September's sales tax deadlines are approaching — and this month has more calendar quirks than usual.

September 20, 2026 falls on a Sunday. That shifts the standard monthly deadline for most states to Monday, September 22. But Texas shifts to September 21. And Florida's electronic payment requirement creates an even earlier effective deadline for electronic filers in that state.

For Q3 quarterly filers, September 30 closes the quarter. Returns won't be due until October 20 — but the decisions you make now about rate accuracy, nexus exposure, and exemption certificates determine whether your October return is clean or complicated.

Here's every deadline, every state-specific rule, and what quarterly filers should be doing right now.

The Standard September 22 Deadline

Most states with deadlines on the 20th of the month shift to the next business day when the 20th falls on a weekend. Because September 20 falls on a Sunday in 2026, the standard deadline for most monthly filers is Monday, September 22. TaxJar's September 2026 due dates guide confirms this applies across the majority of states.

States on the standard September 22 deadline include Alabama, Arizona, Arkansas, Colorado, Connecticut, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, 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, Utah, Virginia, West Virginia, Wisconsin, and Wyoming.

If you file in any of these states, September 22 is your date — with the exceptions covered below.

Texas: September 21 — Not September 22

Texas is the most commonly missed deadline this month — and the reason catches businesses off guard every time.

Texas shifts to the next business day after a weekend — which in September 2026 is Monday, September 21, not Tuesday September 22 like most other states.

According to the Texas Comptroller, a $50 penalty applies per late return immediately, plus 5% of any tax due if filed within 30 days of the deadline, or 10% if more than 30 days late. Put September 21 on your calendar specifically for Texas — not September 22.

Florida: Electronic Payment Must Be Initiated September 19

Florida is the state that generates the most avoidable late penalties — because of a rule most businesses don't know exists.

The Florida Department of Revenue requires that electronic payments be initiated the business day before the due date. The standard Florida monthly deadline is September 22 — but electronic filers must initiate their payment by Friday, September 19.

If you initiate your Florida electronic payment on September 22, it will be processed late. The penalty clock starts immediately — 10% of tax due for the first 30 days, increasing after that.

Put September 19 on your calendar as your Florida action date. File and initiate payment by end of business Friday, September 19.

The Non-Standard State Deadlines

Not every state uses September 22. Here are the states with different September deadlines.

Maine — September 15 — already passed. Maine is the only state with deadlines on the 15th of the month. If you file in Maine and haven't filed yet, penalties are already accruing at 1% per month up to 25% of tax due. File immediately.

Ohio — September 23. Ohio is the only state with deadlines on the 23rd of the month. Ohio monthly filers have until September 23 — one day after the standard deadline.

Washington — September 25. Washington has deadlines on or before the 25th of the month. Washington monthly filers have until September 25. Given that Washington processed 864 local rate changes on July 1, verify your August returns reflect the updated rates for every affected delivery address before filing.

Kansas, New Mexico, and Vermont — September 25. All three states have deadlines on the 25th or next business day. Monthly filers in these states have until September 25.

Massachusetts — September 30. Massachusetts has deadlines on or before the 30th of the month — the latest standard deadline of any state. Monthly filers in Massachusetts have until September 30. Note: if you had Massachusetts sales during the August 8-9 tax-free weekend, verify your system correctly exempted qualifying items under the $2,500 threshold before filing your August return.

California — September 30. California monthly filers have until September 30. Verify your August filings reflect any local rate changes that took effect in your delivery ZIP codes before submitting.

Alaska — September 30. Alaska has no statewide sales tax, but local jurisdictions collect their own. If you're registered in Alaskan localities, verify your specific due dates with each jurisdiction.

August's Back-to-School Holiday Transactions Hit September Returns

This month's filing period includes one of the most compliance-intensive weekends of the year — the August 7-9 multi-state holiday cluster. As Avalara's 2026 sales tax holidays guide details, the August 7-9 weekend involved simultaneous holidays across Iowa, Texas, Ohio, Missouri, Oklahoma, South Carolina, Virginia, and Illinois — plus Massachusetts starting August 8. Before you file your September returns, audit those transactions carefully.

Iowa: Two-day holiday only — Friday and Saturday. Verify Sunday August 9 transactions were taxed normally. Iowa's holiday closed at midnight Saturday.

