Charleston County Is Asking Voters to Approve $4.25 Billion in Transportation Spending. It Failed Last Time. Here's Why This Attempt Is Different.

Charleston County has been here before.

In 2024, county leaders put a transportation sales tax referendum before voters. It failed by a nearly 2-to-1 margin — a resounding rejection driven largely by one controversial project: the Mark Clark Extension, a proposed highway connector that deeply divided the community.

On November 3, 2026, Charleston County gets a second chance. And this time, the county spent months rebuilding the proposal from the ground up.

The Charleston County Council voted on July 21 to approve the third and final reading of the 2026 Transportation Sales Tax program ordinance, finalizing ballot language to be placed before voters on November 3. As reported by Mass Transit Magazine, if approved by voters, the measure would continue the existing 2004 half-cent Transportation Sales Tax when the program completes collections, which is projected to occur in 2027.

The new program is expected to generate approximately $4.25 billion over 25 years.

What's Actually on the Ballot

The referendum will ask voters to extend a half-percent sales tax for up to 25 years in order to raise $4.25 billion for transportation, transit, and protection of undeveloped land.

The half-cent rate is the key framing of the entire campaign. As the Post and Courier explained, the proposed tax would replace an earlier one that will soon expire in 2027, leaving the local sales tax rate unchanged.

That's the political logic: voters aren't being asked to pay more. They're being asked to keep paying what they're already paying — with the revenue redirected from the expiring 2004 program to a new 25-year program with different priorities.

The final program approved by County Council allocates the $4.25 billion across three main categories:

$2.7 billion — 63.6% — to roadway infrastructure including intersection improvements, pavement management, and major road projects. The single largest proposed project is an overpass where a rail line crosses Rivers Avenue at Durant Avenue in North Charleston, estimated at $175.9 million.

Public transit upgrades — including improvements tied to a Berkeley-Charleston-Dorchester Council of Governments downtown route study, with $25 million specifically allocated to public transportation improvements.

Land preservation through the Greenbelt Program — protecting undeveloped land across the county from development pressure.

What Killed the 2024 Referendum — And Why This One Is Different

The 2024 transportation sales tax referendum didn't fail because Charleston County voters oppose infrastructure investment. It failed because of one project.

The Mark Clark Extension — a proposed highway connector that would have linked Interstate 526 to the James Island Connector — was deeply controversial. Opponents argued it would accelerate suburban sprawl, destroy marshland, and benefit a narrow segment of the county while burdening everyone with the cost. The project's inclusion in the 2024 referendum package turned what might have been a straightforward infrastructure vote into a referendum on a divisive highway project.

The 2026 program does not involve the Mark Clark project. That single omission removes the primary driver of 2024's nearly 2-to-1 defeat.

But the county didn't just remove the controversial project and resubmit. It rebuilt the proposal from scratch with extensive community input. As Charleston City Paper reported, supporters hoped to create a blueprint that would satisfy enough people in enough parts of the county that the referendum would pass — and nearly 4,300 people filled out the county's brief survey, most leaving detailed comments.

The months-long public engagement process produced meaningful changes to the final program. The most significant: $75 million that had been allocated to Charleston's Battery Extension Project was split three ways — $25 million to North Charleston infrastructure priorities, $25 million to public transportation improvements, and $25 million to flood mitigation on Hagood Avenue. An additional $20 million was shifted to North Charleston priorities from other program areas.

The geographic redistribution addresses one of the persistent criticisms of Charleston County transportation spending: that it disproportionately benefits the wealthier, more established parts of the county while underserving North Charleston and rural areas. Whether that redistribution is sufficient to build the coalition needed for a majority yes vote remains the central political question heading into November.

The Ballot Language Fight — "May Include" vs. Certainty

There's a detail in the 2026 referendum that deserves specific attention — because the county council changed the ballot wording specifically to address it, and the change matters for how voters interpret their commitment.

At issue was whether the ballot question would say tax money would be used for transportation projects that "may include" the ones listed — or whether the wording would change to add more certainty about which projects would actually get funded.

Aiming to reassure voters by adding project certainty, the Charleston County Council changed the wording of the transportation sales tax referendum planned for the November ballot. The revised language gives voters more confidence that the specific projects listed in the program are genuinely committed — not a wishlist that could be revised by future county councils after the tax is approved.

This matters because one of the consistent criticisms of infrastructure sales tax referendums is that the project lists are non-binding. A county passes the tax with one set of promised projects, and subsequent administrations redirect the money. Strengthening the ballot language is an attempt to close that credibility gap — though it doesn't create a legal binding in the way a bond measure would.

The Track Record That Makes the Case

Charleston County has run transportation sales taxes before — twice — and the track record is real and visible.

Residents approved a higher sales tax in 2004 and in 2016. The 2004 program is the one expiring in 2027 — the one the new referendum would replace. Two decades of transportation investment funded by a half-cent sales tax means Charleston County residents can point to specific completed projects and ask whether they want that model to continue.

County Council Chairman Joe Boykin framed the vote in those terms: "It's a feeling of excitement, promise." His statement reflects the confidence of a county government that has delivered on two previous programs and is asking voters to authorize a third.

The argument against is equally straightforward: 25 years is a long commitment, $4.25 billion is a large number, and the county's growth trajectory means the traffic and infrastructure challenges in 2051 — when the program would end — may look nothing like what anyone can plan for today.

What This Means for Businesses in Charleston County

For businesses operating in Charleston County or selling to Charleston County customers, the compliance implications of November's vote depend entirely on the outcome — and on one specific detail that the referendum's "rate unchanged" framing makes easy to miss.

The existing 2004 half-cent Transportation Sales Tax is scheduled to expire in 2027. If the referendum fails, that half-cent goes away when the current program completes collections. Charleston County's combined sales tax rate would drop by 0.5 percentage points — a rate decrease that would require businesses to update their systems to collect less.

If the referendum passes, the current rate continues unchanged into a new 25-year program. No system update required. The half-cent that was already there stays there — just under new program authority.

For ecommerce sellers using address-level tax calculation for South Carolina deliveries, this is worth tracking: a failed referendum means a mid-2027 rate decrease in Charleston County that would need to be reflected in your tax software. A successful referendum means no change.

Charleston County's current combined sales tax rate is 9% in the city of Charleston — South Carolina's 6% state rate plus local additions including the existing transportation sales tax. That 9% combined rate is among the higher rates in the state.

November 3 — The Same Day as Virginia's 47 Referendums

November 3, 2026 is shaping up to be one of the most significant local sales tax election days in recent American history.

Charleston County's $4.25 billion transportation referendum is on the same ballot as the 47 Virginia jurisdictions voting on 1% school construction sales taxes. Together, those votes could reshape the sales tax landscape across two major East Coast states simultaneously — adding new local tax layers in Virginia while either preserving or eliminating an existing one in South Carolina.

