. But as vehicles become more fuel-efficient and electric vehicles rise in popularity, these taxes are failing to keep pace with the costs of upkeep and expansion.
At the same time, U.S. ecommerce sales reached $1.1 trillion in 2023, accounting for 22% of total retail sales, with projections suggesting an increase to $1.9 trillion by 2029. 95.3 MNC
The logic states are following: ecommerce deliveries depend on roads. Delivery vehicles are straining infrastructure. Gas tax revenue from those vehicles is declining as fleets go electric. Therefore — charge a fee on the deliveries themselves to fill the gap.
It's a simple argument. The compliance implications are anything but.
The two states that have already implemented retail delivery fees have taken meaningfully different approaches — which is exactly what makes this trend complicated for multi-state sellers.
Colorado: Colorado imposes a flat per-order fee on retail deliveries involving tangible personal property subject to state sales tax — currently 29 cents per order, with annual inflationary adjustments. A retailer is not liable for this fee if its total retail sales in Colorado in the prior year were $500,000 or less. WNDU
Minnesota: Minnesota introduced its retail delivery fee at 50 cents per order, which applies when the retail delivery transaction equals or exceeds $100. Businesses with $1,000,000 or more in Minnesota retail sales during the previous calendar year are required to collect and remit this fee.
Same concept. Different rate. Different threshold. Different trigger amount. Minnesota's approach diverges further in its applicability — sometimes extending the fee to items like clothing even though clothing is traditionally exempt from sales tax within the state. WNDU
This is the central compliance problem with retail delivery fees: every state that adopts one writes its own rules. There is no uniform standard. What applies in Colorado may not apply in Minnesota, and what applies in Minnesota may not apply in Vermont or Virginia.
The list of states actively considering retail delivery fees in 2026 is long — and growing.
Vermont is among the closest to the finish line. Vermont's House Bill 863 would impose a 30-cent retail delivery fee on taxable tangible personal property delivered in the state, effective July 1, 2026 — with no small-seller exemption, meaning all retailers registered for Vermont sales tax would be responsible. WFYI
Virginia has multiple competing proposals. Senate Bill 638 would establish a 50-cent statewide retail delivery fee plus an additional 25-cent fee for deliveries in the Northern Virginia Transportation District. House Bill 900 would apply a 20-cent fee specifically in the Northern Virginia Transportation District. Fox 59
Washington State commissioned a full study on the topic. A fee of 30 cents per order in Washington could generate between $45 million and $112 million in revenue in 2026, according to the report — growing to between $59 million and $160 million by 2030. Fonoa
New York has proposed a 25-cent per delivery fee into the state, collected from customers and separately stated on invoices.
Retail delivery fee legislation is currently under consideration in Hawaii, Nebraska, and New York as well.
States including New York, Ohio, Nevada, Minnesota, Colorado, and Washington are all exploring taxing delivery fees for road repair revenue.
It's worth being precise here, because businesses often confuse retail delivery fees with existing sales tax rules on shipping charges.
In most states, shipping charges on taxable goods are already subject to sales tax. That's a separate issue — and one that predates retail delivery fees entirely.
A retail delivery fee is a distinct, additional charge imposed specifically on the act of motor vehicle delivery to a customer's location. Retail delivery fee proposals share a common structure: a flat, per-delivery charge applied to retail transactions involving delivery, charged in addition to existing sales and use excise taxes. Fox 59
So in a state with both a sales tax on shipping and a retail delivery fee, a business could be dealing with three separate charges on a single transaction: the sales tax on the product, the sales tax on the shipping charge, and the retail delivery fee. All three are separate obligations with separate rules.
Here's what makes retail delivery fees genuinely difficult to manage — especially for businesses selling across multiple states.
In most cases, the retail delivery fee will be a separate return from your sales tax return — with the same due date, but possibly a different filing frequency. That means registering separately, filing separately, and tracking separately — on top of everything else. WABX 107.5
The trigger rules vary by state. In Colorado, it's any order with at least one taxable item. In Minnesota, the fee only kicks in on orders of $100 or more. Vermont's proposed version would apply to all taxable deliveries with no minimum order. Virginia's competing proposals would apply differently depending on which version passes — and whether you're delivering into Northern Virginia or elsewhere in the state.
The largest U.S. ecommerce and delivery companies, including Amazon, DoorDash, and Uber, have already expressed concerns about the fees' negative impact on profit margins. And should companies decide to transfer these fees to consumers, it could lead to reduced demand for delivery services as consumers seek to avoid additional costs. Indiana Capital Chronicle
For smaller ecommerce sellers, the concern isn't just cost — it's the administrative weight of tracking yet another obligation in yet another state, with yet another set of rules.
If you sell physical goods online and ship to customers in Colorado or Minnesota, you already have a retail delivery fee obligation. Check whether you exceed the applicable thresholds and whether you're collecting and remitting correctly.
If you sell into Vermont, Virginia, New York, Hawaii, Nebraska, or Washington, watch these proposals closely. The timeline from "proposal" to "effective date" on retail delivery fees has been short in the states that have acted. Vermont's bill, if it passes, would take effect July 1, 2026 — leaving minimal runway for compliance preparation.
The practical checklist:
As one tax expert put it: "The most important thing is to establish clear, practical rules. Policymakers should spell out whether there's a small-seller exemption, exactly what transactions are in scope, how returns and cancellations are handled, and how the fee is reported and remitted. Those details will determine whether a retail delivery fee is a minor line item or a meaningful compliance project for retailers."
For now, that clarity varies dramatically by state. Which means staying on top of it is on you.
Selling physical goods online and not sure whether retail delivery fees apply to your business in Colorado, Minnesota, or states considering new fees? Book a free consultation with our team at sales.tax. We'll review your delivery footprint, identify your obligations, and make sure you're set up correctly before the next fee goes live.
Imagine paying 20% sales tax on everything you buy in Ohio.
That's not a hypothetical. It's a warning from the state's own governor.
Governor Mike DeWine says a proposed constitutional amendment to ban property taxes in Ohio could create a $24 billion budget hole — forcing dramatically raised sales taxes or quadrupled income taxes to fill the gap.
"Sales tax could go up to 17, 18, 19, 20% on products that you buy," DeWine warned. "So, it would be absolutely devastating." Savant Labs
And yet — thousands of Ohioans are actively trying to make it happen.
The movement isn't coming from fringe activists. It's coming from homeowners who have watched their property tax bills explode.
Record-breaking housing price increases in recent years have led to property tax spikes across the state. "The ever-increasing property taxes truly are pricing people out of their homes," said Brian Massie, who is helping lead the Committee to Abolish Ohio Property Taxes. "The people in the state of Ohio have had enough." TaxJar
The group — also known as Ax Ohio Tax — is currently in the signature-gathering phase. They need a minimum of 413,487 valid signatures from 44 of Ohio's 88 counties by July 1 to make the November ballot. The Sales Tax People
As of their most recent public announcement, the group has collected approximately 305,000 signatures — meaning they are short, the deadline is weeks away, and most observers believe they will not make the November 2026 ballot.
But the debate they've ignited? That's not going away.
Here's why both Democrats and Republicans in Ohio's legislature oppose this — despite representing very different constituencies.
Property taxes generate about $24 billion each year for local governments across Ohio. To put that in perspective, that's equal to the total revenue from Ohio's state income and sales taxes combined.
That money funds:
The amendment doesn't specify how that revenue would be replaced — it leaves that entirely to the legislature. And that's exactly what has state officials alarmed.
Ohio's current combined sales tax rates range from 6.5% to 8% depending on the county. Cuyahoga County currently holds the highest rate in the state at 8%. Quizlet
Now consider what replacing $24 billion annually through the sales tax alone would require.
A state Office of Budget and Management analysis estimates the replacement sales tax rates would need to reach 15–18% range, with DeWine's own public statements putting the ceiling at 20%.
That would make Ohio's sales tax the highest in the country — by a massive margin. The current national leader, Louisiana, sits at a combined rate of around 9.5%.
A Tax Foundation analysis suggests that if Ohio eliminated property taxes and replaced them with income taxes instead, the statewide rate could average around 12.6% — climbing above 13% in some counties, with extreme estimates as high as 27%.
Every replacement option is painful. The only question is who bears the pain.
This is where the debate gets philosophically serious.
Property taxes, for all their flaws, are tied to asset values. Owners of more valuable properties pay more. They're imperfect — rising home values can spike bills for long-term residents on fixed incomes — but they have some relationship to wealth.
Sales taxes are different. Policymakers caution that shifting the burden away from property taxes could disproportionately affect households with low or middle incomes, since everyone pays the same rate regardless of how much they earn.
The group Ohioans to Protect Public Services — a coalition of over 65 groups including local elected officials, businesses, trade groups, and unions representing first responders and teachers — called the proposal "reckless," warning it would only create chaos and trigger big increases in sales and income taxes alongside drastic reductions in local services.
Supporters counter that property ownership feeling like "renting from the government" is itself a form of injustice — and that forcing a reckoning is the only way to compel meaningful reform from a legislature that has repeatedly failed to act.
It's worth noting that Ohio's governor and legislature didn't ignore the property tax crisis. They tried to address it.
In December 2025, Governor DeWine signed five bills overhauling Ohio's property tax system — projected to deliver more than $3 billion in savings for Ohio property owners over the next three years by limiting how much future increases in property values can trigger automatic tax hikes. Quaderno
The reforms included capping automatic tax increases tied to reappraisals, expanding the owner-occupancy tax credit for homeowners, and giving counties greater oversight over tax rates.
For the amendment's supporters, it wasn't enough. For the governor, it was a responsible middle ground that avoided blowing up $24 billion in public services.
That disagreement is what's driving the signature campaign — and what will continue to drive it even if the amendment misses the 2026 ballot.
Even if this amendment doesn't make the November 2026 ballot — which now looks likely — businesses in Ohio should understand what's at stake.
The property tax revolt isn't over. Ohio voters will elect a new governor in November 2026, since DeWine is term-limited, meaning discussions about tax relief will continue through the campaign season and beyond. A future legislature, under pressure from a sustained grassroots movement, could pursue property tax elimination or dramatic reduction through legislative channels rather than a ballot initiative. AccurateTax
If sales taxes eventually rise to compensate — even partially — the compliance implications are significant. Rate increases require POS system updates, filing recalculations, and customer-facing price adjustments. Businesses that sell across multiple Ohio jurisdictions already manage different local rates. A statewide rate jump would affect every single transaction.
The time to understand your Ohio sales tax exposure is before rates change — not after.
Operating a business in Ohio and want to make sure your sales tax setup is ready for whatever the legislature does next? Book a free consultation with our team at sales.tax. We'll review your current obligations and help you build a compliance strategy that holds up no matter what the ballot brings.
Advertising has never been subject to sales tax in Minnesota.
That could be about to change.
Senate File 4878 / House File 4343 seeks to expand Minnesota's sales and use tax to apply to advertising services — both digital and non-digital. If it passes, businesses that buy ads in Minnesota would start paying sales tax on something they've never been taxed on before.
The bill is still working its way through the legislature. But it's backed by the governor, it's generating real debate, and the revenue estimates attached to it are serious money.
Here's what you need to know.
This isn't just a tax on Facebook ads. The scope is significantly broader than most people realize.
As written, the bill would apply to a broad array of advertising services including billboard advertising, place-based advertising, design services related to the creation of advertisements, search engine marketing, lead generation optimization, web campaign planning, and more.
The official legislative language defines the taxable category even more specifically. Advertising services are defined as all digital and nondigital advertising services — including out-of-home advertising, design services, rendering advice to a client, and online referrals.
In plain terms: if you're paying someone to help you get in front of customers — whether that's a Google Ads campaign, a billboard on I-35, a design agency building your ad creative, or a consultant optimizing your lead generation funnel — this tax could apply.
The bill carves out specific categories from the taxable definition.
Advertising services do not include services rendered in respect to advertising produced for printing newspapers, periodicals, and magazines, publishing, radio broadcasting, television broadcasting, or web hosting. The Shelby Report
So traditional media — newspaper ads, radio spots, TV commercials — stays untaxed. The tax is aimed squarely at the digital and out-of-home advertising economy. The businesses feeling this most acutely would be digital marketing agencies, SEO firms, paid search specialists, outdoor advertising companies, and the clients who hire all of them.