Texas: Clothing, footwear, school supplies, and backpacks under $100 exempt August 7-9. Verify no tax was collected on qualifying items and that non-qualifying items were taxed normally.

Ohio: Traditional format only — clothing under $75, school supplies under $20. Verify your system didn't apply the expanded 2025 format. Ohio's expanded holiday was canceled for 2026.

Illinois: Reduced rate holiday — 1.25% state rate on qualifying clothing and footwear under $125 through August 16. Verify your August return shows the reduced state rate — not zero — on qualifying Illinois transactions. Local taxes continued at normal rates throughout.

Massachusetts: Full exemption on most items under $2,500 for personal use, August 8-9. Mandatory participation means any August Massachusetts return showing tax collected on qualifying items during those two days creates an over-collection liability.

South Carolina: No price caps on qualifying clothing, computers, and supplies. Verify your system didn't apply a $100 clothing cap to South Carolina transactions.

Getting these configurations wrong in your August transactions creates errors in your September returns that may trigger review. For a full breakdown of every state's holiday rules, visit our complete August 7-9 holiday compliance guide.

Indiana Tax Amnesty Closes September 9 — 8 Days Away

This is the most urgent compliance deadline happening this month — separate from regular filing obligations.

Indiana's Tax Amnesty 2026 closes September 9 — 8 days from today. The program waives all penalties, interest, and collection fees on pre-2024 Indiana liabilities for businesses that enroll and pay or establish a payment plan before that date. We covered every detail of the program — including the double penalty warning and the audited businesses exception — in our Indiana amnesty final warning article

If you have any pre-2024 Indiana sales tax liability — filed or unfiled — the September 9 deadline is more urgent than any filing deadline this month. After September 9, the amnesty closes permanently. The next Indiana amnesty, if historical patterns hold, won't come until 2036.

What Q3 Quarterly Filers Should Be Doing Right Now

If you file quarterly, your Q3 return isn't due until October 20. But September is the month to prepare — not October.

Your Q3 covers July 1 through September 30. Here's what to focus on in the next three weeks.

Review your July 1 rate change compliance. July 1 brought 1,340 sales tax changes across 20-plus states — including Illinois processing 202 local changes, Washington processing 864, Mecklenburg County jumping from 7.25% to 8.25%, Alabama's grocery tax returning, Colorado's retail delivery fee increasing to $0.31, and Nebraska repealing multiple exemptions. Avalara's July 2026 rate changes summary has the full breakdown. Verify your Q3 collections reflect the updated rates from July 1 onward — not the prior rates.

Check for new nexus states. If your sales crossed an economic nexus threshold in a new state during Q2, you may have had an unfiled Q2 obligation. Assess your Q2 filing accuracy before Q3 adds another period on top of any existing gap.

Renew expired exemption certificates. Any resale or exemption certificate that expired during Q2 or early Q3 needs to be renewed before you file your October return. Missing certificates are a primary audit trigger — particularly as states deploy AI-powered audit selection tools that specifically flag exemption certificate gaps.

Audit your back-to-school holiday configurations. Verify your August 7-9 holiday transactions are correctly categorized before those transactions roll into your Q3 return due October 20.

Monitor Washington D.C.'s October 1 rate change. Washington D.C.'s general sales tax rate increases from 6.5% to 7.0% on October 1, 2026 — the first day of Q4. If you sell taxable goods, digital products, or SaaS to D.C. customers, your Q4 rate needs to be updated before October 1. We covered every detail in our Washington D.C. rate change article.

The Zero Return Requirement

One of the most common compliance mistakes for businesses that expanded into new states: skipping returns in months with no taxable sales.

Registering in a state creates a filing obligation — permanently, until you formally close your account. A month with no taxable sales doesn't mean no filing requirement. It means a zero return is due on the same schedule as every other month.

If you registered in any new states in 2026 and had months with no taxable sales into those states, verify zero returns were filed on time. States with automated matching systems are increasingly flagging registered businesses that have gaps in their filing history — even zero-liability gaps.

The Penalty Stakes — September's Worst-Case Scenarios

Missing a September sales tax deadline costs more than the tax owed. Here's what's at stake in the states where penalties hit hardest.

Washington — 9% after the due date, 19% after the last day of the following month, up to 29% after the second month. The steepest penalty structure in the country.