For businesses that sell across multiple states in the Southeast — a region where Amazon fulfillment centers, growing tech corridors, and e-commerce distribution networks have been expanding aggressively — November 3 is worth watching carefully. The combined rate changes that could result from these votes won't hit overnight, but they'll ripple through compliance systems in early 2027.

The Broader Pattern

We've covered local transportation and infrastructure sales tax votes all year — from Fargo's 73% approval of a 22-year extension, to LA County's Measure ER barely passing at 50.35%, to Contra Costa County's rejection at 41%, to Tahlequah, Oklahoma's straightforward renewal.

The pattern across all of them is consistent: voters respond positively to sales tax measures that have a visible track record, a specific and committed project list, a broad geographic distribution of benefits, and a clear answer to "what happens if this fails." Measures that lack any of those elements — or that get caught in controversy over a single project — face significantly higher headwinds.

Charleston County's 2026 referendum has three of those four elements working in its favor. The fourth — a specific and committed project list — is what the ballot language change was designed to address. Whether the combination is enough to overcome the 2024 defeat and build a majority coalition on November 3 is the question Charleston County voters will answer in 60 days.

Not sure how November's local sales tax referendums — in Charleston County, Virginia, or elsewhere — could affect your compliance obligations in early 2027? Book a free consultation with our team at sales.tax. We'll track the results and help you build a compliance plan that handles whatever November brings.

South Dakota Residents Are Fighting Back Against a New County Sales Tax. They Have Until September 24

South Dakota passed a law this year giving every county in the state a new power they've never had before.

For the first time under Senate Bill 96, signed into law during the 2026 legislative session, South Dakota counties can impose a 0.5% gross receipts tax — essentially a local sales tax — and use the revenue to provide property tax relief for owner-occupied homes.

Several counties moved quickly to adopt the new authority. Pennington and Meade counties were among the first. More followed. And now Clay County — a small college county in southeastern South Dakota, home to the University of South Dakota in Vermillion — has passed its own version, Ordinance No. 2026-05, over repeated public opposition.

The community is fighting back.

Residents have until 5 p.m. on September 24 — 20 days after the ordinance's second publication — to gather 428 signatures from registered Clay County voters. If they succeed, the ordinance gets referred to a public vote. If they don't, the tax takes effect January 1, 2027.

That deadline is 20 days away.

What Clay County Just Passed — And Why It's Controversial

The Clay County Commission voted 3-2 on August 25 in favor of the second reading of Ordinance No. 2026-05 — despite two consecutive weeks of public opposition from residents who showed up to speak against it.

The ordinance would impose a 0.5% county gross receipts tax — a tax that follows the same rules as South Dakota's state retail sales tax, except for the rate. As the South Dakota Department of Revenue's April 2026 Tax Guide for County Officials explains, the county gross receipts tax must follow all state sales tax rules except for the rate, and new county taxes may take effect only on January 1 or July 1.

Revenue from the tax would flow through the state and back to Clay County as a property tax credit for owner-occupied homes. The county commission framed it as historic property tax relief — shifting part of the tax burden from homeowners to a broader pool of consumers and businesses.

Opponents see it differently.

Caitlin Collier — a Vermillion attorney, former South Dakota state legislator, and one of the organizers of the referendum petition campaign — was direct in her criticism: "The Clay County Commission is enacting an ordinance, and it is bad. Ordinance 2026-05 is a sales tax. The 'gross receipts' tax covers more transactions and is especially hard on agribusinesses and general businesses. It will also hurt people near or below the poverty line as food and necessities costs continue to rise, even without more tax added on."

Collier also challenged the framing of the ordinance as property tax relief: "The state Legislature intended the law allowing this ordinance to help high-tourism South Dakota cities and regions to get more tax from tourists. In Clay County, it would intentionally give property tax credits to wealthy people with expensive homes first, then it might trickle down."

The Referendum Petition Process — How It Works in South Dakota

South Dakota law gives county residents the right to challenge a county ordinance through the referendum petition process. The mechanism is straightforward but the window is tight.

After an ordinance is adopted, it must be published as a legal notice twice in a local newspaper. The 20-day signature-gathering window begins after that second publication. In Clay County's case, the ordinance was published in the Vermillion Plain Talk on August 28 and September 4 — making the deadline 5 p.m. on September 24.

The petition campaign needs 428 signatures — representing 5% of the number of registered Clay County voters during the most recent general election in 2024, which was 8,555. That's the legal threshold for forcing a public vote.

There's a complication worth noting. The referendum petition campaign started over on the collection of signatures as a result of a misinterpretation of the law and an abundance of caution to protect signers who signed before September 4. Organizers restarted from zero after the second publication date to ensure the signatures would hold up to legal scrutiny.

As reported by Plaintalk.net, the campaign is now actively collecting signatures throughout Clay County with 20 days remaining.

If the 428 signatures are gathered and certified by the Clay County Auditor's office before 5 p.m. September 24, the ordinance gets referred to voters. If the ordinance itself was already scheduled to take effect September 24, the referendum petition filing would pause that implementation until voters weigh in.

If the signatures aren't gathered in time, Ordinance No. 2026-05 takes effect as written — and the 0.5% gross receipts tax begins collecting January 1, 2027.

The Broader South Dakota Picture — Clay County Isn't Alone

Clay County's fight is the most active resistance to the new county tax authority — but it's not the only county where the debate is playing out.

Codington County is already heading to a November 3 vote. As Northern Plains News reported, Codington County voters will decide November 3 whether to approve a 0.5% county sales and use tax intended to provide property tax relief after a citizen-led referendum petition put Ordinance 83 on the general election ballot. The Codington County Commission adopted the ordinance July 21.

Codington County's ballot language is direct: a yes vote would approve Ordinance 83 and allow the 0.5% sales and use tax to take effect on the date permitted by state law. A no vote would reject the ordinance.

Pennington County — home of Rapid City, South Dakota's second-largest city — and Meade County have already adopted the 0.5% tax. Other counties across the state are still deliberating.

The pattern is familiar. A new state law creates a new local tax authority. Some counties move immediately. Others wait and watch. And in some communities, residents push back hard enough to force a public vote.

What Senate Bill 96 Actually Created

Understanding the Clay County fight requires understanding the state law behind it — Senate Bill 96, passed during the 2026 legislative session and codified as SDCL 10-52B.

SB 96 gave South Dakota counties — for the first time — the authority to levy a local gross receipts tax of up to 0.5% and use the proceeds for property tax relief for owner-occupied homes. Previously, only South Dakota municipalities had meaningful local sales tax authority. Counties were largely dependent on state revenue sharing and property tax levies.

The property tax relief mechanism works through the state: tax revenue collected under the county ordinance flows to the South Dakota Department of Revenue, which then calculates a property tax credit for qualifying owner-occupied homes in the county. If the fund raises more than needed to offset 100% of county taxes on owner-occupied property, the remaining money provides an equal-percentage property tax credit on agricultural and non-agricultural property.