Supporters of the bill aren't just arguing it raises needed revenue. They're packaging it as a structural modernization with a meaningful offset.
The bill would reduce Minnesota's state sales tax rate from 6.5% to 6.375%, effective for sales and purchases made after September 30, 2026.
The logic: broaden the base, lower the rate. Tax more things at a slightly lower percentage, rather than fewer things at a higher one. Proponents argue this makes the overall tax system more efficient and less distorting — and that the lower rate benefits all businesses by reducing the cost of their everyday taxable purchases.
The Revenue Department estimates that the bill's changes would increase state revenues by $92.2 million in Fiscal Year 2027 and $340.3 million in the next biennium.
That's not a rounding error. $340 million over two years is a significant new revenue stream — built almost entirely on taxing something that has historically been free from sales tax.
Not everyone is convinced the trade-off is worth it.
The National Federation of Independent Business warned that small businesses across Minnesota are already struggling with rising operating costs and a tax climate that is not conducive to economic growth — and that this new tax will add additional cost pressures, disproportionately impacting small businesses that use advertising services as part of an affordable marketing strategy. Zamp
Small businesses have also been hit with a new Paid Family and Medical Leave payroll tax as well as increased unemployment insurance assessments — making the advertising tax one more weight added to an already strained balance sheet. Zamp
The pass-through argument is also central to the opposition. Rep. Mike Wiener characterized the bill as a tax on consumers, arguing that advertisers would simply pass the extra costs on. In other words, if your agency starts paying sales tax on the services it provides, your agency raises its rates — and you, the client, absorb the increase.
Opponents also warn the bill would raise advertising costs for small businesses and prompt social media platforms to limit advertising features in the state. Kiplinger
This bill has real institutional momentum because it comes from the top.
This proposal has been included in Governor Walz's 2026 Supplemental Budget Recommendations — meaning it's not a fringe legislative idea. It's part of the official executive budget strategy for closing Minnesota's long-term fiscal gap.
Gov. Walz said he aims to help cut costs for middle-class families and ensure that wealthy people and companies pay their fair share. The advertising tax fits that framing: it targets business expenditures rather than consumer necessities, and the rate cut provides cover against the argument that this is a net tax increase on everyday purchases.
The Minnesota Legislature is narrowly divided, with Democrats and Republicans deadlocked in the House, meaning Walz will need to garner bipartisan support to pass any of his ideas. That makes the bill's path to passage uncertain — but not impossible. The Sales Tax People
Maryland passed a digital advertising tax in 2021 — the first state in the country to do so. It immediately faced legal challenges on First Amendment and federal law grounds and has been tied up in courts ever since.
Minnesota's approach is broader — covering digital and non-digital advertising services rather than just digital ad revenue — which may or may not make it more legally defensible. But the Maryland precedent is a reminder that taxing advertising is politically and legally complicated in ways that taxing goods is not.
If Minnesota's bill passes, expect immediate legal scrutiny. And expect other states watching from the sidelines to decide whether to follow or wait for the courts to weigh in.
If you operate in Minnesota — or run campaigns targeting Minnesota consumers — this bill deserves your attention now, not after it passes.
The practical checklist:
The September 30, 2026 effective date doesn't leave much runway. If this becomes law, the compliance window is short.
Running a business that relies on advertising services in Minnesota — or operating a marketing or design agency that could suddenly become a sales tax collector? Book a free consultation with our team at sales.tax. We'll help you understand your exposure and get ahead of the change before it hits.
Los Angeles County is asking its residents to pay more at the register.
Los Angeles County voters will decide whether they want to increase the sales tax for five years to raise $1 billion annually to support public health care and other essential services. Sovos LATAM
The vote is June 2. And right now, it's too close to call.
A recent poll shows 47% of likely voters opposing Measure ER and 45% supporting it — with the outcome genuinely uncertain heading into election day. Deloitte
Measure ER would raise LA County's sales tax by half a percent — from 9.75% to 10.25% — for five years, to replenish hospital and clinic budgets slashed by federal cuts to Medi-Cal. Texas Society of CPAs
The Essential Services Restoration Act proposes to add a temporary half cent per dollar — about 5 cents for every $10 spent in LA County — for five years.
If approved by voters, it's estimated to generate about $1 billion annually to support healthcare, with an estimated $100 million per year directed specifically to public health efforts. Resalecertificate
This is not a permanent tax. It has a five-year sunset. But it would push LA County's combined sales tax rate past 10% — a threshold that matters both symbolically and practically for consumers and businesses.
Here's the context that makes Measure ER particularly charged.
LA County residents have already seen their sales tax creep up significantly in recent years. Starting April 1, 2026, the countywide sales tax increased by 0.25% — from 9.25% to 9.5% — following the passage of Measure A in the November 2024 election, a permanent tax increase to fund expanded homelessness prevention programs.
That increase is less than six weeks old. Now voters are being asked to approve another 0.5% on top of it.
In cities like Long Beach, the combined rate would go from 9.75% to 10.25%. In some cities within the county — like Santa Monica, West Hollywood, and Culver City, which carry their own local add-ons — combined rates would go even higher.
Supporters frame Measure ER as an emergency response to federal policy.
The Community Clinic Association of Los Angeles County called it "an urgent and necessary step to stop the damage and to protect access to life-saving care," with support from community health organizations including Venice Family Clinic and MLK Community Healthcare.
The core argument is straightforward: federal cuts to Medi-Cal are gutting the funding that LA County's safety-net hospitals and clinics depend on. Without a local revenue source to fill the gap, clinics close, patients lose coverage, and the public health infrastructure weakens. The sales tax is the fastest available mechanism to raise the money needed.
Accountability would be ensured through independent audits, public reporting, and a citizens' oversight committee.
Opponents aren't arguing against healthcare. They're arguing against the method — and the timing.
The Howard Jarvis Taxpayers Association argued that sales tax in LA County is already too high and that raising it again is "unreasonable and unfairly harsh" for those who can't afford it.
The Pasadena Chamber of Commerce voted to "strongly oppose" the measure, citing concerns about rising costs for consumers and businesses, as well as what it described as insufficient oversight and ineffective use of existing county funds. Avalara
The regressive tax argument runs deep here. A half-cent sales tax costs the same whether you earn $30,000 or $300,000 a year — but it takes a much bigger bite out of lower-income households who spend most of what they earn. The irony is that the people most likely to need the healthcare funded by the tax are also the people most burdened by paying it.
If Measure ER passes, the compliance implications kick in fast.
If a majority of voters approve Measure ER, LA County would begin imposing the additional 0.5% sales tax in October 2026.
That gives businesses roughly four months to update their point-of-sale systems, reprogram their tax calculation software, and notify customers. For multi-location retailers operating across different cities within LA County — where combined rates already vary — this adds another layer of rate complexity to manage.
It also raises a broader question: at what point does a 10%+ sales tax rate start changing consumer behavior? Research consistently shows that high combined tax rates can push consumers toward online purchases from out-of-state sellers, border shopping in lower-tax neighboring counties, or simply spending less. Businesses in already-thin-margin categories like food service, retail, and entertainment will feel that shift first.
LA County is not an isolated case.
Across California, several other cities and counties have sales tax measures on the June 2026 ballot — including Bell, Bell Gardens, Commerce, and Covina, all proposing their own local sales tax increases. Morgan Lewis
The trend reflects a national reality: as federal funding tightens and state budgets face pressure, local governments are increasingly turning to the sales tax as their most accessible revenue lever. It's visible, it's broad-based, and — unlike property taxes or income taxes — it can be implemented relatively quickly.
Whether voters in LA County decide that's the right move on June 2 will be one of the most-watched local tax decisions of 2026.
Running a business in Los Angeles County and not sure how a potential rate change would affect your compliance setup? Book a free consultation with our team at sales.tax. We'll walk through your current obligations and make sure you're ready for whatever the ballot brings.
Back-to-school shopping just got a little cheaper in Ohio.
Governor Mike DeWine announced that Ohio's 2026 Sales Tax Holiday will run for three days in August — from 12 a.m. on August 7 through 11:59 p.m. on August 9. Avalara
Three days. No sales tax on qualifying items. And if you're a parent stocking up on school supplies, clothing, or instructional materials before the new school year, the timing is designed exactly for you.
Here's what's covered, what's not, and what businesses need to have ready before the weekend arrives.
Ohio's sales tax holiday is an annual event where the state temporarily suspends sales tax on select back-to-school purchases. It's designed to give families a break on essential school items right before the academic year begins.
The holiday normally begins right before the new school year starts so parents and students can save money on school supplies. Avalara
Ohio has run this holiday in various forms for years. The 2023 version was notably expanded — covering all items $500 and under for a full weekend. The 2026 version returns to the traditional, narrower scope focused specifically on back-to-school essentials.
The 2026 Ohio Sales Tax Holiday includes all items of clothing priced at $75 or less, school supplies priced at $20 or less, and school instructional materials priced at $20 or less. Avalara
Breaking that down:
Clothing — $75 or less per item:
School Supplies — $20 or less per item:
School Instructional Materials — $20 or less per item:
If an item falls within these categories and stays under the price threshold, no Ohio sales tax applies — state or local — during the holiday window.
This is where shoppers can get caught off guard — and where retailers need to be precise.
The sales tax holiday does not include items that are $500 or less, food in restaurants, boats and watercrafts, titled outboard motors, motor vehicles, alcohol, tobacco, vape products, or items with marijuana. It also does not apply to taxable services and items purchased for use in a business. Avalara
A few things worth highlighting specifically:
The price thresholds apply per item, not per transaction. Buying five $18 notebooks is fine — all five qualify. Buying one $25 notebook means that item is fully taxable.
Ohio's 2023 sales tax holiday was a significant expansion — covering essentially all items priced at $500 or under for the entire weekend. That version generated a lot of buzz because it extended well beyond school supplies into appliances, electronics, and furniture.
The 2026 holiday does not include items that are $500 or less. Avalara
In other words — that expanded version is gone. 2026 is back to the traditional, targeted format. Families hoping to score a tax-free TV or refrigerator like they could in 2023 will be disappointed. This holiday is specifically about clothing and school supplies, not general consumer goods.
If you're planning purchases based on what Ohio's holiday covered in prior years, double-check the current rules before assuming something qualifies.
Ohio's state sales tax rate is 5.75%. Combined with local rates, most Ohio shoppers pay between 6.5% and 8% in total sales tax depending on their county.
Here's what that saves on a typical back-to-school haul:
| Item | Price | Tax Saved (at 7.5%) |
|---|---|---|
| Pair of sneakers | $70 | $5.25 |
| School uniform set | $65 | $4.88 |
| Calculator | $18 | $1.35 |
| Backpack full of supplies | $45 in supplies | $3.38 |
| Total | $198 | ~$14.86 |
Not enough to change your life — but enough to cover another supply run. And for families buying for multiple kids, it adds up faster.
If you operate a retail business in Ohio, the sales tax holiday isn't just a consumer event — it's a compliance event. You're responsible for correctly applying the exemption at the point of sale, and getting it wrong creates liability.
Here's what to have in place before the weekend:
The holiday runs 72 hours. High transaction volume, edge-case products, and price-threshold questions will come fast. Preparation before August 7 is the difference between a smooth weekend and a compliance headache.
Ohio's back-to-school weekend is one of the most recognized sales tax holidays in the country — but it's far from the only one happening in 2026.
Nearly 20 states have confirmed at least one sales tax holiday this year, covering everything from back-to-school clothing and supplies to Energy Star appliances, emergency preparedness gear, firearms and ammunition, and even outdoor recreation equipment. Key dates cluster around the same August 7–9 weekend as Ohio — Florida, Iowa, Missouri, Oklahoma, South Carolina, Texas, and Virginia are all running their own back-to-school holidays that same weekend. Tennessee's holiday runs July 24–26, Connecticut's goes August 16–22, and Maryland's stretches from August 9–15.
The holiday types vary too. Florida alone runs five separate sales tax holidays throughout 2026 — including a "Freedom Month" holiday in July covering boating, camping, and fishing supplies, and a dedicated "Tool Time" holiday for skilled trade workers. Louisiana and Mississippi both run Second Amendment weekends later in the year. Missouri added an Energy Star appliance holiday in April on top of its August back-to-school event.