California — 10% of tax due for late filing, with daily interest accruing. For high-volume California sellers, a missed September 30 deadline compounds quickly.

Texas — $50 per late return immediately, plus 5% of tax due within 30 days, 10% beyond 30 days. Missing the September 21 Texas deadline by even one day triggers the immediate $50 per-return penalty.

Illinois — 2% penalty on unpaid tax, plus 20% if the return isn't filed within 30 days of the due date.

New York — 10% for late filing, with additional penalties for businesses with a pattern of late filings.

Your September Compliance Checklist

Three weeks is enough time to handle everything — if you start today.

For monthly filers: Reconcile your August transaction data by jurisdiction. Audit your August 7-9 holiday transactions for correct exemption application. Initiate Florida's electronic payment by September 19. File Maine immediately if you missed September 15. Put Texas on September 21 — not September 22. Verify Washington, Kansas, New Mexico, and Vermont are calendared for September 25. Schedule Massachusetts and California for September 30.

For quarterly filers: Review Q3 July and August collections for rate accuracy against July 1 rate changes. Assess Indiana amnesty eligibility before September 9. Renew expired exemption certificates. Update your D.C. rate to 7% before October 1. Start preparing your Q3 return data now so October 20 isn't a scramble.

For all businesses: File zero returns on time for every registered state with no taxable sales. Verify your filing frequency hasn't been adjusted by a state without your noticing — states can change filing frequency as your revenue grows, sometimes without prominent notification.

Not sure whether your September filings are on track across all your registered states — or concerned that the July 1 rate changes or August holiday transactions created compliance gaps in your Q3 records? Book a free consultation with our team at sales.tax. We'll audit your filing calendar, verify your rate accuracy, and make sure nothing falls through the cracks before September 22.

It seems like it should be a simple question.

You sell something online. You charge the customer for shipping. Do you collect sales tax on that shipping charge?

The answer is: it depends. On the state. On how the shipping charge appears on your invoice. On whether the item being shipped is taxable. On who is doing the delivering. And in some cases, on whether the customer had the option to pick the item up instead.

There is no single federal rule for sales tax on shipping. Sales tax is administered at the state level, and each state writes its own definitions of what is taxable. As a result, the treatment of delivery, freight, and handling charges differs significantly from one state to the next. ca

31 states tax shipping on taxable orders. 14 states exempt it when separately stated. 5 states have no sales tax at all. FastTaxCalc

Here's the complete breakdown — and the invoicing decisions that can change your tax obligation without changing a single product.

The Four Factors That Determine Shipping Taxability

Before diving into state-by-state rules, understanding the factors that drive taxability helps you ask the right questions in any state.

Shipping taxability generally depends on several factors: the taxability of the item sold, the method of delivery, how the charge is presented on the invoice, and whether the customer had a real option to pick up the item instead of paying for delivery. Hands Off Sales Tax

Factor 1: Is the item being shipped taxable?
In most states, shipping follows the taxability of the product. If you're shipping a taxable item, the shipping charge is likely taxable. If you're shipping an exempt item — certain groceries, prescription drugs, or other exempt categories — the shipping is usually exempt too. This is the most important factor in most states.

Factor 2: Is the shipping charge separately stated on the invoice?
A separately stated shipping charge appears as its own line on the invoice. Some states exempt delivery only when it is separately stated. If the seller folds shipping into the item price, the entire price is usually taxed as the sale price. A single invoicing decision — whether to show shipping as a separate line or bundle it into the product price — changes the taxability outcome in more than a dozen states. Hands Off Sales Tax

Factor 3: Is it "shipping" or "shipping and handling"?
When an invoice says "shipping and handling" as one combined charge, states that would normally exempt pure shipping may tax the whole bundled charge. Keeping shipping and handling as separate line items — when your platform allows it — can change your tax obligation in several states. Hands Off Sales Tax

Factor 4: Who is doing the delivering?
Charges for a company to deliver goods in its own vehicle are often taxed differently than charges for delivery by common carrier or private carrier. Shipping via USPS, UPS, or FedEx is treated differently from delivery in your own truck in states like Maine, Georgia, and others. If you operate your own delivery fleet, verify the specific rules for each state separately — the carrier-based rules in this guide may not apply. GoShippo

States Where Shipping Is Always Taxable on Taxable Items

These states tax shipping when the underlying item is taxable — regardless of whether the shipping charge is separately stated on the invoice.