Supporters in the legislature framed SB 96 as a way to give counties — particularly those with significant tourism, retail, or commercial activity — a tool to shift part of the tax burden from residential property owners to a broader consumer base.

Critics argue that the "tourist tax" framing doesn't hold for inland agricultural counties like Clay County, where the vast majority of sales tax would be paid by local residents and area businesses — not tourists passing through.

What This Means for Businesses in Clay County and Affected South Dakota Counties

For businesses operating in Clay County specifically, the outcome of the September 24 petition deadline determines whether a compliance update is needed before year-end.

If the petition succeeds and the ordinance is referred to voters: no rate change on January 1, 2027. The vote will happen at a future date to be determined, and the tax cannot take effect until at least 90 days after the Department of Revenue is notified of voter approval — meaning the earliest possible implementation would be July 1, 2027 if voters approve in a spring election.

If the petition fails and the ordinance takes effect: businesses operating in Clay County need to update their systems for a 0.5% increase to the combined gross receipts tax rate effective January 1, 2027. The new rate must follow all state sales tax rules — meaning the same products taxable under South Dakota's state sales tax are taxable under the county tax, at the additional 0.5% rate.

For businesses across South Dakota more broadly: the SB 96 county tax authority is new, it's being adopted at different speeds by different counties, and the compliance picture for multi-location South Dakota businesses is becoming more complex. Counties where the tax has been adopted — Pennington, Meade, and potentially others — already have a different combined rate than those that haven't. Clay County's January 1, 2027 implementation date, if the petition fails, adds another jurisdiction to that patchwork.

South Dakota's state sales tax rate is currently 4.2% — a temporary reduction from 4.5% that is set to sunset in 2027 unless the legislature acts to extend it. The county gross receipts taxes being adopted under SB 96 add on top of whatever the state rate is at the time of collection.

The September 24 Deadline

Twenty days. 428 signatures.

Whether Clay County's residents can gather enough support to force a public vote before the September 24 deadline will determine whether the county joins Pennington and Meade in implementing the new tax on January 1 — or whether voters get the final say.

The organizers are well-credentialed — a former state legislator and a local attorney with experience in South Dakota election law. The legal restart of the signature campaign on September 4 suggests they're being careful about the process. Whether they can gather 428 signatures in 20 days in a county of roughly 14,000 people is an open question.

Businesses watching this story should note: even if the referendum is invoked and the ordinance is paused, the debate about whether Clay County should adopt the county sales tax doesn't end with a no vote. The commission could revisit the question in a future session. The state law authorizing it isn't going anywhere. And the property tax pressure driving the initial adoption — the same pressure driving similar decisions in counties across the state — doesn't disappear based on a referendum outcome.

Not sure how South Dakota's new county gross receipts tax authority affects your compliance obligations in Pennington, Meade, Codington, or potentially Clay County? Book a free consultation with our team at sales.tax. We'll review your South Dakota footprint and make sure your rates reflect every county-level change that has taken effect or is on the horizon.

47 Virginia Jurisdictions Are Voting on a 1% Sales Tax Increase in November. Is Your Business Ready?

Virginia just became one of the most important sales tax stories in the country heading into November.

Voters in 47 Virginia jurisdictions will weigh a 1% sales tax to fund school construction and modernization costs on November 3, 2026. In Northern Virginia, the revenue could also be used for transit funding. Early voting begins September 18.

That's 47 separate local sales tax referendums — all on the same ballot, all on the same day — each one capable of adding 1 percentage point to the combined sales tax rate in that jurisdiction overnight.

For businesses selling into Virginia, November 3 is a date worth circling.

How This Happened — The Budget Deal That Changed Everything

We covered Virginia's four-month budget crisis in detail earlier this year — the data center tax fight, the "data center diva" showdown, the near-shutdown. What most coverage missed was a provision buried in the final budget deal that is now reshaping Virginia's local tax landscape more dramatically than the data center fight ever did.

As part of Virginia's 2026-28 budget, the General Assembly approved legislation giving all Virginia cities and counties the authority to put a referendum on their November ballot to impose an additional 1% sales and use tax — provided the revenues are used only for school capital projects. Previously, only nine localities had been authorized to levy the additional sales tax through a separate General Assembly action in 2020.

As Cardinal News reported, lawmakers pushed to expand the authority for years but efforts either failed or were vetoed by former Republican Governor Glenn Youngkin, who cited concerns about adding to Virginians' tax burden.

With a Democratic-controlled General Assembly and Democratic Governor Abigail Spanberger in office, the expansion finally made it through — tucked into the budget that also created the new energy consumption tax on data centers. The result: a scramble across Virginia as county boards and city councils raced to place the referendum on November's ballot before the August 14 deadline.

What 47 Jurisdictions Means in Practice

More than 40 localities had approved a voter referendum for the additional 1% sales tax as of early August — and the final count reached 47 jurisdictions on the November ballot.

That's 35% of Virginia's municipal governments simultaneously asking voters to approve a new local sales tax layer — a number that has no precedent in Virginia history.

The 47 jurisdictions span the state geographically. In Northern Virginia, major jurisdictions including Fairfax County, Prince William County, and Arlington County are on the list. Chesterfield County — one of Virginia's largest suburban counties with over 400,000 residents — is asking voters whether the county should be authorized to levy a local general retail sales tax at a rate not to exceed one percent, the revenues of which shall be used solely for capital projects for the construction or renovation of public schools, which shall expire on July 22, 2046.

Chesterfield alone estimates the additional tax would generate $65 million to $70 million each year for qualifying public school construction and major renovation projects.

About 58% of Virginia's counties and cities are not seeking any change — some localities held back because they didn't need the authority right now, it didn't solve their capital or revenue problem, or they preferred to wait for a future year. But for the 47 that are on the ballot, November 3 is a decisive moment.

The Northern Virginia Transit Angle

In Northern Virginia specifically, the 1% school construction tax has an additional dimension. The revenue from the tax in Northern Virginia localities could also support transit funding — making it a dual-purpose measure in the state's most densely populated and commercially active region.

Northern Virginia's proximity to Washington D.C. — where the combined sales tax rate is going to 7% on October 1 — means that businesses operating across the D.C.-Virginia border are already tracking rate changes in both jurisdictions simultaneously. A successful 1% referendum in Fairfax County, Arlington, or Prince William would push those jurisdictions' combined rates meaningfully higher in an already complex multi-jurisdiction environment.

What Has Worked Before — The Track Record

The nine localities that already had authority to levy the school construction sales tax provide a concrete preview of what the new jurisdictions could expect.

Virginia localities have already raised $119 million for school construction through targeted sales taxes, according to Virginia Mercury's June 2026 reporting. Henry County has raised $28 million since voters approved their referendum in 2020. Pittsylvania County has raised $11.5 million since 2023.

Those numbers are why local leaders in the 47 new jurisdictions are pointing to the existing examples when making their case to voters. The money is real, the projects are visible, and the track record is short but concrete.