If you sell across multiple states, the compliance picture gets complex fast — different dates, different qualifying categories, different price thresholds, and different rules on whether local taxes are included. For the full 2026 sales tax holiday schedule, state by state, visit our complete guide to sales tax holidays. It covers every confirmed holiday, the eligible items, and the price caps you need to know.
Running a retail business in Ohio or another state with an upcoming sales tax holiday and not sure how to handle compliance during the exemption window? Book a free consultation with our team at sales.tax. We'll make sure your systems are set up correctly before the holiday hits.
Missouri is considering the most dramatic sales tax overhaul any state has attempted in decades.
The Missouri House voted 95-59 to send a proposed constitutional amendment to the ballot that would direct future legislatures to cut personal income tax rates as state revenue increases — and allow the General Assembly to expand the sales tax to transactions involving any goods and services.
Governor Mike Kehoe has until May 22 to decide whether the measure will appear on the August 4 primary ballot or the November general election.
That deadline is days away. And the decision will set the stage for what could be the largest sales tax expansion in Missouri history.
This isn't a simple rate change. It's a structural overhaul of how Missouri funds its government.
Right now, Missouri collects billions in state income tax revenue every year. The proposal would chart a path to eliminate that entirely — and replace the lost revenue with an expanded sales tax base.
Lawmakers would have a five-year window to expand transaction-based taxes, like sales taxes, to make up for revenue lost by eliminating the income tax.
If approved by voters, Missouri would become the tenth state to eliminate its state income tax, joining neighboring Tennessee, which repealed its state income tax in 2021. SmartAsset
The key word in all of this: expand. Missouri's current sales tax applies to goods but exempts most services. To replace income tax revenue, lawmakers would almost certainly need to start taxing things that have never been taxed before — haircuts, legal services, accounting fees, medical visits, real estate transactions.
The scale of what's being proposed is hard to overstate.
The nonpartisan Missouri Budget Project said eliminating the income tax while increasing sales taxes will cost up to 80% of Missourians more overall, while blowing a $5 billion hole in the state budget. AccurateTax
The Missouri Budget Project estimates that 80% of Missourians would see their net tax cost increase. In comparison, the 20% of Missourians — defined as those making $300,000 or more — would see their overall taxes decrease. TaxHero
The math reflects a fundamental difference between how income taxes and sales taxes work. Income taxes are progressive — higher earners pay a higher percentage. Sales taxes are regressive — everyone pays the same rate, but lower-income households spend a larger share of their income on taxable purchases.
Eliminating one and expanding the other shifts the tax burden down the income scale.
Supporters argue the change would make Missouri more competitive.
Governor Kehoe called it "the first step in keeping our promise to make Missouri more competitive, attract jobs and investment, and let families keep more of what they earn." Republicans framing the proposal say it gives Missourians more control over what they're taxed on — you pay when you choose to spend, not just for earning a paycheck. Taxfyle
Opponents see it differently.
Senate Minority Leader Doug Beck called the proposed amendment the pave the way for the largest tax increase in Missouri history, warning it would mean more taxes for most Missourians — and that the people hit hardest are retirees, senior citizens, and disabled veterans who pay no income tax now but would pay higher sales tax on doctors' visits and prescription medicines. Quizlet
Democrats warned that if it passes, higher sales taxes will shift the tax burden to poorer Missourians who must spend most or all of their income on necessities — feeding their families, keeping a roof over their heads, buying medicine.
Here's the compliance reality that businesses in Missouri need to start thinking about now.
If the amendment passes and lawmakers follow through on expanding the sales tax base, virtually no industry is safe from review. Items likely to be taxed if the measure passes include haircuts, salon visits, and plumber services. SmartAsset
Industries currently protected by strong exemptions — agriculture, real estate, healthcare — would face enormous pressure. Many worry that should those exemptions disappear, it would hurt seniors and make people choose between meals and medication.
For businesses that currently provide tax-exempt services in Missouri, this is not a distant hypothetical. The five-year window for lawmakers to act starts the moment voters approve the amendment. Service businesses that have never had to think about sales tax collection could find themselves registering, filing, and remitting within the same legislative session.
Here's how the next several months play out:
If the income tax isn't eliminated by January 1, 2032, the tax may continue until it is ended. There's no automatic snap-back — the pressure to follow through would be sustained and political. Taxfyle
Missouri isn't the only state exploring this trade. The trend of shifting from income-based to consumption-based taxation has been building for years.
States like Tennessee — already income-tax-free — have become reference points for what this looks like in practice. And the argument that a consumption tax is simpler, more predictable, and harder to avoid has real appeal to both lawmakers and certain segments of the business community.
If Missouri voters approve this amendment, expect other states to take notice. It would be the most significant state-level tax restructuring in a generation — and a signal to legislatures across the country that voters are open to rethinking how government gets funded.
If you operate a business in Missouri — especially a service business currently exempt from sales tax — now is the time to understand what this proposal could mean for your compliance obligations. Book a free consultation with our team at sales.tax. We'll walk through your exposure and help you prepare for whatever the ballot brings.
If you're buying groceries in Alabama right now, you're paying less at the register.
Governor Kay Ivey signed Act 2026-604 into law, suspending Alabama's 2% state sales tax on SNAP-eligible food items from May 1 through June 30, 2026. Avalara
Two full months. Zero state grocery tax.
But there are rules, exceptions, and a compliance wrinkle that every retailer in the state needs to understand before the next transaction hits the register.
Alabama has one of the most complicated grocery tax histories in the country.
This is the third piece of legislation lowering state sales taxes on groceries in the last four years. In 2022, the state grocery tax was lowered from 4% to 3%. In 2024, it dropped again to 2%. Galvix
Each cut was permanent. This one is temporary — but it's the most aggressive relief yet. A full suspension means the state rate goes to zero for 60 days.
For a family spending $800 a month on groceries, that's $16 back in their pocket this month and next. Not life-changing — but real.
The suspension applies to food as defined under the federal SNAP program — specifically items intended for home consumption.
That includes:
The exemption covers grocery staples such as fruit, vegetables, meat, dairy products, and other items intended for home consumption. Avalara
Not everything in the grocery store qualifies. These items remain taxable even during the suspension:
Food has the same meaning as defined in 7 U.S.C. § 2011 for the purposes of the federal Supplemental Nutrition Assistance Program (SNAP). If it wouldn't qualify for SNAP, it doesn't qualify for the suspension. Shopify
Here's where it gets complicated — and where compliance mistakes happen.
The city and county sales and use tax rates on food are not affected by this act. Shopify
That means this is not a blanket grocery tax holiday. It's a state-only suspension running alongside fully active local taxes. Retailers in Alabama are now operating in a split-rate environment for 60 days:
Alabama has hundreds of local jurisdictions with their own grocery tax rates. The state suspension doesn't touch any of them.
Grocers must operate in a split-rate environment for 60 days — no state tax on eligible groceries, but the full local tax is still due at the register. Numeral
This isn't a set-it-and-forget-it situation. The Alabama Department of Revenue has issued specific guidance for how retailers must handle this period.
Retailers must still report all gross sales of qualifying food items in their total gross proceeds on the state tax return and then subtract — deduct — the qualifying food sales from the amount used to calculate state sales tax. Avalara
In plain terms:
Miss any one of these steps and you're either over-collecting from customers or under-remitting to the state. Both create problems.
Alabama is part of a national trend that's accelerating fast.
States are recognizing that taxing food is politically unpopular and economically regressive. Alabama remains one of only about ten states in the country that still impose a statewide sales tax on groceries. That number has been falling steadily — Arkansas and Illinois made their exemptions permanent on January 1, 2026. Numeral
Alabama's suspension is temporary. But given the legislative trajectory — three cuts in four years — the question isn't whether Alabama will eliminate its grocery tax entirely. It's when.
If you're a retailer in Alabama and need help configuring your systems for the suspension period — or a business in another state trying to track how grocery tax changes affect your compliance obligations — book a free consultation with our team at sales.tax. We'll make sure you're set up correctly before the next return is due.
Indiana just did something that hasn't happened in modern history.
On May 6, 2026, Governor Mike Braun suspended both the state's gas sales tax and the gas excise tax simultaneously — saving Hoosier drivers nearly 60 cents per gallon at the pump.
It's the first time any Indiana governor has done both at once. And it's happening because gas prices in the state have become a genuine crisis.
Here's what's going on — and why it matters beyond Indiana's borders.
Bad. Fast.
Indiana gas prices skyrocketed by $1.05 per gallon in just seven days, with the state average hitting $4.83 per gallon — 92.6 cents higher than a month ago and $1.64 per gallon higher than this time last year. TaxJarTaxJar
Indiana, a state where drivers are used to paying below the national average, suddenly found itself in the top 10 most expensive states for gasoline. Taxfyle
The Great Lakes region — Michigan, Indiana, Ohio, and Wisconsin — bore the brunt of the volatility, driven by a combination of Middle East conflict disrupting global supply and regional refinery issues compounding the problem. TaxHero
In Indianapolis, prices hit $4.99 per gallon. The Sales Tax People
Indiana's gas tax isn't a single tax. It's two separate taxes:
Braun had already suspended the sales tax side in April, when prices were averaging around $4.13 a gallon. That alone saved about 17 cents per gallon but left the bigger excise tax in place — and critics noticed.
Then prices kept climbing.
On May 6, Braun went further. He extended the gas sales tax suspension for another 30 days and added a full suspension of the excise tax on top of it — the first time in modern history an Indiana governor has done both simultaneously.
Combined, the two suspensions add up to $0.59 a gallon in savings — a 12.4% discount on the average price of gasoline in Indiana. The Sales Tax People
This relief doesn't come free.
The 30-day suspensions combined are expected to cost state coffers $104 million, plus an additional $52 million for local units of government. That's on top of the $50 million revenue cost from Braun's initial 30-day sales tax suspension in April.
The excise tax, in particular, funds Indiana's road infrastructure. Braun had previously resisted suspending it for exactly that reason — every dollar of excise tax not collected is a dollar not going to highways, bridges, and potholes. But with prices pushing toward $5 a gallon, the political calculus changed.
The state still collected $283.7 million through the gasoline sales tax in April and is $425.7 million above fiscal year projections — which gave Braun the cushion to act.
Here's the part that everyone in Indiana is now watching.
This extension is the longest Braun can suspend the gas tax under his own executive authority. Another extension beyond this would require calling a special legislative session. The Sales Tax People
The current suspension runs through early June — covering Memorial Day weekend, one of the biggest driving periods of the year. After that, Braun's unilateral power runs out.
If prices haven't come down by then, Indiana lawmakers will face a choice: return for a special session to extend the relief, or let the taxes snap back at the pump when drivers are already stretched thin heading into summer.
Indiana is the most dramatic example right now, but it's not alone.
Georgia, Utah, and Indiana have all implemented gas tax holidays in 2026 in response to surging prices. At the federal level, the Gas Prices Relief Act of 2026, introduced by Senators Mark Kelly and Richard Blumenthal, would establish a federal gasoline tax holiday lasting until October 1. A companion bill has been introduced in the House.
Pennsylvania is weighing both a 60-day state gas tax suspension and a six-month gas and diesel tax holiday proposal starting June 1.
The pattern is the same everywhere: prices spike, politicians reach for the tax suspension lever, and the debate over infrastructure funding versus immediate consumer relief starts all over again.
Gas tax suspensions create a specific compliance challenge that most businesses don't think about until it's too late.
When a state suspends its gas sales tax, the rate businesses must collect — and remit — changes immediately. Point-of-sale systems need to be updated. If you're operating fuel-related businesses in Indiana or any state implementing a tax holiday, your collection and remittance obligations change on the day the suspension takes effect, not on your next filing cycle.
There's also the price gouging angle. Indiana's Attorney General has initiated price gouging investigations into retailers across the state and sent warning letters to stations it is monitoring — a reminder that tax relief is only meaningful if businesses actually pass the savings through to consumers. The Sales Tax People
Regulators are watching.
Questions about how gas tax changes or state tax suspensions affect your business's compliance obligations? Book a free consultation with our team at sales.tax. We'll walk through exactly what you need to update — and when.
This is one of the most common sales tax questions people search — and it comes up on a lot of economics and civics quizzes.
The short answer: $60 if the rate is 6%, or $62.50 using Massachusetts's actual 2026 rate of 6.25%.
But the longer answer is more interesting — because crossing the border to avoid sales tax isn't as simple as it sounds.