The following states tax shipping costs when they are part of an order, regardless of whether the shipping charge is part of the price of the item or listed separately: Arkansas, Connecticut, District of Columbia, Georgia, Hawaii, Illinois, Indiana, Kansas, Kentucky, Michigan, Minnesota, Mississippi, Missouri, Nebraska, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Washington, West Virginia, and Wisconsin. Zamp

A few specific states worth calling out:

Texas: Texas Rule 3.303(a) applies sales tax to all transportation and delivery charges billed by the seller when a taxable item is sold, even if the shipping is separately stated. The Texas Comptroller gives this example: a $500 taxable sofa plus a separately stated $50 delivery fee is fully taxable, so the seller collects tax on $550. If the sofa sale is exempt, the $50 delivery is exempt too. RJM Sales Tax

New York: New York Tax Bulletin TB-ST-838 states that shipping or delivery charges are taxable if the product being delivered is taxable, including charges labeled transportation, handling, or postage. On mixed shipments, only the fairly allocated taxable portion is taxable — if not allocated, the whole charge is taxable. RJM Sales Tax

Hawaii: Hawaii is the only state that always taxes shipping, regardless of whether the item is taxable or not. In every other state, an exempt item creates an exempt shipping charge. In Hawaii, the general excise tax applies to virtually all business activity — including shipping — regardless of what's being shipped. Tranzesta

Illinois: Illinois taxes shipping costs when they are part of an order regardless of whether separately stated. Note that Illinois also has a new 10-day back-to-school holiday through August 16 with a reduced state rate — shipping on qualifying items during that window follows the reduced rate, not the standard rate. Zamp

Florida: Florida's treatment of shipping charges was clarified by the DOR in May 2026: delivery charges are taxable when they are part of the sale of taxable tangible personal property, regardless of whether they are separately stated on the invoice. This May 2026 clarification brought Florida in line with the "always taxable on taxable items" group — important for sellers who previously treated Florida shipping differently based on invoice presentation. FastTaxCalc

States Where Shipping Is Exempt If Separately Stated

These states give sellers a way out — if the shipping charge is listed as its own line item on the invoice, it can be exempt even when the item being shipped is taxable.

These states say shipping charges are not taxable if you show the charge separately from the item: California, Colorado, Idaho, Iowa, Louisiana, Maine, Maryland, Massachusetts, Nevada, Oklahoma, Utah, Virginia, Wisconsin, and Wyoming. Zamp

California: California only taxes shipping if it's not separately stated from the product price. If your California order shows shipping as a separate line, it's exempt. If shipping is bundled into the item price, it's taxable as part of the sale price. This is one of the most commonly misunderstood rules in the country — California businesses and sellers shipping to California frequently get this wrong. Salestaxsolutions

Colorado: Colorado exempts separately stated shipping charges — but note that Colorado's retail delivery fee (currently $0.31 per qualifying order) applies separately to taxable deliveries regardless of how shipping is billed. The retail delivery fee and the sales taxability of shipping are two distinct compliance questions in Colorado.

Louisiana: Louisiana exempts separately stated shipping when delivered by common carrier. Shipping in a seller-owned vehicle is treated differently — verify the specific rule for your delivery method.

Virginia: Separately stated shipping charges are generally exempt in Virginia. Combined "shipping and handling" charges are taxable. The separately stated rule applies to common carrier delivery — seller-vehicle delivery has different rules.

States With No Sales Tax — Shipping Is Never an Issue

Five states have no statewide sales tax at all. In these states, shipping taxability is moot for state purposes:

• Alaska (no state sales tax — but local taxes may apply in some jurisdictions)
• Delaware
• Montana
• New Hampshire
• Oregon

Note that Alaska's lack of a state sales tax doesn't mean all Alaskan purchases are tax-free — some local jurisdictions impose their own sales taxes, and each has its own rules about shipping charges.

The Mixed Order Problem — When Your Cart Has Both Taxable and Exempt Items

This is where shipping taxability gets genuinely complicated — and where most compliance errors happen on real orders.