The arguments against are equally concrete. As the Daily Signal noted in its coverage, adding a 1% sales tax raises questions about transparency in school capital spending — and about whether visitors, commuters, and out-of-county shoppers should bear the cost of school construction for residents.

Powhatan County's Board of Supervisors framed the fairness argument directly: approval of the referendum would shift the burden of funding the school's facility needs from the county's residential property owners to a larger pool that includes visitors, commuters, and other non-Powhatan residents — and would provide a consistent funding stream for school capital projects.

The Virginia Beach Example — $100 Million on the Line

The scale of Virginia's school construction backlog is illustrated most dramatically by Virginia Beach — the state's most populous city.

The Virginia Board of Education recently approved $577 million in grants to schools across the commonwealth, with the average project cost at $16.98 million. Virginia Beach had the most expensive single project — $100 million to construct a new Princess Anne High School building, expected to be completed in 2028.

Virginia Beach is among the jurisdictions with a referendum on November's ballot. A successful vote there would generate significant new annual revenue specifically dedicated to projects like the Princess Anne rebuild — without requiring property tax increases or bond measures that would require supermajority approval.

What Businesses Selling Into Virginia Need to Know

This is where the story moves from politics to compliance — and where businesses need to start paying attention now, not after November 3.

The key facts for compliance planning:

If the referendums pass in a jurisdiction, the local governing body then has the authority to adopt an ordinance imposing the additional sales tax. The tax cannot be implemented immediately upon voter approval — the governing body must take action to formally adopt it. York County's referendum language is explicit: the tax would end after 20 years or when the debt used to finance school construction and renovation is paid off.

The timeline from voter approval to actual rate change will vary by jurisdiction. Some counties and cities that pass the referendum on November 3 may move quickly to adopt the ordinance and implement the tax as early as January 1, 2027. Others may take longer. The Virginia Department of Taxation will publish updated rate tables as each jurisdiction's new tax takes effect — which is the authoritative source for compliance purposes.

The practical implication: businesses selling into Virginia are potentially looking at up to 47 separate local rate changes across the state — spread over multiple effective dates in 2027 — depending on how quickly each jurisdiction moves from voter approval to ordinance adoption.

For ecommerce sellers using address-level tax calculation, this is a manageable update if you have a system that pulls from Virginia Tax's published rate tables. For businesses using manual rate tables or legacy systems that don't update automatically, each jurisdiction's change is a separate manual update requirement.

The November 3 Timeline for Businesses

Early voting begins September 18 — just two weeks away. The November 3 election date is when the results will be known. But results alone don't trigger rate changes — the subsequent ordinance adoption process in each jurisdiction does.

Here's how to think about the timeline:

September 18: Early voting begins across Virginia jurisdictions with referendums on the ballot.

November 3: Election Day. Results known for all 47 referendums the same night.

November through December: Governing bodies in jurisdictions that passed their referendums begin the ordinance adoption process.

January 1, 2027: The earliest realistic effective date for most jurisdictions that move quickly. Some may take until April 1 or July 1, 2027.

The practical preparation window: November 4 through December 31. If the referendums pass in jurisdictions where you have significant customer volume, that's your window to update your Virginia rate configurations before the new tax takes effect.

The Broader Virginia Tax Picture

November's referendum wave doesn't exist in isolation. Virginia's combined sales tax landscape has already been shifting in 2026.

The state budget that authorized these referendums also created the new energy consumption tax on data centers — $600 million per year — and included the local 1% school construction tax authority as part of the same legislative package. The data center energy tax took effect July 1. The school construction referendum wave votes November 3. And Washington D.C.'s rate goes to 7% on October 1 — adding complexity to the Northern Virginia market specifically.

For any business with significant Virginia sales — particularly in Northern Virginia where multiple overlapping jurisdictions may all pass the referendum simultaneously — 2026 is the year to ensure your Virginia compliance setup is current, flexible, and capable of handling multiple simultaneous local rate changes in early 2027.

Not sure how Virginia's November referendums could affect your sales tax rates — or want to make sure your system is ready to handle up to 47 potential Virginia rate changes in early 2027? Book a free consultation with our team at sales.tax. We'll review your Virginia footprint and help you build a compliance plan that handles whatever November brings.

Three Sales Tax Changes That Happened While You Were Focused on Back-to-School Season

August has been the busiest month of the year for sales tax holidays — Tennessee, Iowa, Texas, Ohio, Missouri, Oklahoma, South Carolina, Virginia, Illinois, Massachusetts, Connecticut, and Mississippi all ran back-to-school or Second Amendment weekends in the past few weeks.

While the holiday coverage dominated the conversation, three significant compliance changes happened quietly in the background that affect far more businesses than any holiday ever will.

Here's what you missed — and what you need to do about each one.

Change 1: Kentucky Just Eliminated Its 200-Transaction Nexus Threshold — Effective August 1

Kentucky House Bill 757 took effect on August 1, 2026, removing the state's 200-transaction economic nexus threshold for remote sellers and marketplace providers.

Before August 1, Kentucky required out-of-state sellers to register and collect sales tax once they crossed either $100,000 in gross receipts from Kentucky sales or 200 separate transactions with Kentucky customers in a calendar year. Either threshold was enough to trigger the obligation.

After August 1, only the revenue test applies. If you have under $100,000 in Kentucky sales, the state no longer cares how many individual orders you shipped there.

Kentucky joins a rapidly growing list of states that have dropped the transaction count: Illinois dropped it January 1, 2026. Utah dropped it July 1, 2025. North Dakota, California, Wisconsin, Wyoming, and more than a dozen others did it in prior years. As of today, roughly 28 of the 45 states that enforce economic nexus use revenue-only thresholds. Only 15 states plus Washington D.C. still pair the dollar test with a transaction count.

The direction of travel is clear: the 200-transaction threshold is a dying mechanism. But its death creates two separate compliance questions depending on your situation.

If your Kentucky sales exceed $100,000 annually — you have a nexus obligation whether you knew about the transaction threshold change or not. Your obligation under the old rules was the same as under the new rules. Nothing changes for you except simplicity.

If your Kentucky sales are below $100,000 but you previously triggered nexus solely because of transaction count — you no longer have a Kentucky nexus obligation under the revenue-only test. That means you may be able to deregister from Kentucky if revenue-only is your only remaining connection to the state. Before doing so, verify that you don't have physical nexus — an employee, inventory, a fulfillment partner, or regular in-state activity — that independently creates an obligation regardless of the economic nexus threshold.

One more detail: Kentucky also expanded its sales tax base as part of the same legislation. Data brokering services — companies that collect, buy, sell, or share consumer data — became subject to Kentucky's 6% sales tax on August 1. If your business sells data, licensing, or information-based services to Kentucky customers, review your taxability under the new expanded definition immediately.

Change 2: California and Colorado Are Taxing SaaS Starting January 1, 2027 — You Have 4 Months to Prepare

This is the most significant digital economy sales tax development since Washington's ESSB 5814 expanded to IT services and digital advertising in October 2025.