Sales tax is calculated as a percentage of the purchase price.
If the rate is 6% and you buy a $1,000 television in Massachusetts:
$1,000 × 0.06 = $60 in sales tax
If the rate is 6.25% — which is Massachusetts's actual current rate:
$1,000 × 0.0625 = $62.50 in sales tax
New Hampshire has no state sales tax. So if you buy the same $1,000 TV across the border in New Hampshire, you pay $0 in sales tax.
The savings: $60 to $62.50, depending on which rate you use.
For quiz purposes, the answer is $60 — that's the closest option and the one based on the 6% rate used in the question. In real life, using Massachusetts's actual 6.25% rate, you'd save $62.50.
New Hampshire is one of only five states in the U.S. with no statewide sales tax. The others are Alaska, Delaware, Montana, and Oregon.
New Hampshire funds its government primarily through property taxes and other revenue sources — and it leans hard into its no-tax identity. You'll see "Live Free or Die" license plates everywhere, and that philosophy extends to how the state approaches consumption taxes.
The result: shopping in New Hampshire is a popular move for residents of neighboring states, especially Massachusetts, Maine, and Vermont — all of which have meaningful sales tax rates.
Border shopping — crossing into a no-tax or lower-tax state specifically to make a purchase — is common, especially for big-ticket items.
A $1,000 TV saves you $62.50. A $5,000 appliance package saves you $312.50. A $30,000 car saves you $1,875. The dollar amount scales directly with the purchase price, which is why border shopping gets more appealing the more expensive the item is.
Stores near the Massachusetts-New Hampshire border — especially in places like Salem and Nashua, NH — do a significant portion of their business with Massachusetts residents for exactly this reason.
Here's what most people don't know.
Massachusetts has a use tax — and it's the same rate as the sales tax: 6.25%.
The use tax exists specifically to capture sales tax revenue on purchases made out of state that are brought back into Massachusetts for use. Legally, if you drive to New Hampshire, buy a $1,000 television, and bring it home to Massachusetts, you owe Massachusetts 6.25% use tax on that purchase.
That's $62.50 — the same amount you would have paid in sales tax at a Massachusetts store.
In practice, most individual consumers never report or pay use tax on personal purchases. Enforcement on small consumer transactions is minimal. But it's not a technicality — it's the law. Massachusetts residents are required to self-report use tax on their annual state income tax return.
For businesses, use tax is taken much more seriously. If a Massachusetts business buys equipment, supplies, or goods from an out-of-state vendor that doesn't charge sales tax, the use tax obligation is real and actively audited.
Crossing the border to shop legally saves you money when:
The savings evaporate quickly if you're driving two hours and burning gas to save $60 on a TV. And for businesses operating in Massachusetts, the use tax obligation means the savings may not exist at all.
Massachusetts sits in the middle of the pack nationally at 6.25%. Here's how its neighbors compare:
The variation across New England alone shows how much the tax you pay can depend on where you happen to be standing when you swipe your card.
Questions about how sales tax applies to your business — including use tax obligations on out-of-state purchases? Book a free consultation with our team at sales.tax. We'll walk through your specific situation and make sure you're not carrying a liability you didn't know about.
You've probably paid both without realizing it.
Every time you fill up your gas tank, part of what you pay is an excise tax — baked into the price before you even get to the pump. Every time you check out at a store, the tax added to your total is a sales tax.
Same receipt. Completely different taxes.
Here's how to tell them apart — and why it matters for your business.
Sales tax is a broad tax applied to most retail purchases. It's calculated as a percentage of the sale price, added at checkout, and collected from the buyer.
Excise tax is a targeted tax applied to specific goods — like fuel, alcohol, tobacco, and airline tickets. It's usually a fixed amount per unit, collected earlier in the supply chain (from manufacturers or wholesalers), and baked into the product's price before it reaches you.
One is wide. The other is surgical.
Sales tax is what most people think of when they hear "tax at checkout."
It's imposed by state and local governments on the retail sale of most goods and some services. The seller collects it from the buyer at the point of sale, then remits it to the state.
Key characteristics:
If you buy a $500 laptop in a city with a combined 8% sales tax rate, you pay $40 in sales tax on top. The rate is the same whether the laptop costs $500 or $5,000 — the tax scales with the price.
Excise tax is different in almost every way.
It's imposed on specific goods and services — usually ones with significant social costs or high revenue potential. Think gasoline, cigarettes, alcohol, firearms, and airline tickets.
Key characteristics:
Common examples of excise taxes in the U.S.:
Unlike sales tax, excise taxes don't go up automatically when prices go up. If gasoline costs $3 per gallon or $5 per gallon, the federal excise tax is still $0.184 per gallon either way.
| Sales Tax | Excise Tax | |
|---|---|---|
| What it applies to | Most goods and services | Specific products only |
| How it's calculated | % of purchase price | Fixed amount per unit (usually) |
| Who collects it | Seller, from buyer at checkout | Manufacturer or wholesaler |
| Visibility | Shown separately on receipt | Built into the product price |
| Purpose | General government revenue | Revenue + behavior control |
| Level | State and local | Federal and state |
Here's where it gets interesting — and where businesses can get caught off guard.
Sales tax and excise tax are not mutually exclusive. They can both apply to the same transaction.
When you buy a pack of cigarettes, the manufacturer has already paid federal and state excise taxes on them. That cost is built into the retail price. Then, when you buy them at the store, sales tax is added on top in most states.
You're paying both. Most people never realize it.
The same thing happens with alcohol, gasoline (in some states), and other excise-taxed goods. Businesses selling these products need to understand both their excise tax obligations (paid earlier in the supply chain or remitted separately) and their sales tax obligations (collected from customers at the point of sale).
Hawaii is a special case worth mentioning.
Instead of a traditional sales tax, Hawaii imposes a General Excise Tax (GET) — a tax on businesses for the privilege of doing business in the state. It applies to virtually all business activity: retail, wholesale, services, rentals, and more.
The rate is generally 4% at the state level, with an additional 0.5% surcharge in Honolulu County. Unlike sales tax, GET is technically a tax on the business, not the buyer — but most businesses pass it on to customers at checkout.
If you sell to customers in Hawaii, GET applies differently than a standard sales tax. It's one of the more commonly misunderstood tax structures in the country.
If you sell excise-taxable goods — fuel, alcohol, tobacco, firearms, certain beverages — you have obligations beyond standard sales tax compliance. Excise taxes are often filed separately, on different schedules, with different agencies. Missing them is easier than you'd think.
If you sell general goods or services, excise tax likely doesn't apply to you directly — but you should know it exists, because your suppliers may be passing excise costs through to your pricing.
And if you operate in multiple states, the overlap between sales tax and excise tax rules adds another layer of complexity to get right.
Not sure which taxes apply to what you sell? Book a free consultation with our team at sales.tax. We'll walk through your products, your states, and your obligations — so you know exactly where you stand.
As of 2026, 37 states plus the District of Columbia no longer tax most grocery food at the state level. And that number just got bigger.
On January 1, Arkansas and Illinois both eliminated their state-level grocery taxes — joining Kansas, which did the same in 2025, and Oklahoma, which dropped its 4.5% food tax in 2024.
The trend is clear. States are removing taxes on food. But the details matter — especially if you're a seller.
It's simple math for lawmakers.
Grocery taxes hit low-income households hardest. Families who spend most of their income on food pay a bigger share of that income in tax. As grocery prices have stayed elevated, the political pressure to eliminate food taxes has been hard to ignore.
The result: a national rollback that's been building for years and is accelerating fast.
Illinois eliminated its 1% state grocery tax — but it simultaneously gave municipalities the option to impose their own 1% local grocery tax.
The result? Roughly 600 out of 1,300+ Illinois communities opted in.
So for many Illinois residents, the grocery tax didn't disappear. It just changed hands — from the state to their city or county.
If you're an ecommerce seller shipping food products into Illinois, this means your tax obligations now depend entirely on the delivery address. Every ZIP code is potentially different.
Not every state has followed the trend. As of mid-2026, around ten states still impose a statewide tax on groceries.
Here's where it stands:
Tennessee is the most active right now. In 2026, lawmakers have introduced over half a dozen bills that would reduce or eliminate the state's 4% grocery tax — ranging from a full elimination to a one-day-per-month sales tax holiday on the fifth of each month.
Virginia looked close to eliminating its remaining 1% grocery tax in 2026, but the bill was pushed to the 2027 session.
Hawaii is weighing more than ten separate proposals.
The rollback isn't slowing down.
If you sell food products and ship to customers across multiple states, you have homework to do.
The definition of "groceries" is not universal. Most states exempt basic staples — bread, produce, dairy, meat — but the line between "grocery item" and "prepared food" varies. A bag of chips sold in a family-size package may be tax-exempt in Texas, while the individual-serving version of the same product is taxable.
When states eliminate grocery taxes while preserving local ones — like Illinois — sellers face a compliance patchwork that requires address-level accuracy, not just state-level rules.
This is one of those changes that looks like a simplification on the surface and creates complexity underneath.
Not sure how grocery tax changes affect your business? Book a free consultation with our team at sales.tax. We'll review your product taxability, identify where you have exposure, and help you stay compliant as the rules keep changing.
Sales tax revenue is used by state and local governments to pay for essential public services. Here are several key examples:
Sales tax helps fund a wide range of public services that communities rely on every day, including education, safety, infrastructure, healthcare, and social support programs.
Giving money to family or receiving an inheritance might seem straightforward.
But from a tax perspective, it’s not always that simple.
Whether you’re transferring wealth, helping a family member, or planning your estate, understanding the tax implications can help you avoid unexpected costs, penalties, and compliance issues.
Here’s what you need to know.
Before anything else, it’s important to distinguish between the two.
Money or assets given during your lifetime
Money or assets received after someone passes away
These are taxed differently—and misunderstanding that difference is one of the most common mistakes.
In the U.S., gifts can be subject to federal gift tax—but not always.
You can give up to a certain amount each year without triggering tax reporting requirements.
Larger gifts may count toward your lifetime exemption before taxes apply.
Most people don’t actually pay gift tax—but they may still need to report it correctly.
Here’s where many people get confused:
There is no federal inheritance tax.
However:
Where you live—and where the estate is located—matters.
Ignoring tax implications can lead to:
Large transfers may trigger reporting requirements or future liabilities
Failing to file required forms can result in fines
Poor planning can reduce the value of what’s transferred
If business ownership or assets are involved, tax exposure increases significantly
Things become more complicated when:
These scenarios often require more than basic tax knowledge.
This is where your angle becomes powerful:
While gifts and inheritances are typically associated with income or estate taxes, they can also create indirect tax exposure, especially when:
These events can trigger new sales tax obligations (nexus) without people realizing it.
Giving money or receiving an inheritance isn’t just a financial decision—it’s a tax decision.
Understanding the rules helps you:
If you’re dealing with business assets, multi-state operations, or anything beyond a simple transfer, it’s worth taking a closer look.
Book a strategy session here:
https://sales.tax/whats-next/
If you’re looking for Connecticut sales tax, here’s the quick answer:
👉 The statewide base rate in Connecticut is 6.35%.
But that’s not the full story.
Connecticut applies different rates to specific products and services, which is where many businesses—and buyers—get confused.
Let’s break it down.
👉 Unlike many states, Connecticut does not have local sales tax rates—everything is applied at the state level.
Use this simple formula:
Total Price=Item Price×(1+Tax Rate)
👉 Just adjust the rate depending on the product category.
Most tangible goods are taxable, including:
Connecticut also taxes many services, which is less common compared to other states.
Some key exemptions include:
👉 These exemptions can change, so classification matters.
Connecticut’s complexity comes from category-based rates, not local variation.
Common mistakes:
👉 Even small errors can create compliance issues over time.
You may be required to collect sales tax if you have nexus in Connecticut.
This can include:
👉 If you sell into Connecticut, it’s worth confirming your obligation.
Connecticut sales tax looks simple at first—but multiple rates and service taxation make it more complex than it appears.
If you’re selling products or services in the state, getting the details right matters.
Whether you’re dealing with multiple product categories or multi-state sales, it’s easy to miss something.
If you’re trying to calculate Michigan sales tax, here’s the quick answer:
👉 Michigan has a flat 6% sales tax rate statewide.
There are no additional local sales taxes.
That means calculating sales tax in Michigan is simpler than in most states.