If a cart contains taxable and exempt items, many states require sellers to allocate the delivery charge between taxable and exempt merchandise. A common method is to allocate by item price or item weight. If the seller cannot reasonably allocate, the full delivery charge may be treated as taxable. Hands Off Sales Tax

A practical example: A customer orders $50 of taxable clothing and $50 of exempt prescription medication in the same cart with a $10 shipping charge. In most states, $5 of that shipping charge is taxable (allocated to the taxable clothing) and $5 is exempt (allocated to the prescription). In a state where you can't reasonably allocate, the full $10 may be taxable.

A Texas order with $50 of taxable goods and $50 of exempt groceries with a $10 shipping charge would only tax $5 of that shipping — the taxable portion. FastTaxCalc

For ecommerce sellers using cart software, verify whether your platform handles proportional shipping allocation automatically. Most tax engines do — but not all of them do it correctly for every state's specific allocation rules.

The Handling Charge Trap

Many ecommerce sellers charge separately for shipping and handling — or bundle them into a single "shipping and handling" line item. The distinction matters more than most people realize.

Handling is not always treated like postage or carrier delivery. When an invoice says "shipping and handling" as one combined charge, states that would normally exempt pure shipping may tax the whole bundled charge. Hands Off Sales Tax

The practical solution: wherever your platform allows it, break out shipping and handling as separate line items. The shipping line can potentially be exempt in states with the separately stated rule. The handling line may be taxable as a service charge — but at least you've preserved the exemption on the shipping portion.

If your platform doesn't allow separate line items and defaults to "shipping and handling" as a combined charge, assume the full amount is taxable in states where handling is taxable and factor that into your compliance setup.

The Retail Delivery Fee — A Separate Issue

One more thing ecommerce sellers need to track alongside shipping taxability — but it's not the same thing.

Several states now impose retail delivery fees — flat per-order charges on deliveries of taxable goods. Colorado ($0.31 per order), Minnesota ($0.50 per order on orders over $100), and Vermont (proposed $0.30 per order) all require this fee regardless of how shipping is billed.

Even if a state technically exempts your shipping charge, the law may still require you to collect a retail delivery fee. The retail delivery fee is flat rate — it doesn't matter if the order is $100 or $10,000, the fee remains the same per transaction. Most states require this to be listed as a distinct line item on the invoice. TaxJar

Shipping taxability and retail delivery fees are separate compliance obligations. Getting shipping right doesn't eliminate your retail delivery fee obligation — and vice versa.

The Four Questions to Ask for Every State

When you're configuring sales tax on shipping for any specific state, here's the checklist:

1. Is the item being shipped taxable in this state?
If yes, shipping is almost certainly taxable in most states. If no, shipping is almost certainly exempt everywhere except Hawaii.

2. Is this state in the "always taxable" group or the "separately stated exemption" group?
Use the state lists above. If you're in the separately stated exemption group, make sure your invoice shows shipping as a distinct line item.

3. Am I bundling shipping and handling?
If yes, the combined charge is likely taxable in states that would otherwise exempt separately stated shipping. Split the charges if your platform allows it.

4. Does this state have a retail delivery fee?
If you're selling into Colorado or Minnesota, the retail delivery fee applies on top of your shipping taxability determination. Verify both obligations separately.

The Biggest Mistake Ecommerce Sellers Make

The misconception that shipping is always tax-free is widespread among online shoppers, and the opposite misconception — that it is always taxable — is equally common among sellers. Neither is correct. Numeral

The most common real-world error: sellers who configure their tax software once — assuming a uniform rule — and never revisit it as state laws change. Florida's May 2026 clarification changed how shipping on taxable items is treated in a state with one of the largest ecommerce markets in the country. Sellers who set up their Florida shipping taxability before that clarification may now be under-collecting.

Sales tax rules on shipping change. They change when states issue new guidance. They change when states join the Streamlined Sales Tax program. They change when new legislation passes. The setup that was correct in January 2026 may not be correct today — and the setup correct today may not be correct in January 2027.

Build a process for reviewing your shipping taxability settings at least annually — ideally quarterly, when most states push rate and rule updates. It's one of the most commonly misconfigured areas in ecommerce tax compliance, and it's one of the most commonly audited.

Not sure whether your current shipping tax configuration is correct for every state where you sell? Book a free consultation with our team at sales.tax. We'll review your invoice setup, your state-by-state shipping taxability, and identify where you may be over-collecting or under-collecting before an audit does it for you.

August 20 is 10 days away.