Two of the largest state economies in the country are moving in the same direction simultaneously.

Colorado enacted House Bill 26-1223, signed into law on June 4, 2026. California enacted Senate Bill 122, signed into law this summer. Both take effect January 1, 2027. Both fundamentally change how software is taxed.

Here's what's changing in each state:

In Colorado, the prior rule tied software taxability to delivery method — software transferred on physical media was taxable, while software accessed remotely or delivered electronically was generally not. House Bill 26-1223 eliminates that delivery-based distinction entirely. Starting January 1, 2027, Colorado's definition of taxable computer software expands to include software delivered by any means — including remote internet access, downloads, and cloud-based access. SaaS subscriptions, mobile apps, and cloud-based software tools that were previously exempt in Colorado become taxable at the state's 2.9% sales tax rate plus applicable local rates.

Two narrow exemptions survive in Colorado: custom software developed specifically for a single customer, and software governed by a negotiated license agreement — meaning a written contract individually bargained between parties and signed before the software is accessed. Standard click-through terms and nonnegotiable license agreements don't qualify for the negotiated agreement exemption. If your SaaS uses standard terms of service rather than individually negotiated contracts, assume your product is taxable in Colorado from January 1.

California has historically been one of a small minority of states that did not impose sales tax on electronically delivered prewritten software or SaaS. That changes on January 1, 2027. Under Senate Bill 122, California expands its definition of tangible personal property to include digital products — specifically prewritten computer software transferred on tangible media, transferred electronically, or accessed remotely. The practical effect: SaaS, cloud software subscriptions, and electronically delivered prewritten software all become subject to California's 7.25% base sales tax rate plus applicable local rates.

Custom software developed for a specific customer remains exempt in California. But off-the-shelf software — regardless of delivery method — is now in scope. For businesses selling standardized software products to California customers, this is a new compliance obligation that requires registration, rate configuration, and billing updates before January 1.

The combined market impact is enormous. California and Colorado together represent two of the most important technology and software markets in the country. Any business that sells SaaS, software subscriptions, or electronically delivered software and has customers in either state needs to start preparing now — not in December.

The four-month preparation checklist:

Review your product catalog for every software product sold to California or Colorado customers. Determine whether each product is prewritten — and therefore taxable in 2027 — or custom-developed for a specific buyer and therefore exempt. Verify California nexus — if you sell SaaS to California customers and your annual California revenue exceeds $500,000, you have economic nexus and a collection obligation beginning January 1. If you've been treating your SaaS as non-taxable and haven't registered in California, that registration needs to happen before year-end. Configure your billing system to add sales tax to SaaS invoices for California and Colorado customers from January 1. Update your customer contracts where applicable — particularly in Colorado, where a negotiated license agreement may preserve the exemption. Gather exemption certificates from any customers claiming a resale or manufacturing exemption. Review your Colorado home rule city exposure — many Colorado home rule jurisdictions such as Denver have their own separate sales tax rules that may or may not align with the state's new SaaS taxability rules.

The four months between now and January 1 sound like enough time. For software companies with large customer bases, complex product catalogs, and multi-entity legal structures, the compliance work is significant. Start now.

Change 3: South Dakota's Sales Tax Rate Cut Expires July 1, 2027 — 10 Months Away

This one requires no action today. But it's the kind of change that sneaks up on businesses that don't track it — and it's worth knowing about now rather than discovering it in June 2027.

In 2023, South Dakota temporarily reduced its state sales tax rate from 4.5% to 4.2% — a consumer-facing cut designed to provide relief during an inflationary period. That reduction has been in place for three years.

It expires July 1, 2027.

Unless South Dakota's legislature acts to extend or make permanent the 4.2% rate during the 2027 legislative session — which opens in January — South Dakota's state sales tax rate reverts to 4.5% on July 1, 2027.

South Dakota is notable in the sales tax world as the state whose Supreme Court case — South Dakota v. Wayfair in 2018 — fundamentally changed how economic nexus works across the country. The state's relatively straightforward sales tax structure — a flat 4.2% or 4.5% state rate, no income tax, simple nexus rules — makes it one of the cleaner compliance environments in the country. The rate change is a minor adjustment in isolation. But for businesses selling high volumes into South Dakota, a 0.3 percentage point rate increase on July 1, 2027 requires a system update and a pricing review.

Watch South Dakota's 2027 legislative session closely. If the rate cut extension becomes a political priority — as it did when it was first passed in 2023 — it may be renewed before June 30. If the legislature doesn't act, the reversion is automatic.

The Bigger Pattern All Three Changes Reflect

These three stories — Kentucky's nexus simplification, California and Colorado's SaaS expansion, South Dakota's rate sunset — aren't random. They reflect the same forces reshaping the sales tax landscape that the Tax Foundation's midyear report documented last week.

States are simplifying where complexity produces no revenue advantage. The 200-transaction threshold was a compliance burden for businesses and a minimal enforcement tool for states. Kentucky dropping it follows a consistent multi-year pattern of states concluding the transaction test isn't worth the complexity it creates.

States are expanding what they tax as the economy shifts toward digital services. California and Colorado taxing SaaS from January 2027 is the most significant expression of this in years — two of the largest consumer technology markets in the country bringing SaaS into the taxable column simultaneously. They won't be the last.

States that cut rates temporarily face pressure to make cuts permanent or let them expire. South Dakota's 2027 decision is a version of the same conversation happening in Tennessee over grocery taxes, in Alabama over grocery tax suspensions, and in every state where a temporary cut created a constituency for permanence.

All three changes require something from businesses — whether that's deregistering in Kentucky if transaction-volume was the only nexus trigger, preparing California and Colorado billing systems for January 2027, or monitoring South Dakota's legislative session next year. None of them are optional.

Not sure how Kentucky's threshold change affects your registration status — or whether your SaaS products will be taxable in California and Colorado starting January 1, 2027? Book a free consultation with our team at sales.tax. We'll review your nexus exposure, your product taxability, and your compliance setup across every state where these changes matter.

Texas Just Collected $4.6 Billion in Sales Tax in One Month — Again. Here's What the Numbers Tell Us.

Texas doesn't have an income tax.

It runs the second largest economy in the United States entirely on sales tax, oil revenue, and fees. And right now, the sales tax engine is running exceptionally hot.

Texas Comptroller Don Huffines reported on August 3 that state sales tax revenue totaled $4.6 billion in July 2026 — 10.1% more than in July 2025.

That's the second time in this fiscal year that Texas monthly sales tax collections grew by more than 10%. The last time it happened twice in one fiscal year was during the pandemic recovery boom of 2021.

"State sales tax collections grew by more than 10% for the second time this fiscal year, well above the rate of general price inflation," Huffines said. "Growth was strong in nearly all major sectors, with receipts from the retail trade sector growing at their fastest pace since the pandemic."

There's a new face delivering these numbers — and a new political agenda attached to them.