To calculate sales tax, use this formula:
Total Price=Item Price×(1+0.06)
👉 Just multiply the item price by 1.06 to get the final total.
Unlike many states, Michigan keeps things simple:
👉 Compare that to states like California or Texas, where rates vary by city.
Most tangible personal property is subject to sales tax, including:
Some common exemptions include:
👉 Always verify exemptions based on your specific transaction.
Even with a flat rate, businesses still make errors:
👉 The rate is simple—but compliance isn’t always.
If you’re running a business, calculating tax is just one part of the equation.
You also need to consider:
👉 That’s where things get complicated fast.
If you’re selling into Michigan or multiple states, it’s worth making sure your setup is correct.
If you’re searching for Miami-Dade tax deed sales, you’re likely looking for one thing:
👉 How to find and buy properties through the county’s tax deed auction.
This guide gives you exactly that—no fluff, just what you need to understand how the process works, how to participate, and what to watch out for in 2026.
Miami-Dade tax deed sales happen when a property owner fails to pay property taxes.
After a certain period, the county can auction the property to recover unpaid taxes.
👉 These auctions are public and open to investors, businesses, and individuals.
Here’s a simple breakdown of the process:
A property owner fails to pay property taxes.
The county sells a tax certificate to investors.
If taxes remain unpaid, the certificate holder can apply for a tax deed sale.
The property is auctioned to the highest bidder.
👉 Auctions are typically conducted online, making it easy to participate from anywhere.
To participate, you’ll need to monitor official listings.
Look for:
👉 Most auctions are handled through the county’s official tax deed auction platform.
If you’re ready to take action, here’s what to do:
Create an account and verify your information.
Check location, condition, and any known issues.
This is critical:
Bidding is competitive and typically starts at the amount owed in taxes and fees.
Many investors look at these auctions because:
👉 But opportunity comes with risk (more on that below).
Tax deed sales are not the same as buying a home traditionally.
Key risks include:
👉 Skipping due diligence is the fastest way to lose money.
Here’s where many buyers overlook important details:
👉 This is where having a tax strategy matters—not just winning the auction.
Interest in tax deed sales is increasing, especially in markets like Miami-Dade.
That means:
👉 If you’re entering this space, being informed gives you an edge.
Miami-Dade tax deed sales can offer real opportunities—but only if you understand the process and the tax implications behind it.
The difference between a great deal and a costly mistake often comes down to preparation.
Winning a property is one thing—handling the tax side correctly is another.
👉 If you’re considering a purchase or already participating in tax deed sales, it’s worth making sure you understand your exposure.
Sales tax holidays are one of the most searched—and misunderstood—tax events every year.
In 2026, they’re bigger than ever. More states are participating, more categories are included, and more shoppers are actively searching for what qualifies.
But here’s the catch:
👉 Not everything is tax-free.
If you’re a business (or even a consumer trying to save money), understanding exactly what items qualify for sales tax holidays in 2026 can make a huge difference.
Let’s break it down.
While rules vary by state, most sales tax holidays fall into a few major categories.
This is the most common category across nearly every state.
Typical rules include:
What usually does NOT qualify:
👉 Example: States like Iowa, Oklahoma, and Connecticut all follow similar rules with price caps around $100
Back-to-school holidays are a major driver of traffic—and confusion.
Common qualifying items:
Typical price limits:
Some states go beyond basics and include tech.
Qualifying items may include:
Price caps are much higher here:
👉 Important: Not all states include electronics—this is where businesses often make mistakes.
Certain states offer “green” tax holidays.
Qualifying items:
Typical limits:
This is one of the biggest emerging categories this year.
States like Texas are expanding tax holidays to include emergency preparedness items.
Qualifying items may include:
But here’s where it gets tricky:
👉 Many items are explicitly excluded, such as:
👉 This is exactly where businesses get it wrong.
Even if an item qualifies, it must fall under a specific price threshold.
Examples:
If the price goes over?
👉 The item becomes partially or fully taxable depending on the state
Across most states, these items are commonly excluded:
Even within qualifying categories, exceptions are everywhere.
👉 Example: A backpack may qualify—but a designer handbag won’t.
Here’s the real issue:
👉 There is no universal rule.
Each state defines:
More than 20 states are running sales tax holidays in 2026, each with different rules
That means:
➡️ The same product could be tax-free in one state—and fully taxable in another.
If you sell across multiple states, this is where risk shows up.
The most common mistakes:
👉 And these errors don’t always show up immediately—they show up during audits.
Sales tax holidays in 2026 cover more items than ever:
But the details—price limits, exclusions, and state differences—are where things get complicated.
And that complexity is exactly why so many businesses get it wrong.
Sales tax holidays might only last a few days—but the compliance impact can last much longer.
👉 If you’re unsure whether your systems are applying the right tax rules across states, it’s worth taking a closer look now.
Every year, sales tax holidays bring a surge of shoppers looking to save money.
And in 2026, they’re back—bigger, broader, and more confusing than ever.
States across the U.S. are expanding tax-free weekends to include everything from school supplies to emergency preparation items. On the surface, it sounds simple: don’t charge sales tax on certain products for a limited time.
But behind the scenes, it’s anything but simple.
For businesses, sales tax holidays are quickly becoming one of the most misunderstood—and risky—compliance events of the year.
A sales tax holiday is a limited-time period when specific items can be sold without charging sales tax.
Traditionally, these holidays focused on:
But in 2026, states are expanding the scope.
For example, Texas introduced an emergency preparation tax holiday, allowing tax-free purchases on items like generators and safety equipment.
👉 Sounds straightforward, right? Not exactly.
Here’s where most businesses get into trouble.
Not everything in a category qualifies—and small details matter.
For example:
Even worse, rules vary by state—and sometimes even by product type within the same category.
👉 The result: businesses either over-collect tax (bad for customers) or under-collect (risky for audits).
Sales tax holidays don’t exist in a vacuum.
Businesses also have to navigate:
In some cases, state sales tax may be waived—but local taxes may still apply.
If you sell through platforms, the platform may handle some tax collection—but not always consistently across jurisdictions.
How your product is categorized in your system determines whether tax is applied correctly.
👉 One mismatch in classification = incorrect tax collection.
This year isn’t just another round of tax-free weekends.
It reflects a bigger trend:
States are using targeted tax relief events while expanding overall tax enforcement elsewhere.
That means:
And for businesses operating in multiple states, the complexity multiplies quickly.
From what we’re seeing, the most common mistakes include:
These mistakes don’t always show up immediately—but they can surface later during audits or reconciliations.
If your business is impacted by sales tax holidays, a proactive approach makes all the difference.
Here’s what to focus on:
👉 The goal is simple: charge the right tax, at the right time, in every state.
Sales tax holidays might seem like a short-term event—but they can create long-term compliance issues if handled incorrectly.
And in 2026, with expanded categories and more complex rules, the margin for error is smaller than ever.
If you’re not 100% confident your sales tax setup can handle these changes, it’s worth taking a closer look now—before the next tax holiday hits.
If sales tax hasn’t been on your radar lately, 2026 is about to change that.
Across the U.S., states are quietly—but aggressively—rewriting the rules. What used to be exempt is now taxable. What used to be simple is now layered with complexity. And if your business sells across state lines, these changes aren’t optional—they affect you directly.
Let’s break down what’s happening and what it actually means for your business.
For years, sales tax mostly applied to physical goods. That’s no longer the case.
In 2026, states are expanding sales tax to include more:
This shift isn’t random. States are adapting to how modern businesses operate—and they’re looking for new ways to generate revenue.
The result?
👉 More businesses are now responsible for collecting sales tax, even if they never had to before.
One of the clearest examples comes from Ohio.
Starting in 2026, the state removed several long-standing sales tax exemptions, including those tied to:
This is a big deal because it shows exactly where things are heading.
States aren’t just tweaking rates—they’re redefining what’s taxable.
Ohio might be leading the conversation, but it’s far from alone.
Across the country, states are:
Some are even removing transaction thresholds entirely, meaning you could owe sales tax based on revenue alone.
At the same time, others are experimenting with new types of taxes, especially around:
👉 The common thread: sales tax is getting more complex everywhere.
Here’s something many businesses didn’t expect.
States are starting to rethink tax incentives for large-scale tech investments.
For example, Washington recently scaled back tax breaks for data centers—something that directly impacts companies investing in AI and cloud infrastructure.
That signals a broader shift:
👉 Even high-growth, innovation-driven industries are no longer “safe” from sales tax changes.
All of this might sound like background policy noise—but it has real consequences.
If your products or services fall into newly taxable categories, you could be responsible for collecting tax right now.
With changing thresholds, it takes less activity in a state to create a tax obligation.
Between rate changes, rule updates, and multi-state complexity, spreadsheets and basic tools won’t cut it anymore.
This isn’t just a “2026 trend.”
States are gradually shifting away from income-based taxes and putting more weight on sales tax.
Why?
Because it’s more stable, more predictable—and easier to enforce across digital and interstate commerce.
👉 That means businesses like yours are becoming a bigger part of how states generate revenue.
Ignoring these changes is risky. Waiting until something breaks is even riskier.
A better approach is to get clarity now:
If you’re unsure about any of those, it’s worth taking a closer look before it turns into a problem.
If 2026 is already changing the rules, the worst move is doing nothing.
👉 Take a few minutes to understand where you stand and what needs to change.
Book a quick strategy session here:
https://sales.tax/whats-next/
Most businesses assume their sales tax is “probably fine.”
Until something forces them to take a closer look.
In reality, many growing businesses are doing sales tax wrong — they just don’t realize it yet.
And in 2026, with increased enforcement and more complex rules, those mistakes are getting harder to ignore.
Here are five signs your business might have a sales tax problem — even if everything seems under control.
Tools like QuickBooks, Shopify, or tax automation platforms are helpful — but they don’t replace actual sales tax analysis.
Most software:
If your setup is wrong, software will just apply the wrong rules consistently.
This is one of the biggest red flags.
If you don’t know exactly where you have sales tax obligations, there’s a good chance you’re missing something.
Economic nexus rules mean you can owe tax in a state based on:
Most growing businesses trigger nexus in more states than they expect.
They assume sales tax only applies where they’re located — not where their customers are.
Selling on Amazon, Shopify, and other platforms adds complexity fast.
Marketplace facilitators may collect tax for some transactions — but not all.
If you’re selling through multiple channels, there’s a high chance of gaps in your compliance.
This is especially true if you assume marketplaces handle everything.
Sales tax rules change constantly.
New thresholds, updated taxability rules, and local changes happen every year — sometimes without much visibility.
If your setup hasn’t been reviewed recently, it’s likely outdated.
What worked in 2024 or 2025 may not be correct in 2026.
This is the most common pattern.
Many businesses only take sales tax seriously when:
By that point, your options are more limited — and more expensive.
If your business is growing, this applies to you.
The more you grow, the easier it is for sales tax issues to go unnoticed.
Sales tax mistakes aren’t always obvious.
Most businesses don’t realize there’s an issue until it becomes a liability.
And in 2026, with increased enforcement, those mistakes are being found faster.
This is exactly where most businesses need clarity.
At sales.tax, we help businesses identify hidden risks, fix compliance gaps, and stay protected as they grow.
👉 Schedule a free consultation today and find out where you actually stand.
Ohio just made a quiet but important change to its sales tax rules — and many businesses haven’t caught it yet.
As of January 1, 2026, key sales tax exemptions for telecommunications services and equipment have been repealed.
If your business operates a call center, uses telecom services heavily, or relies on direct marketing infrastructure, this change could directly impact your tax liability.
Here’s what changed — and what your business needs to do now.
Ohio eliminated certain sales tax exemptions that previously applied to:
These exemptions are no longer available starting January 1, 2026.
This means many businesses that previously paid little or no sales tax on these items may now be required to collect or pay it.
This change is especially relevant for:
If you’ve been relying on these exemptions, your cost structure may have changed overnight.
This is where things get more serious.
If your business continues operating under the assumption that these exemptions still apply, you may be:
States don’t always notify businesses directly when exemptions are removed.
That means the responsibility falls on you to adjust — even if the change wasn’t obvious.
At first glance, this might seem like a niche update.
But for affected businesses, it can significantly impact:
And because this is a targeted change, many businesses haven’t adjusted yet — which increases risk.