For monthly sales tax filers, that's the deadline to report and remit July's transactions in most states. For quarterly filers, Q3 is underway — and the decisions you make now about nexus, rate accuracy, and exemption certificates will determine whether your October return is clean or complicated.

Sales tax compliance rarely breaks because of a calculation error. It breaks because filing obligations quietly multiply across states. Monthly in one state. Quarterly in another. A non-standard deadline somewhere else. Miss one and penalties start compounding — even when the tax itself was calculated correctly. Sails

Here's every August deadline, every non-standard state, and everything quarterly filers should be doing right now.

The Standard August 20 Deadline — Who It Covers

Most states have due dates on the 20th of the month for monthly filers. August 20 falls on a Thursday in 2026 — a standard business day, no weekend shift needed. Salestaxes

The states on the standard August 20 deadline include Alabama, Arizona, Arkansas, Colorado, Connecticut, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, 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, August 20 is your date — with two important exceptions covered below.

Florida: The Electronic Payment Trap

Florida is the most commonly missed deadline for ecommerce businesses — and the reason is a rule most sellers don't know exists.

Florida is the exception for electronic payments, which must be initiated the business day before the 20th. Ceretax

That means Florida's effective deadline for electronic filers isn't August 20 — it's August 19. If you initiate your Florida payment on August 20, it's late. The penalty clock starts immediately.

This rule catches businesses off guard every month. If you file Florida electronically — which most businesses do — put August 19 on your calendar as the actual action date, not August 20.

Texas: August Sales Due September 21 — Not September 20

Texas monthly filers covering July transactions have their return due August 20 — standard. But here's what forward-planning businesses need to know for next month.

Texas's August sales tax return — covering August transactions — is due September 21, not September 20, because the 20th falls on a weekend in September. Salestaxsolutions

If you're Texas-registered and managing your own filing calendar, mark September 21 for your August return. Texas's comptroller does not automatically alert you to adjusted dates.

The Comptroller assesses a $50 penalty per late return immediately, plus 5% of any tax due if you file within 30 days of the deadline, or 10% if you are more than 30 days late. Salestaxsolutions

The Non-Standard State Deadlines

Not every state uses the 20th. Here's where August looks different:

Maine — August 15 (already passed).
Maine is the only state with deadlines on the 15th of the month. If you file in Maine and missed August 15, file immediately — penalties are already accruing at 1% per month up to 25% of tax due.

Ohio — August 23.
Ohio is the only state with deadlines on the 23rd of the month. Ohio monthly filers have until August 23 — three extra days over the standard deadline. Salestaxes

Washington — August 25.
Washington has deadlines on or before the 25th of the month. Washington monthly filers have until August 25. Given Washington's complex rate structure — 864 local rate changes hit July 1 — verify your July returns reflect the updated rates before filing.

Kansas, New Mexico, Vermont — August 25.
Kansas, New Mexico, and Vermont have deadlines on the 25th or the next business day. All three are due August 25 for monthly filers. Salestaxes

Massachusetts — August 30.
Massachusetts is the only state with deadlines on or before the 30th every month. Massachusetts monthly filers have until August 30 — the latest standard deadline of any state. Note: if you had Massachusetts sales during the August 8-9 tax-free weekend, verify your system correctly exempted qualifying items during that window before filing.

California — August 31.
California monthly filers have until August 31. California's combined rates vary significantly by jurisdiction — verify your July filings reflect any local rate changes that took effect July 1 in your delivery ZIP codes, including the Mecklenburg County-style changes in California jurisdictions.

Alaska — August 31.
Alaska has no statewide sales tax, but local jurisdictions collect their own — and many use month-end deadlines. If you're registered in Alaskan localities, verify your specific due dates.

The Back-to-School Holiday Wrinkle

August's filing period overlaps with one of the most compliance-intensive weekends of the year — the August 7-9 multi-state holiday cluster.

If you filed returns in Iowa, Texas, Ohio, Missouri, Oklahoma, South Carolina, Virginia, Illinois, or Massachusetts, your July return is straightforward. But your August return — due in September — will include the holiday weekend transactions.

Here's what that means for each state:

Iowa: Your August return covers August 7-8 holiday transactions. Those transactions need to show qualifying clothing and footwear as exempt — zero tax collected. Verify your system applied the exemption correctly before those transactions hit your September return.