Meet Texas's New Comptroller

July's revenue report is the first major data release under Comptroller Don Huffines, who was sworn in on August 1 after winning the Republican primary earlier this year. Huffines, a former Dallas real estate developer and state senator, ran on a platform of aggressive property tax relief and fiscal conservatism.

His immediate reaction to the strong July numbers framed them in explicitly political terms: "The Texas economy is strong and continues to grow. The increased tax revenue to the state should also put the Legislature in position to deliver meaningful property tax relief during the next legislative session. Governor Greg Abbott has made this a priority, and I will work with him and all our state leaders to accomplish this goal."

That framing matters — strong sales tax collections give the legislature political cover to cut property taxes without reducing services. Every billion above forecast is a billion that can theoretically flow back to homeowners and businesses as property tax relief. Huffines's first act was to signal that's exactly what he plans to advocate for.

What's Driving the Growth

July's 10.1% growth didn't come from one sector. It came from virtually everywhere — which is what makes the number credible rather than a one-category spike.

Retail trade led the way — with receipts growing at their fastest pace since the pandemic. The specific categories driving retail strength: online general merchandisers, electronics and appliance stores, and general merchandise retailers. The back-to-school shopping season, which picked up pace in July ahead of the August 7-9 Texas sales tax holiday, contributed meaningfully to both online and in-store retail numbers.

Services were strong — up nearly 10% in the sector, reflecting continued consumer spending on experiences, dining, and personal services even as goods prices have remained elevated.

Business spending sectors held up. Manufacturing, wholesale trade, and construction all posted growth — signs that Texas's commercial and industrial economy is expanding alongside consumer activity. Construction in particular reflects continued growth in Texas's population centers, where residential and commercial development has shown no signs of slowing.

Mining was essentially flat — a reflection of oil price stability rather than decline, and a reminder that Texas's economy is far more diversified than its oil patch reputation suggests.

The 2026 Running Total

Put July in context alongside the prior months of 2026:

April: $4.7 billion (9.8% growth — strongest month of the year)
May: $4.5 billion (growth above inflation)
June: $4.2 billion (solid but the softest month of Q2)
July: $4.6 billion (10.1% growth — second double-digit month of the fiscal year)

Four consecutive months of strong growth, averaging well above the rate of general price inflation. The three-month rolling average through July is running at approximately 8% above the prior year — a sustained pace that is reshaping Texas's fiscal outlook.

For context: Texas's sales tax revenue for all of fiscal year 2025 was $49.06 billion — up 4% from fiscal year 2024. The first four months of fiscal year 2026 are running at more than double that growth rate. If the current trajectory holds, fiscal year 2026 will be among the strongest sales tax collection years in Texas history.

The Local Distribution Picture

State collections are only half the Texas sales tax story. A significant share of what Texas collects is distributed directly to local governments — cities, counties, transit systems, and special purpose districts.

For July's distribution — based on February sales — the Texas Comptroller sent $1.2 billion in local sales tax allocations, up 5.6% from July 2025.

For August's distribution — reflecting more recent sales activity — the numbers from the June local distribution were $1.3 billion, up from the prior year. The trend in local distributions mirrors the state trend: consistent, broad-based growth across the jurisdictions that depend on sales tax for roads, public safety, transit, and infrastructure.

The Tariff Warning — Embedded in Every Headline Number

We've been tracking this dynamic all year — and it applies here too.

A meaningful portion of Texas's sales tax growth in 2026 reflects tariff-inflated prices rather than genuine increases in economic activity. 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 — a 15% revenue increase with no change in consumer behavior.

New York's State Comptroller explicitly flagged this dynamic last week in releasing New York's midyear revenue data, noting that growth was driven "in part by higher prices for goods and services as a result of higher tariffs and global conflicts" and warning that the growth rate "may not last."

Huffines's statement didn't include that caveat. But the underlying dynamic is the same in Texas as in New York — some share of the 10.1% growth is price inflation rather than volume growth. When tariff levels normalize or prices plateau, year-over-year comparisons become harder and growth rates slow even if actual economic activity holds steady.

That doesn't make July's numbers bad. But it's context every business and policymaker should carry when looking at the headline.

What Texas's Numbers Mean for Businesses Selling Into the State

Texas's consistent revenue growth has a specific implication for out-of-state businesses: the state's economic environment is attracting more sellers, which means more businesses are approaching or crossing Texas's economic nexus threshold.

Texas's nexus threshold is $500,000 in annual Texas sales — significantly higher than most states' $100,000 threshold. That higher bar has historically given smaller sellers more runway before triggering a collection obligation.

But as Texas's economy grows and consumer spending expands, more businesses are approaching that $500,000 line for the first time. A business that was doing $350,000 in Texas sales last year may be on track for $450,000 this year — putting it within sight of the threshold for the first time.

Crossing the Texas nexus threshold without registering doesn't pause the obligation — it starts it, retroactively, from the moment the threshold was crossed. And Texas's $50 per-late-return penalty structure, combined with 5% to 10% of tax due in late penalties, adds up quickly on a large-state liability.

If your Texas sales are growing alongside the broader market, now is the time to verify where you stand relative to the $500,000 threshold — not after you've crossed it.

The Property Tax Angle That Shapes Everything

Huffines's property tax comment wasn't casual. It reflects a structural debate in Texas that directly affects how the state uses its sales tax revenue.

Texas relies on property taxes far more heavily than most states for funding local public services — particularly public schools. The state has been running a multi-year effort to reduce property tax burdens by using state revenue to buy down local school property taxes. The mechanism: when state revenue — primarily sales tax — runs ahead of forecast, the excess can be used to increase school finance formulas, which reduces the property tax levy local school districts need to impose.

Strong sales tax collections in 2026 make that trade more affordable. If Texas ends fiscal year 2026 with sales tax revenue materially above forecast — which the current trajectory suggests — the 2027 legislative session will have genuine fiscal room to deliver meaningful property tax reductions.

For businesses, the connection is direct: a Texas sales tax environment that generates consistently strong revenue may ultimately translate into lower property tax burdens at their Texas locations. The two taxes are linked in Texas's fiscal architecture in a way they aren't in most states.

The Back-to-School Holiday Factor in August's Numbers

One more thing worth noting for businesses tracking Texas's monthly trajectory.

August's revenue numbers — which will be reported by Huffines in early September — will include transactions from July that were remitted in August. They will also reflect the first wave of back-to-school shopping in late July as Texas families began their school-year purchases ahead of the August 7-9 holiday.

The August 7-9 Texas back-to-school holiday — covering clothing, footwear, school supplies, and backpacks under $100 — generated significant retail activity. The Comptroller's office estimated $142.5 million in expected savings during the holiday, implying the underlying transaction volume was substantial. Those holiday transactions — where the state waived the 6.25% tax — won't show up in revenue numbers, but the surrounding non-holiday purchases in the same shopping trips will.

August's revenue report in September will be the first clean post-holiday read on where Texas's sales tax trajectory is heading into Q4.