If you operate in Ohio and use telecom services, don’t wait to address this.
Start with these steps:
This is the kind of change that’s easy to miss — but costly to ignore.
Ohio’s repeal of telecom sales tax exemptions is a targeted change — but it has real consequences.
If your business relied on these exemptions, your compliance obligations have changed.
And if you don’t adjust, the risk doesn’t go away — it grows over time.
This is exactly where most businesses need clarity.
At sales.tax, we help businesses identify exposure, adjust to rule changes, and stay compliant across states.
👉 Let’s review your exposure and make sure this change doesn’t turn into a liability.
Sales tax isn’t just about rates anymore. In 2026, it’s about what’s getting taxed.
More states are expanding their sales tax rules to include products and services that were previously exempt — and many businesses don’t even realize it’s happening.
If you’re wondering what products are getting taxed in 2026, you’re not alone. And the answer might directly impact your business.
Here’s what’s changing — and what you need to watch closely.
This shift isn’t random. States are actively expanding their tax base.
Why? Because it’s one of the easiest ways to increase revenue without raising tax rates.
The result: more goods and services are becoming taxable.
While rules vary by state, there are clear trends in what’s being targeted.
Software delivered online — including SaaS platforms, subscriptions, and cloud tools — continues to be a major focus.
Some states treat SaaS as a taxable service, while others still exempt it. That inconsistency is where many businesses get caught.
Downloads and digital goods are increasingly taxable, including:
Even if these weren’t taxed before, that’s changing in many states.
Traditionally, services were often exempt from sales tax. That’s no longer a safe assumption.
States are expanding taxation to include certain service-based offerings — especially those tied to digital delivery.
If you sell a bundle (for example, software + support + training), the entire package may become taxable depending on how it’s structured.
This is one of the most overlooked risks in 2026.
The most common issue isn’t knowing the rules have changed.
It’s assuming your product is still treated the same way it was last year.
Sales taxability isn’t static. It changes — and often quietly.
What was non-taxable in 2024 or 2025 might be taxable in 2026.
If your business fits into any of these categories, you should take a closer look:
The more modern your business model, the more likely you’re affected.
If you’re unsure whether your products are taxable, now is the time to review.
Start with:
Most businesses don’t realize there’s an issue until they’re already exposed.
In 2026, the biggest sales tax changes aren’t always about rates.
They’re about what’s becoming taxable.
If your business sells digital, subscription-based, or bundled products, there’s a good chance the rules have shifted.
And assuming nothing has changed is where the risk begins.
That’s where most businesses get stuck.
At sales.tax, we help businesses understand product taxability, stay compliant across states, and avoid costly surprises.
👉 Schedule a free consultation today and get clarity before it turns into a liability.
Most businesses don’t think about sales tax audits—until they get the notice.
And by then, it’s usually too late to fix the problem.
In 2026, sales tax audits are increasing across the U.S. States are using better data, stricter enforcement, and more aggressive strategies to identify non-compliant businesses.
If you sell across state lines, there’s a growing chance your business could be on their radar.
This isn’t random. There are a few key reasons audits are on the rise.
In short: states can see more, and they’re acting on it.
If your business fits any of these categories, your audit risk is higher:
The bigger your footprint, the more visible you are.
Most audits don’t happen by chance. They’re triggered by specific signals.
If you exceed a state’s sales threshold (often $100,000), you’re expected to register and collect sales tax.
If you don’t, that gap is easy for states to detect.
Even if you’re registered, missing filings can trigger attention quickly.
States expect consistent reporting—even if you owe $0.
States compare your reported sales with third-party data like 1099-K forms and marketplace reports.
If the numbers don’t match, it raises a red flag.
Scaling businesses often trigger nexus in multiple states quickly—but don’t always keep up with compliance.
This gap is one of the most common audit entry points.
A sales tax audit typically involves a detailed review of your business activity over several years.
States may examine:
If issues are found, you may be responsible for:
For multi-state businesses, this can quickly turn into a six- or seven-figure liability.
The good news: most audit risk is preventable.
Start with these steps:
This is where most businesses go from reactive to proactive.
Sales tax audits aren’t new—but in 2026, they’re becoming more frequent and more targeted.
The biggest risk isn’t making a mistake.
It’s not realizing you have a problem until a state points it out.
That’s where most businesses get stuck.
At sales.tax, we help multi-state businesses identify exposure, fix compliance gaps, and stay protected as they grow.
👉 Schedule a free consultation today and get clarity before it turns into a liability.
“No sales tax” sounds simple. But for most businesses, it’s not.
While a handful of states don’t have statewide sales tax, that doesn’t mean your business is off the hook.
In 2026, sales tax rules are more complex than ever — and many businesses misunderstand what “no sales tax” actually means.
Here’s what you need to know before you assume you’re in the clear.
There are five states with no statewide sales tax:
At first glance, this seems straightforward. But there’s more to the story.
👉 For a deeper breakdown of each state and how they handle taxes, check out our full guide:
States with No Sales Tax
This is where many businesses get it wrong.
Even if a state doesn’t have sales tax, you may still have tax obligations.
Here’s why:
In other words, “no sales tax state” doesn’t mean your business avoids sales tax altogether.
The most common mistake is assuming your location determines your obligation.
Sales tax is usually based on where your customer is — not where your business is.
So even if you’re based in a state with no sales tax, you may still need to:
This is especially true for eCommerce, SaaS, and multi-state businesses.
If your business falls into any of these categories, this applies to you:
The more states you sell into, the more likely you have sales tax obligations somewhere.
If you’re relying on the idea of “no sales tax,” it’s time to take a closer look.
Start by:
Most businesses don’t have a tax problem — they have a visibility problem.
States without sales tax can be beneficial — but they don’t eliminate your compliance responsibilities.
In 2026, sales tax is driven by where you sell, not just where you’re based.
Assuming you’re exempt can lead to costly mistakes.
That’s where most businesses get stuck.
At sales.tax, we help multi-state businesses understand their obligations, stay compliant, and avoid costly surprises.
👉 Schedule a free consultation today and get clarity before it turns into a liability.
If you sell on Amazon, Shopify, or any marketplace, you probably assume sales tax is handled for you.
That assumption is where many businesses get into trouble.
Marketplace sales tax rules in 2026 are more complex than they look, and enforcement is increasing across multiple states.
While marketplace facilitator laws cover a large portion of transactions, they don’t cover everything — and the gaps are where businesses get exposed.
Marketplace facilitator laws require platforms like Amazon, Walmart, and others to collect and remit sales tax on behalf of sellers for transactions that happen on their platform.
Sounds simple, right? Not exactly.
These laws vary by state, and more importantly, they don’t always apply to:
This is where most businesses get caught off guard.
States are not necessarily rewriting marketplace laws — they’re enforcing them more aggressively.
Here’s what we’re seeing:
In other words: states are closing the gap between what businesses assume and what the law actually requires.
This is the most common (and expensive) misunderstanding.
Marketplace facilitators only handle tax for transactions that happen on their platform.
If you also sell:
You may still have sales tax obligations in multiple states.
And yes — that includes registering, collecting, filing, and remitting tax yourself.
If your business falls into any of these categories, this applies to you:
The more channels you sell through, the higher the risk of gaps in compliance.
After the Wayfair decision, states gained the ability to enforce sales tax based on economic activity — not just physical presence.
Now, with marketplace data and reporting tools improving, states have better visibility than ever into:
This is why enforcement is increasing in 2026.
If you rely on marketplaces, this isn’t something to ignore.
At a minimum, you should:
Most businesses don’t have a visibility problem — they have a clarity problem.
Marketplace facilitator laws simplified sales tax — but they didn’t eliminate your responsibility.
In 2026, the risk isn’t misunderstanding the rules.
It’s assuming they don’t apply to you.
If you’re selling across multiple channels, there’s a good chance you have obligations you’re not fully accounting for.
That’s where most businesses get stuck.
Our team works exclusively with multi-state businesses to identify exposure, clean up compliance, and keep you protected as you grow.
👉 Talk to a sales tax specialist today and get clarity before it turns into a liability.
You built a business past the $10 million mark. You have a finance team, probably an accountant or a CFO, and systems in place for most things. Sales tax, though? For many high-revenue businesses, it’s still being managed like a startup problem — reactively, manually, or not at all.
That’s a costly mistake. At your scale, sales tax isn’t an administrative nuisance. It’s a liability exposure that can run into six or seven figures if it’s not handled correctly. Here are the most common — and most expensive — mistakes we see from businesses at the $10M+ level.
QuickBooks, Xero, NetSuite — these tools are great at tracking transactions. They are not great at interpreting multi-state sales tax law. Most accounting platforms apply basic rate lookups, but they don’t account for product taxability rules, industry-specific exemptions, or the nuances of economic nexus thresholds in each state.
A $10M+ business selling across state lines needs more than a rate table. You need someone who understands the law, not just the software.
“We thought our ERP was handling sales tax automatically. It wasn’t — it was just applying the wrong rates consistently.” — CFO, $30M eCommerce Brand
Since the 2018 South Dakota v. Wayfair decision, physical presence is no longer the only trigger for sales tax obligations. Economic nexus rules mean that if you exceed a revenue or transaction threshold in a state — typically $100,000 in sales or 200 transactions — you’re required to collect and remit sales tax there, even if you’ve never set foot in that state.
Most $10M+ businesses are operating in economic nexus in far more states than they realize. A nexus study is not optional at your scale — it’s the foundation of any compliant strategy.
States where businesses most commonly have unrecognized nexus include:
If you sell to other businesses, exemption certificates are a critical part of your compliance picture. The problem is that certificates expire, businesses change status, and states have different requirements for what a valid certificate looks like.
Many $10M+ companies collect a certificate once and never revisit it. During an audit, an expired or incomplete certificate is treated the same as no certificate at all — meaning you’re on the hook for the tax that should have been collected.
Managing exemption certificates at scale requires a system, not a spreadsheet.
By the time a state sends an audit notice, the window for proactive compliance has closed. Voluntary Disclosure Agreements (VDAs) allow businesses to come forward, register in states where they have back liability, and often negotiate reduced penalties and a limited lookback period — typically 3–4 years instead of the full statute of limitations.
Businesses that wait for the audit lose the ability to negotiate. They also face the full liability, interest, and penalties that come with it. At $10M+ in revenue, that exposure can be significant.
The best time to address back liability is before the state finds you. The second best time is right now.
Your general accountant or CPA firm handles a lot. Income tax, payroll, financial reporting — they’re covering a wide surface area. Sales tax, especially multi-state sales tax, is a specialized discipline that most general practitioners aren’t equipped to manage at depth.
The rules change constantly. States update thresholds, taxability determinations, and filing requirements on a rolling basis. A generalist can’t keep up with 45+ state tax codes the way a dedicated sales tax firm can.
At $10M+ in revenue, the cost of getting this wrong is too high to treat it as a side task for your existing accountant.
Sales tax compliance at scale is not complicated — but it is consequential. The businesses that get it right aren’t necessarily the ones with the biggest finance teams. They’re the ones that recognized early that multi-state sales tax requires dedicated expertise, and brought in the right people before a problem became a liability.
Ready to find out where your business actually stands?
Our team works exclusively with multi-state businesses to identify exposure, manage compliance, and keep you protected. Book a free call and talk to a sales tax specialist today.
Sales tax is expanding again, and this time it’s hitting services.
Washington State is moving forward with legislation that would expand how sales tax applies to services, a shift that could impact a wide range of businesses.
If you run a service-based business, this is the kind of change you don’t want to ignore.
Here’s what’s happening and what it could mean for your business.
Washington lawmakers are advancing legislation aimed at expanding and clarifying sales tax on services.
Historically, many services were not subject to sales tax. But that’s changing.
The proposed updates would broaden which services are considered taxable, bringing more business activities under sales tax rules.
While final details are still developing, the direction is clear: more services will likely become taxable.
This shift isn’t just happening in Washington. It’s part of a broader trend across the U.S.
States are expanding sales tax to services for a few key reasons:
In short, taxing services is becoming the next major step in sales tax evolution.
If the legislation moves forward, a wide range of service-based businesses could be impacted.
This may include:
Even businesses that have never dealt with sales tax before may now need to register, collect, and file.
Sales tax on services isn’t always straightforward.
Rules may depend on:
This creates complexity, especially for businesses operating across multiple states.