Texas: August 7-9 holiday transactions are included in your August return due September 21. Qualifying clothing, footwear, school supplies, and backpacks under $100 should show as tax-exempt. Verify before filing.

Ohio: August 7-9 holiday transactions in your August return need to reflect the traditional format only — clothing under $75, supplies under $20. If your system was accidentally configured for the expanded format, audit your August transactions now before filing the return.

Illinois: August 7-16 holiday transactions show a reduced 1.25% state rate on qualifying items — not zero. Verify your August Illinois return correctly shows the reduced state rate with local taxes unchanged. This is the most technically complex of the holiday configurations to verify in post-period audit.

Massachusetts: August 8-9 holiday transactions should show most qualifying items under $2,500 as fully exempt. Mandatory participation means you were required to apply the exemption — any August Massachusetts return showing tax collected on qualifying items during those two days creates an over-collection liability.

What Quarterly Filers Should Be Doing Right Now

If you file quarterly rather than monthly, your Q3 return isn't due until October 20. But August is the month to get ahead of it — not to wait.

Quarterly filers are typically due January 20, April 20, July 20, and October 20. Your Q3 covers July 1 through September 30. Here's what to focus on now:

Review your July 1 rate change compliance. July 1 brought 1,340 sales tax changes across 20-plus states. Illinois processed 202 local rate changes. Washington processed 864. Mecklenburg County's rate jumped from 7.25% to 8.25%. Alabama's grocery tax suspension ended. Colorado's retail delivery fee increased. Nebraska repealed multiple exemptions. If any of these affected your delivery jurisdictions, verify your Q3 collections reflect the updated rates from July 1 onward — not the prior rates.

Assess new nexus states. If your sales crossed an economic nexus threshold in a new state during Q2 — which ended June 30 — you may have had a Q2 filing obligation you missed. Address historical exposure now before Q3 adds another period on top of it.

Check Indiana's tax amnesty window. Indiana's amnesty program runs July 15 through September 9 — covering pre-2024 liabilities with full penalty and interest waivers. If you have Indiana back-tax exposure, the amnesty window closes September 9. That's 30 days away.

Renew expired exemption certificates. Any resale or exemption certificate that expired during Q2 or early Q3 needs to be renewed before you file your October return. Missing certificates are a primary audit trigger — especially in states where AI-powered audit selection is now standard.

Monitor Connecticut's August 16-22 holiday. Connecticut's expanded tax-free week — with the new $300 threshold and backpacks added as a qualifying category — runs August 16-22. If you sell clothing or footwear into Connecticut, your Q3 return will include holiday-period transactions that need to be correctly configured as exempt.

The Zero Return Requirement — The Rule Most Businesses Forget

Even if you collected zero sales tax in a period, most states still require you to file a zero return. Skipping it triggers the same late penalties as if you owed money.

This is one of the most common compliance mistakes for businesses that expanded into new states and then had a slow month. Registering in a state creates a filing obligation — permanently, until you formally close your account. A month with no taxable sales doesn't mean no filing requirement. It means a zero return is due on the same schedule as every other month.

If you registered in any new states in Q1 or Q2 and had months with no taxable sales into those states, verify zero returns were filed on time. States with automated matching systems are increasingly flagging registered businesses that have gaps in their filing history — even zero-liability gaps.

The Penalty Stakes

Missing a sales tax due date can lead to a whole world of pain. Penalties and interest add up quickly and can dramatically cut into your profits. Worse, repeatedly missing a due date can trigger audits or damage your reputation with state tax agencies who'll flag you as a compliance risk. Ortholo

Here's what's at stake in the states where penalties hit hardest:

Washington — 9% after the due date, 19% after the last day of the following month, up to 29% after the second month. The steepest penalty structure in the country.

California — 10% of tax due for late filing, plus daily interest. For high-volume sellers, a missed California deadline is expensive fast.

Texas — $50 per late return immediately, plus 5% of tax due within 30 days, 10% beyond 30 days.

Illinois — 2% penalty on unpaid tax, plus 20% if the return isn't filed within 30 days.

New York — 10% for late filing, with additional penalties for repeat late filers.

Your August Compliance Checklist

Ten days is enough time to handle everything — if you start today.

For monthly filers: Reconcile your July transaction data by jurisdiction. Verify rate accuracy — especially for jurisdictions affected by July 1 rate changes. Confirm Florida's electronic payment initiates August 19, not August 20. File Maine immediately if you missed August 15.