Selling into Texas and want to understand whether your current Texas revenue is approaching the $500,000 economic nexus threshold — or need help updating your Texas compliance setup to reflect July 1 local rate changes? Book a free consultation with our team at sales.tax. We'll review your Texas footprint and make sure your compliance is current before the next filing deadline.

Tahlequah, Oklahoma Is Voting Today on Two Sales Tax Propositions. Here's What's on the Ballot — And Why It's Framed as "No New Taxes

Tahlequah, Oklahoma is at the polls today.

Voters in the Cherokee Nation capital — a city of about 16,000 in eastern Oklahoma — are deciding two separate sales tax propositions that city leaders say would fund a 15-year pipeline of infrastructure projects and shore up day-to-day city operations.

Tahlequah voters will decide Tuesday, August 25, whether to approve two sales tax propositions that city leaders say would help fund future capital improvements and support the city's general operations. The first proposition would continue a 0.50% sales tax specifically for 12 capital improvement projects. The second would establish a 0.25% sales tax for the city's general fund.

The campaign slogan captures the city's core pitch: "No New Taxes."

What's Actually on the Ballot

Tahlequah's existing sales tax — a 0.75% levy approved as part of the 2013 bond program — is scheduled to expire in March 2028. Today's vote asks voters to decide what replaces it.

The city has split the replacement into two separate propositions:

Proposition 1 — 0.50% Capital Improvement Sales Tax, 15 years (expiring 2043)
A temporary half-cent tax dedicated to funding 12 specific capital improvement projects chosen through community surveys. If approved, the tax would take effect April 2028 — when the current tax expires — and run through 2043.

Proposition 2 — 0.25% General Fund Sales Tax, permanent
A quarter-cent tax dedicated to the city's general fund for day-to-day operations and essential services. This one has no expiration date.

Together, the two propositions replace the existing 0.75% with a new 0.75% — same total rate, different structure and purpose. That's the mathematical foundation of the "no new taxes" framing. Tahlequah residents would pay exactly what they pay today in city sales tax — the money just gets directed differently.

What the 12 Projects Are

The capital improvement tax has a specific list of projects attached to it — chosen through community surveys and approved by the City Council in May 2026. Mayor Suzanne Myers outlined the scope directly:

"From cemetery upgrades to senior citizen center upgrades to potentially a new fire station, to a new community center which would also house City Hall, an amphitheater that would be an absolute plus for this community."

The full project list includes improvements to the public library, city cemetery, Northeastern Health System facilities, Riverlinks Golf Course, Senior Citizens Center, fire stations, street and park lighting and safety, aquatic facilities, and animal shelter — plus trail expansion and a new amphitheater on Water Street and a new Community Event and Municipal Government Complex.

The projects reflect the age of Tahlequah's current infrastructure. The main fire station is 50 years old. The public library is half a century old and consistently overcrowded. The firefighter quarters need to be expanded to accommodate both male and female firefighters. Fire Chief Whittmore was direct about the need: "A new station would be helpful. Things have changed, science has changed, the apparatus has changed, the technology. So we're changing everything about the fire service."

The General Fund Side

The 0.25% permanent general fund tax is the less glamorous of the two propositions — and potentially the more politically fraught. Capital improvement taxes fund visible projects with specific start and end dates. General fund taxes fund operations — payroll, services, maintenance — with no expiration and no specific deliverables voters can point to.

City Administrator Taylor Tannehill framed the general fund tax in straightforward terms: a dedicated revenue source for essential city services and operations. A portion of the funding would specifically support the main fire station — the same 50-year-old facility that the capital improvement tax is also partially targeting.

The dual approach — using both a temporary capital tax and a permanent general fund tax to address the same facility from different angles — reflects a common municipal finance strategy: capital funds cover construction, operating funds cover staffing and maintenance.

Why Oklahoma Does So Many Local Sales Tax Votes

Tahlequah's vote today is one of several Oklahoma cities holding sales tax elections on August 25. Oklahoma's statewide structure makes local sales tax votes unusually common — and unusually specific.

Oklahoma cities and towns have limited options for raising revenue. There is no local income tax. Property taxes are constrained by state constitutional limits and are politically difficult to raise in most Oklahoma communities. Sales tax is the most accessible and politically viable lever available.

The result is a pattern we've seen all year: local governments across Oklahoma — from Salina in June to Tahlequah today — regularly putting sales tax measures before voters to fund specific needs. Each vote is usually framed around a specific project list, a specific expiration date, or a specific replacement for an existing tax. The "no new taxes" framing is particularly effective in Oklahoma's political culture, where tax increases face significant voter skepticism.

Tahlequah's Context — A Regional Hub Under Fiscal Pressure

Tahlequah is the county seat of Cherokee County and the capital of the Cherokee Nation — the largest federally recognized tribe in the United States by membership. The city serves as a regional hub for healthcare, education, and government services for a wide area of eastern Oklahoma.

That regional role creates infrastructure demands that exceed what a city of 16,000 would typically face. Northeastern Health System's Tahlequah campus serves patients from across the region. The Eastern Oklahoma Library System's Tahlequah branch serves a multi-county area. The city's parks, trails, and community facilities serve both residents and the broader Cherokee Nation membership.

The "quality of life" framing from Mayor Myers — an amphitheater in a natural setting, trail expansion, community event space — reflects Tahlequah's ambition to be a destination, not just a regional service center. Tourism and quality-of-life investment make sense for a city that draws visitors for Cherokee Nation cultural events, outdoor recreation, and Northeastern State University.

What the Vote Means for Businesses

For businesses operating in Tahlequah or selling to Tahlequah customers, today's vote has a specific and delayed compliance implication.

If both propositions pass, the current combined rate in Tahlequah stays exactly where it is — the new 0.75% city tax simply takes over from the expiring 0.75% in April 2028. No rate update needed in 2026. No system change required until 2028.

If only one proposition passes — say, Proposition 1 passes and Proposition 2 fails — Tahlequah's city rate drops by 0.25% when the current tax expires in March 2028, and the capital improvement tax starts at 0.50% in April 2028. That's a net rate decrease from the current structure.

If both propositions fail, the city loses its entire 0.75% city sales tax when the current program expires in March 2028. Tahlequah's combined rate drops by 0.75 percentage points — a meaningful decrease that ecommerce sellers and retailers would need to update systems for in early 2028.

The outcomes to monitor: results from today's vote, the April 2028 effective date, and the Oklahoma Tax Commission's quarterly rate update bulletin for Q2 2028 — which is when any changes would take effect.

The Broader Oklahoma Pattern Today

Tahlequah is one of several Oklahoma cities holding sales tax elections today. Across the state, Oklahoma communities are collectively deciding on a range of measures — from GO bonds for infrastructure to hotel tax increases to sales tax renewals and extensions.