What’s taxable in one state may not be taxable in another.
If you provide services in Washington, now is the time to start preparing.
Consider taking these steps:
Planning ahead can help you avoid compliance issues if the rules change.
Washington’s move to expand sales tax to services reflects a larger national trend.
As the economy continues shifting toward services and digital offerings, more states are likely to follow.
If your business relies on services, sales tax may soon become part of your day-to-day operations.
Keeping up with changing sales tax rules across states can be overwhelming, especially as services become taxable.
At sales.tax, we help businesses understand their obligations, stay compliant, and avoid costly mistakes.
Schedule a free consultation today and make sure your business is covered.
Illinois just made a major change to its sales tax nexus rules, and many businesses don’t realize how much this impacts them.
Starting in 2026, Illinois removed its 200 transaction threshold, leaving only a $100,000 sales threshold to determine economic nexus.
If you sell into Illinois, this change could affect whether you’re required to collect and remit sales tax.
Here’s what changed, and what your business needs to do next.
Illinois simplified its economic nexus rules by removing the transaction-based threshold.
Before 2026, businesses had nexus in Illinois if they had:
Now, only one rule applies:
If your business exceeds $100,000 in sales into Illinois, you have economic nexus.
The number of transactions no longer matters.
This update may seem simple, but it has a big impact depending on how your business operates.
Businesses that previously exceeded 200 transactions but didn’t reach $100,000 in sales may no longer have nexus in Illinois.
This can reduce compliance requirements for certain eCommerce businesses.
If you sell high-value products or services, you may still reach the $100,000 threshold quickly, even with fewer transactions.
For these businesses, the change does not reduce compliance obligations.
While removing the transaction threshold simplifies the rule, businesses still need to carefully track revenue by state.
Monitoring when you cross the $100,000 threshold is critical to staying compliant.
Economic nexus is a rule that requires businesses to collect sales tax in a state based on their sales activity, even if they don’t have a physical presence there.
This concept became standard after the 2018 Supreme Court decision in South Dakota v. Wayfair.
Today, nearly every state uses economic nexus thresholds to determine tax obligations for remote sellers.
If you sell into Illinois, it’s important to review your sales activity under the updated rules.
Start by:
Even if this change reduces your obligations, it’s important to confirm your status and avoid potential compliance issues.
Illinois’ decision to remove the transaction threshold is part of a broader trend toward simplifying sales tax rules.
However, for businesses operating across multiple states, sales tax compliance is still complex and constantly evolving.
Understanding where you have nexus is the first step to staying compliant.
Keeping up with changing nexus rules across multiple states can get complicated fast.
At sales.tax, we help businesses understand where they have nexus, stay compliant, and avoid costly mistakes.
Schedule a free consultation today and make sure your business is covered.
Sales tax rules for SaaS and digital services are changing fast in 2026, and many businesses are getting caught off guard.
States across the U.S. are expanding how they tax software subscriptions, cloud platforms, and digital products, turning what used to be a gray area into a growing compliance risk.
If you sell SaaS or use cloud-based tools in your business, this isn't just a technical update. It can directly impact where you owe tax, how much you owe, and whether you're exposed to penalties.
Short answer: Yes, more states are taxing SaaS and digital services in 2026. But the rules vary widely by state, making compliance more complex for businesses selling across multiple jurisdictions.
Here's what's changing, why it's happening, and what your business should do next.
Traditionally, sales tax applied to physical goods. But as businesses shifted to software and cloud-based tools, states began asking a straightforward question: if software is essential to doing business, why isn't it taxed?
As a result, more states are now:
The challenge is that every state is approaching this differently, which creates significant complexity for businesses operating across state lines.
This shift isn't random. There are three core drivers behind the expansion of SaaS sales tax across the U.S.
Businesses are no longer purchasing physical software. They're paying for subscriptions, cloud storage, AI tools, and SaaS platforms. States are updating their tax rules to reflect how companies actually operate today.
Sales tax is one of the largest sources of income for state governments. As consumer and business spending has shifted away from physical goods toward digital services, states are working to capture that lost tax base. SaaS taxation is a direct response to that revenue gap.
Modern reporting tools and data-sharing between states now make it much easier for tax authorities to track remote sellers, analyze transaction data, and identify non-compliance. Stricter enforcement and more frequent audits are a direct result of these improved capabilities.
One of the most significant examples of local digital tax expansion is Chicago's cloud tax.
The city increased its Personal Property Lease Transaction Tax to 15% on:
Chicago also introduced a social media data tax, which charges companies based on the number of users located within city limits.
This means businesses are no longer just tracking revenue by state. They now need to track where their users are located down to the city level. It's a preview of where digital tax enforcement is headed nationwide.
There is no single federal rule for taxing SaaS in the United States. Each state sets its own policy, which means the same product can be taxed completely differently depending on where your customer is located.
Currently across U.S. states:
On top of that, taxability may depend on:
The result is that a SaaS company selling the exact same product to customers in different states may have completely different tax obligations in each one.
If you sell software or digital services, this shift directly affects your compliance obligations. Depending on where your customers are located, you may now need to:
Getting this wrong can result in audits, back taxes, and penalties that compound quickly, especially if the issue spans multiple years or states.
Most SaaS companies and digital businesses don't realize they have a sales tax exposure until they receive a notice or face an audit. The most common reasons businesses fall behind include:
This is one of the most significant hidden compliance risks in sales tax today, particularly for fast-growing SaaS businesses that have expanded their customer base across multiple states.
You don't need to overhaul your entire operation overnight, but you do need a clear plan. Start with these four steps:
Even small adjustments made now can prevent significant compliance issues later.
Sales tax is no longer limited to physical products. In 2026, it extends to software, subscriptions, digital services, and in some cases, user data.
As more states expand their digital tax rules, the businesses that stay ahead are the ones that treat sales tax compliance as an ongoing process, not a one-time checkbox.
If you sell SaaS or digital services, you are already part of the sales tax system. The question is whether your business is set up to handle it correctly.
Navigating SaaS and digital tax rules across multiple states and cities can get complicated fast, especially as the rules keep changing.
At sales.tax, we help SaaS companies and digital businesses stay compliant with evolving sales tax laws, from state-level SaaS taxation to local rules like Chicago's cloud tax.
Schedule a free consultation today and make sure your business is fully covered.
The Ohio sales tax holiday is one of the most anticipated tax-free shopping events of the year. Each year, the state temporarily suspends sales tax on certain purchases, giving consumers a chance to save money while encouraging retail spending.
For businesses, however, the tax holiday comes with important compliance rules. Retailers must know which items qualify, how to apply the exemption correctly, and how the rules apply to both in-store and online purchases.
Here’s what businesses and consumers need to know about the Ohio Sales Tax Holiday 2025.
The Ohio sales tax holiday is a temporary period during which certain items can be purchased without paying state or local sales tax. The program was designed to help families save money on back-to-school items and stimulate retail activity.
During the holiday period, qualifying purchases are exempt from both the Ohio state sales tax and applicable local sales taxes.
This means consumers can purchase eligible items without paying the typical combined tax rate.
While exact dates may vary slightly depending on state announcements, the Ohio tax-free weekend traditionally takes place in early August and runs for several days.
Retailers should monitor announcements from the Ohio Department of Taxation for the official 2025 dates and compliance guidance.
Once the holiday begins, the exemption applies automatically at checkout for qualifying items.
The Ohio sales tax holiday generally applies to specific categories of consumer goods commonly purchased for school or everyday use.
Common qualifying items include:
However, these items must fall below certain price thresholds to qualify for the exemption.
For example, individual clothing items must typically be priced below a set limit per item to be eligible.
Retailers should review official state guidelines to confirm current price thresholds and item eligibility.
Not every purchase qualifies during the Ohio tax holiday.
Examples of items that may not qualify include:
Additionally, services and digital goods may be subject to different tax rules depending on Ohio regulations.
Businesses should verify whether their products fall within the eligible categories before applying the exemption.
While the holiday benefits consumers, it also requires businesses to adjust their tax collection procedures.
Retailers must ensure their systems correctly remove sales tax for qualifying items during the tax holiday period.
Businesses should prepare by:
Failing to apply the exemption correctly can lead to over-collection or compliance issues.
Online retailers and remote sellers may also need to apply the exemption when shipping qualifying products to customers in Ohio.
If a business has sales tax nexus in Ohio, it is generally required to follow the same tax holiday rules as in-state retailers.
This means eligible purchases shipped to Ohio addresses during the tax holiday may qualify for the exemption.
Businesses selling through marketplaces should also confirm how their platform handles tax holiday adjustments.
For shoppers, the Ohio tax-free weekend offers a chance to save money on everyday purchases.
To maximize savings:
Because many retailers run additional promotions during this period, consumers may see even greater discounts combined with the tax exemption.
Yes. Several states offer similar tax-free shopping events throughout the year.
States that frequently host sales tax holidays include:
Each state sets its own rules, qualifying items, and price limits.
For businesses selling across multiple states, it’s important to track these holidays carefully to ensure proper tax compliance.
The Ohio Sales Tax Holiday 2025 provides an opportunity for consumers to save money and for retailers to boost sales. However, businesses must be prepared to apply the exemption correctly and ensure their systems reflect the temporary tax change.
Understanding the rules ahead of time can help retailers avoid compliance issues and make the most of the increased shopping activity during the tax-free period.
Managing sales tax across multiple states — especially during events like tax holidays — can quickly become complicated.
At sales.tax, our experts help businesses stay compliant with changing sales tax rules, local rate updates, and special exemptions.
Schedule a free consultation today to see how we can simplify your sales tax compliance.
The Wichita sales tax vote is drawing attention from businesses and consumers across Kansas. If approved, the measure could change the combined sales tax rate in Wichita and impact everything from retail pricing to tax compliance obligations.
Here’s what the vote is about — and what it means for you.
The Wichita sales tax vote asks residents to approve a local sales tax measure that would adjust the city’s current rate. Local sales tax initiatives are typically proposed to fund infrastructure projects, public safety improvements, economic development initiatives, or other city priorities.
Because Kansas is a destination-based sales tax state, any change to Wichita’s local rate directly affects businesses selling to customers located within city limits — including online sellers with Kansas nexus.
If passed, the measure would modify the combined sales tax rate, which includes:
Even a small percentage change can significantly impact retailers with high transaction volumes.
If voters approve the Wichita sales tax proposal, the change would typically take effect on a future implementation date set by the city and the Kansas Department of Revenue.
Businesses should watch for:
Sales tax rate changes often become effective at the beginning of a calendar quarter to simplify compliance.
Brick-and-mortar retailers in Wichita would need to:
Failure to update systems on time can result in under-collection (which the business may still owe) or over-collection (which may need to be refunded).
If your business has sales tax nexus in Kansas, you are required to collect the correct destination rate based on where the customer receives the product.
That means:
Even companies located outside Kansas may be affected if they exceed economic nexus thresholds.
Sales tax changes require more than just flipping a switch in your POS system. Businesses should:
Proactive compliance helps reduce audit risk and reporting errors
For consumers, a sales tax rate increase means slightly higher out-of-pocket costs on taxable purchases.
Examples of impact:
While the increase may seem small on individual transactions, it can add up over time — especially for households making frequent taxable purchases.
Whether you operate locally or sell into Wichita, preparation is key.
Action Steps:
Staying ahead of local tax changes helps prevent compliance issues and unexpected liabilities.
The Wichita sales tax vote is more than just a local issue — it directly affects retailers, online sellers, and consumers throughout the region. Because local tax rates can change quickly after voter approval, businesses should monitor developments and prepare early.
Staying proactive ensures accurate collection, smooth reporting, and reduced compliance risk in 2026 and beyond.
Chicago just raised its cloud tax to 15%.
Let’s break that down.
Starting January 1, Chicago’s Personal Property Lease Transaction Tax increased from 11% to 15% on:
If it’s hosted remotely and used by someone in Chicago, it may now be subject to a 15% city tax.
That’s higher than most state sales tax rates.
And this is not Illinois sales tax.
This is a Chicago municipal tax, administered by the Chicago Department of Finance.
Chicago applies its lease transaction tax to the right to use software remotely.
That means if your customer is located in Chicago and pays to access software in the cloud, the transaction may be taxable at 15%.
This is separate from rules administered by the Illinois Department of Revenue.
Two different authorities. Two different tax systems. One compliance headache.