For back-to-school holiday states: Audit your August 7-9 holiday transactions before September filings. Verify Illinois shows the reduced 1.25% state rate — not zero — on qualifying items. Confirm Massachusetts holiday exemptions were applied correctly.

For quarterly filers: Review Q3 July collections for rate accuracy. Assess Indiana amnesty eligibility before September 9. Check for expired exemption certificates. Monitor Connecticut's August 16-22 holiday for Q3 return accuracy.

For all businesses: File zero returns on time for every registered state with no taxable sales. Verify your filing frequency hasn't been changed by a state without your noticing — states can adjust filing frequency as your revenue grows, often without prominent notification.

Not sure whether your August filings are on track across all your registered states — or concerned that the July 1 rate changes created compliance gaps in your Q3 records? Book a free consultation with our team at sales.tax. We'll audit your filing calendar, verify your rate accuracy, and make sure nothing falls through the cracks before August 20.

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.

Why This Weekend Is Different From Every Other Holiday

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.

State-by-State: What You Need Configured by Thursday Night

Iowa — August 7-8 Only

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.

Texas — August 7-9

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 — August 7-9 — Traditional Format Only

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 — August 7-9

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 — August 7-9

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 — August 7-9

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 — August 7-9

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 — August 7-16 — Reduced Rate, Not Full Exemption

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 — August 8-9 — Broadest Holiday of the Weekend

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.

The Seven Things Every Multi-State Retailer Must Do Before Friday

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.

The Consequences of Getting It Wrong

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.

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.

How We Got Here — The Number That Changed Everything

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: The Moratorium That Broke the Dam

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.

Arizona: Three Years, Starting Today

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: Pause Starting Today

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.

Virginia: The Model Everyone Is Watching

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: The Biggest Domino Yet to Fall

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.

Utah: The Governor's Executive Order

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.

The Ballot Initiative Wildcard

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.

What This Means for Data Center Operators Nationally

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 National Pattern Is Now Unmistakable

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.

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.

Why June Is One of the Highest-Stakes Filing Months

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.

The June 22 Deadline — Who It Applies To

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.

The States That Don't Follow June 22

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

Quarterly Filers: What You Should Be Doing Right Now

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.

The Penalties for Missing June 22

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.

The One Mistake That Trips Up Expanding Businesses

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.

Your June 22 Checklist

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.

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.

Alabama: Grocery Tax Holiday Ends — 2% Rate Comes Back

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.

Illinois: Dozens of Local Rate Changes — The Biggest Wave of the Year

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: Local Rate Changes Across Cities and Special Districts

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.

Arkansas: Local Rate Changes Statewide

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: Local Rate Changes

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: Local Rate Changes

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: New Retail Delivery Fee Proposed for July 1

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: New Taxable Services Fully Active

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.

Utah: Home Cook Sales Tax Exemption Begins

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.

The Q2 Close — What Quarterly Filers Need to Know

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:

• Every rate change that took effect April 1 needs to be reflected in your Q2 return
• Every new nexus state you crossed into during Q2 may trigger a new filing obligation in July
• Every exemption certificate that expired during Q2 needs to be renewed before you file

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.

The Complete July 1 Checklist

Here's everything that needs to happen before the first transaction of July 1:

1. Alabama grocery sellers — revert to collecting 2% state rate on qualifying food
2. Illinois sellers — update all affected jurisdiction rates per IDOR bulletin; contact software vendor
3. Texas sellers — confirm Q3 2026 Texas rate tables are loaded in your tax software
4. Arkansas sellers — pull DFA July 1 bulletin; check annexation changes for your delivery addresses
5. North Carolina sellers — verify county rates through NCDOR rate notice
6. Oklahoma sellers — verify combined rates through OTC Q3 2026 tables
7. Vermont sellers — monitor HB 863 status; be ready to implement 30-cent delivery fee if it passes
8. Washington service providers — confirm transitional relief is expired; collect tax on all qualifying transactions from July 1
9. Utah home cooks — update POS to stop collecting state tax on qualifying food sales
10. All quarterly filers — begin Q2 close process now; identify new nexus states; renew expired exemption certificates

Why July 1 Matters More Than January 1 for Local Tax Changes

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.