Chicago also rolled out what’s widely considered the country’s first social media tax.
Here’s how it works:
If your platform collects consumer data from more than 100,000 Chicago users, you owe:
$0.50 per month for every user above that threshold.
Every month.
This means companies now have to:
You’re not just tracking revenue by state anymore.
You’re tracking users by municipality.
Welcome to municipal tax sourcing.
Most companies budget for:
Very few budget for:
This is where compliance gaps happen.
And at 15%, under-collection is not a rounding error.
This impacts:
If you have customers or users in Chicago, you need to evaluate exposure.
The biggest issue isn’t the rate.
It’s that most companies don’t know this exists.
Local digital taxes are growing. Cities are getting creative. And enforcement is increasing.
Sales tax compliance is no longer just state-by-state.
It’s state + city + platform thresholds + sourcing rules.
If you sell SaaS or operate a platform with Chicago users:
✔️ Review whether your service qualifies under the lease transaction tax
✔️ Confirm your billing system applies the 15% Chicago rate correctly
✔️ Evaluate whether you exceed the 100,000-user threshold
✔️ Document how you determine user location
✔️ Review registration and filing requirements with the city
This is the part of sales tax nobody budgets for — until it becomes a problem.
If you sell SaaS, AI tools, subscriptions, or operate a data-driven platform and aren’t sure whether Chicago’s 15% cloud tax or social media tax affects you, schedule a free consultation call with our team at sales.tax.
We’ll review your footprint, identify municipal exposure risks, and help you build a compliant strategy before this turns into a costly issue.
👉 Schedule your free call today and stay ahead of local digital tax complexity.
The Indiana Department of Revenue has announced that a new Indiana tax amnesty program will run from July 15, 2026 through September 15, 2026.
This limited-time program allows eligible taxpayers to resolve unpaid tax liabilities while receiving relief from penalties, interest, and certain enforcement actions.
If your business has outstanding Indiana sales tax or other state tax obligations, this could be a significant opportunity.
Under legislation enacted in 2025 (P.L. 213, H.B. 1001), the Department is required to establish a tax amnesty program for taxpayers with unpaid liabilities for tax periods ending before January 1, 2023.
Eligible taxes include those the Department is authorized to collect or administer — including:
If approved and paid in full (or under a written payment agreement), the Department will:
For businesses facing compounding sales tax penalties, this relief can be substantial.
The program applies to unpaid tax liabilities that were due and payable for tax periods ending before January 1, 2023.
Additional eligibility guidelines are currently pending under S.B. 243, which recently advanced through the Committee on Ways and Means.
The final version of S.B. 243 may clarify:
Businesses should monitor updates closely as the legislative process continues.
Sales tax liabilities often grow quickly due to:
An amnesty window provides a rare opportunity to reset compliance without long-term financial damage.
For businesses that have:
This may be the most cost-effective time to resolve the issue.
These programs are temporary and not guaranteed to repeat.
If your company operates in Indiana and has unresolved tax liabilities, now is the time to review:
Waiting until after the amnesty window closes could mean full penalties and enforcement resume.
If you're unsure whether your business qualifies for the Indiana tax amnesty program — or you want to evaluate outstanding sales tax exposure — schedule a free consultation call with our team at sales.tax.
We’ll review your situation, assess potential savings under the amnesty program, and help you determine the best compliance strategy before the July 2026 deadline.
👉 Don’t wait until enforcement resumes. Take advantage of the opportunity while it’s available.
Big update for anyone filing Nevada sales and use tax returns.
The Nevada Department of Taxation has officially changed the due date for sales and use tax returns. Starting with the January 2026 reporting period, returns will now be due on the 20th of the following month — not the last day of the month.
That means:
This change may sound small — but it has real compliance implications.
Previously, Nevada sales tax returns were due on the last day of the month following the reporting period.
Beginning in 2026, the due date moves to the 20th of the month, which is the standard sales tax filing deadline in most U.S. states.
In other words, Nevada is aligning its sales tax filing deadline with the national norm.
Due date changes are one of the most common reasons businesses accidentally file late.
If your accounting team, ERP system, or compliance calendar is still set to “last day of the month,” you now have a 10-day difference to account for.
Missing the new Nevada sales tax deadline could result in:
And as we know, sales tax penalties can add up quickly.
Nevada sales and use tax returns must be filed electronically through the My Nevada Tax system on the state’s Department of Taxation website.
If you have sales tax nexus in Nevada, you are required to:
If you're reviewing your Nevada sales tax compliance, here are a few helpful reminders:
Searches for “Nevada sales tax due date 2026” and “Nevada sales tax filing deadline” typically increase when changes like this occur — making this an important update for businesses and practitioners alike.
Sales tax rules don’t just change — they shift quietly, and missing a small update can quickly turn into penalties.
If you want help staying on top of Nevada sales tax deadlines, rate changes, and multi-state compliance requirements, schedule a free call with us here.
Whether you’re filing in one state or nationwide, having the right systems and guidance in place makes all the difference.
Don’t let a simple calendar change become a compliance issue — stay ahead with sales.tax.
Here are several important state-level sales tax changes businesses should be aware of in 2026:
Sales tax compliance is getting more complex every year. Between shifting deadlines, local rate updates, and evolving nexus rules, even small oversights can lead to penalties and audits.
If you’re unsure whether your business is fully compliant — or you simply want a second set of eyes on your multi-state sales tax strategy — schedule a free consultation call with our team at sales.tax.
We’ll review your current setup, identify potential risk areas, and help you build a clear plan for staying compliant in 2026 and beyond.
👉 Schedule your free call today and take the guesswork out of sales tax compliance.
Detroit may soon add a new local sales tax, and while it’s still a proposal, it’s already something businesses should keep an eye on.
City officials are exploring a 1% local sales tax that could apply to sales within Detroit. If approved, this would increase the total sales tax rate for transactions in the city and add new compliance considerations for sellers.
Here’s what’s being discussed and why it matters.
Detroit is considering a proposal that would:
This would be in addition to existing state and local taxes, not a replacement.
At this stage, it’s not law — but early awareness matters.
Even proposed changes can have real planning implications.
If the tax is approved:
Local taxes are often where compliance errors happen most.
Businesses with economic nexus in Michigan may be required to:
Selling remotely doesn’t automatically exempt you from local taxes.
Businesses would need to ensure:
Missing a local tax update can quickly lead to under-collection.
Even though the tax hasn’t passed yet, preparation is smart:
Being proactive makes implementation much easier if the tax is approved.
Detroit’s proposed 1% local sales tax isn’t final — but it’s a reminder that local sales taxes can change quickly and often with little notice.
For businesses, staying informed and having flexible tax systems in place is the best way to avoid last-minute compliance issues.
Sales tax rules continue to evolve as governments adapt to the rapid growth of digital commerce, SaaS, and cross-border online sales. In 2026, increased scrutiny of digital transactions and remote sellers is shaping how sales tax applies to online services and international platforms.
Businesses selling digital products or services should understand how these changes may affect tax collection, registration, and compliance requirements.
As ecommerce and digital services expand, tax authorities are focusing more closely on:
Many jurisdictions are updating sales tax rules to better align with how consumers purchase and consume digital services.
In the United States, sales tax treatment of SaaS and digital products varies by state. Some states classify SaaS as a taxable digital product, while others treat it as a non-taxable service. These classifications continue to change as tax laws modernize.
Businesses offering SaaS or digital platforms may be required to:
Governments are also increasing enforcement on foreign and international sellers providing digital goods or services to customers within their borders. This includes:
In many cases, physical presence is no longer required. Instead, economic nexus and digital sales thresholds determine whether a seller must register and collect sales tax.
Economic nexus laws allow states to require sales tax collection based on sales activity alone. For digital businesses, this means revenue from online sales may create tax obligations in multiple states — even without offices or employees.
Tracking where customers are located and how much revenue is generated in each state is essential for ongoing compliance.
👉 Not sure where your digital sales may create sales tax obligations?
Use our Nexus Calculator to evaluate where your business may be required to collect and remit sales tax:
🔗 https://sales.tax/resources/nexus-calculator/
Businesses involved in digital trade should:
Staying informed about sales tax and digital trade developments helps reduce compliance risk as regulations continue to evolve.
Last updated: 2025
Also effective January 1, 2026, Chicago quietly enacted a year-end rate increase to its Personal Property Lease Transaction Tax, raising the rate from 11% to 15%.
What it can affect:
The change is especially relevant for technology-driven businesses operating in or selling into Chicago. While the update did not come with much fanfare, it has a real impact on ongoing tax collection and filing obligations. Businesses subject to this tax should confirm they are applying the updated rate, and those who file the tax in Chicago should be aware of the change to avoid under-collection or compliance gaps moving forward.
he Maine sales tax portal, managed by Maine Revenue Services (MRS), is used by businesses to file sales and use tax returns, submit payments, and manage tax accounts online.
Businesses registered to collect sales tax in Maine must use the portal to stay compliant with state filing and payment requirements.
The portal allows businesses to:
The Maine sales tax portal applies to:
Filing frequency may be monthly, quarterly, or annual, depending on the business’s sales volume and registration status.
Maine enforces economic nexus rules for remote sellers. Businesses without a physical presence in the state may still be required to register, file returns, and remit sales tax based on their sales activity.
👉 Not sure if you’re required to file in Maine?
Use our Nexus Calculator to determine whether your business may have sales tax obligations in the state.
Last updated: 2025
ellers are responsible for validating exemption claims and maintaining proper records.
Key compliance steps for businesses:
Improper or missing exemption documentation can result in tax assessments, penalties, and interest. Regular reviews of exemption certificates help reduce compliance risk.
Not sure if your exemption process is compliant?
Schedule a “What’s Next” call here to review your sales tax exposure.
Texas maintains strict enforcement around sales and use tax, particularly for businesses operating across state lines. Many compliance issues stem from misunderstandings around use tax obligations.
Common areas where businesses get exposed:
Even when a seller fails to collect tax, the buyer may still owe use tax. Businesses should regularly review purchasing activity to avoid unexpected liabilities during audits.
Concerned about Texas sales or use tax exposure?
Schedule a “What’s Next” call to identify potential gaps:
Colorado quietly made a change that directly affects how retailers handle sales tax — and if you sell into the state, this is something you should be aware of.
Starting in 2026, Colorado eliminated the state sales tax vendor fee, which previously allowed businesses to keep a small percentage of the sales tax they collected as compensation for handling tax collection and filing.
Here’s what changed, why it matters, and what businesses should do next.
Under the old rules, Colorado retailers were allowed to keep a vendor fee as a small offset for the administrative work of collecting and remitting sales tax.
That’s no longer the case.
This doesn’t change how much tax customers pay — but it does change how much businesses keep.
At first glance, this may sound minor. In reality, it has real financial and operational impact.
That vendor fee helped offset:
With the fee gone, businesses are now absorbing 100% of the cost of sales tax compliance in Colorado.
If your accounting process still assumes a vendor fee:
This is especially important for high-volume sellers.
If you have economic nexus in Colorado, this change applies to you as well — even if you don’t have a physical presence in the state.
Remote sellers must still:
If you sell taxable products or services in Colorado, here’s your quick checklist:
While the change doesn’t increase tax rates, it does impact margins.
Colorado eliminating the sales tax vendor fee shifts more responsibility — and cost — onto businesses. While customers won’t notice a difference, retailers will.
As states continue tightenin
Effective January 1, 2026, California is introducing a new Battery-Embedded (CBE) Waste Recycling Fee that applies to certain products sold or leased for use in the state that contain non-removable, embedded batteries. The fee is set at 1.5% of the product’s retail price, capped at $15 per item, must be separately stated on invoices or receipts where required, and is paid by the customer at the time of purchase or lease.
What you need to do to remain compliant
As of January 1, 2026, Illinois simplified its economic nexus standard by eliminating the transaction count threshold. Remote sellers will no longer trigger sales tax nexus based on the number of transactions alone. Instead, nexus will be determined solely by annual gross sales into Illinois, aligning the state more closely with a revenue-based approach.
For growing businesses, this change reduces complexity—but it doesn’t eliminate risk. If your Illinois sales exceed the state’s dollar threshold, registration and ongoing compliance are still required. Now is a good time to revisit your nexus footprint, confirm where you’re exposed, and make sure your sales tax strategy keeps pace with your growth.