Several cities are asking voters to extend half-cent sales taxes for storm siren upgrades and economic development. One city is asking voters to raise its hotel/motel tax from 8% to 12% — a 50% increase that would generate an estimated $700,000 annually for tourism-related projects. Another is considering a 9% lodging tax for short-term rental guests.

The volume and variety of tax measures on Oklahoma's August 25 ballot reflects a broader reality: local governments across the state are actively working to secure funding for aging infrastructure, public safety, and quality-of-life improvements before existing revenues expire. The sales tax — with its broad base, its accessibility to voters, and its flexibility in being targeted to specific purposes — is the primary tool they have to work with.

Whether Tahlequah's voters say yes today determines whether a 15-year infrastructure pipeline moves forward — or whether the city faces 2028 with significantly less revenue and a very different set of choices.

Results are expected tonight. Watch for the Oklahoma Election Board's reporting through the evening for Tahlequah's final numbers.

Operating a business in Tahlequah or Cherokee County and want to understand how today's vote affects your sales tax obligations going forward? Book a free consultation with our team at sales.tax. We'll track the result and make sure your compliance setup reflects whatever Tahlequah voters decide.

Chicago's Sales Tax Just Hit 10.5% - Second Highest in the Nation. Here's What Every Business Selling Into the Area Must Know.

As of August 1, Chicago has the second highest combined sales tax rate in the United States.

Chicago's combined sales tax reached 10.5% on August 1, 2026, as the Northern Illinois Transit Authority sales tax added an additional 0.25 percentage point to sales taxes across Cook, DuPage, Lake, Will, Kane, and McHenry counties. According to the Illinois Policy Institute, this brings Chicago's sales tax to the second-highest in the nation, following only Seattle. Porte Brown

But here's what most businesses don't realize: this isn't just a Chicago story.

The increase affects all of Chicago and five surrounding collar counties: DuPage, Kane, Lake, McHenry, and Will. That's a six-county region of nearly 8 million people — one of the largest metro areas in the country. Every retailer and ecommerce seller with customers anywhere in that footprint needs to have updated their systems two weeks ago. WGN Radio

If you haven't done it yet, this is your article.

What Actually Changed — The Full Story

The rate increase didn't come out of nowhere. It's the result of legislation that has been in the pipeline since late 2025.

Transit funding legislation signed by Governor JB Pritzker last December provided for the 0.25% increase to take effect on August 1 in Cook, DuPage, Kane, Lake, McHenry, and Will counties. The tax hike is projected to generate $478 million a year as part of the $1.5 billion in annual transit funding provided in Senate Bill 2111. Central Illinois Proud

The agency collecting the tax has a new name too. NITA — the Northern Illinois Transit Authority — was created by the Illinois General Assembly to replace the Regional Transportation Authority (RTA). The General Assembly passed PA 104-0457 during the 2025 Fall Veto Session. It was signed into law by Governor JB Pritzker on December 16, 2025. FOX 2

The revenue goes directly to the three major transit agencies serving the Chicago metro area — the Chicago Transit Authority (CTA), Metra commuter rail, and Pace suburban bus.

The Rates Are Different Depending on Where You Sell

This is the detail that's catching the most businesses off guard — and it's the most important compliance distinction in this entire change.

The new NITA occupation and use tax rate is 1.25% for general merchandise in Cook County and 1.50% for qualifying groceries, drugs, and medical appliances in Cook County. For businesses making sales from DuPage, Kane, Lake, McHenry, or Will County locations, the new NITA rate is 1.00% for general merchandise, qualifying groceries, and qualifying drugs and medical appliances. NFIB

In plain terms: Cook County and the five collar counties have different NITA rates. A business that sells from a Cook County location pays more than one selling from a DuPage or Will County location — even though both locations are in the NITA coverage area.

For businesses making sales from a Cook County location, the new NITA occupation and use tax rate is 1.25% for general merchandise and 1.50% for qualifying groceries, drugs, and medical appliances. For businesses making sales from DuPage, Kane, Lake, McHenry, or Will County locations, the new NITA rate is 1.00% for general merchandise, qualifying groceries, and qualifying drugs and medical appliances. The Black Chronicle

This rate difference matters enormously for ecommerce sellers using origin-based tax calculation — and for retailers with locations in multiple counties within the NITA footprint.

What the Combined Rates Look Like Now

Chicago's 10.5% combined rate is the most visible — and the most talked about. But the rate picture across the six-county NITA area is more nuanced.

Chicago sits at 10.5% because it layers the Illinois state rate, Cook County tax, Chicago home rule tax, and now the new 1.25% NITA rate on top of each other. That 10.5% applies to general merchandise purchases in the city proper.

In the collar counties, the combined rate is lower — but still meaningfully higher than it was on July 31. Naperville in DuPage County, Aurora in Kane County, Waukegan in Lake County, and Joliet in Will County all saw their combined rates increase by 0.25 percentage points on August 1.

According to the Daily Herald, the increase means consumers are paying $2.50 more on every $1,000 spent in the region on purchases as of August 1. CJBS Accounting Firm

For businesses, the compliance obligation tracks the delivery address — not the business's location. An ecommerce seller based in California shipping to a Naperville customer owes the Naperville combined rate, which now includes the new NITA component.

The Grocery and Drug Rate — A Separate Calculation

Illinois taxes groceries and drugs at a different rate than general merchandise — and the NITA increase applies differently to these categories too.

In Cook County, the NITA rate on qualifying groceries and qualifying drugs is 1.50% — higher than the 1.25% on general merchandise. In the five collar counties, the NITA rate on qualifying groceries and drugs is the same 1.00% as general merchandise.

For retailers selling food or pharmaceutical products in Cook County specifically, the blended rate on grocery transactions is now higher than it was on July 31 — and the increase is larger than the general merchandise bump.

This applies to many common types of sales, including general merchandise, qualifying groceries, qualifying drugs and medical appliances, titled or registered items, cannabis, and aviation fuel. Weiss CPA

Cannabis retailers in Cook County — already navigating one of the most complex tax environments in the country — have another rate component to incorporate into their calculations.

The Political Reaction — Collar Counties Are Not Happy

The transit funding rationale for the increase is straightforward: Chicago's CTA, Metra, and Pace all need capital investment and operating funding. Senate Bill 2111 provided that funding. The 0.25% sales tax across six counties was the revenue mechanism.

But the political reaction from suburban legislators has been sharp — particularly from representatives whose constituents use the transit system rarely or not at all.

State Rep. Steven Reick, R-Woodstock, said suburban taxpayers are bailing out the Chicago Transit Authority. "We're giving them a lifeline of money that we're not getting anything in return for," Reick said. Central Illinois Proud

In McHenry County, Reick said most regularly-scheduled Pace buses run empty. "If we could work out an intergovernmental agreement with Metra to keep rail service coming out here to McHenry County, I wouldn't have a problem if our county board put a referendum on the ballot to get us out of this thing completely," Reick said.

The border shopping effect is already being discussed. Reick noted that McHenry County is on the border with Wisconsin, suggesting people might make economic choices to drive up to Walworth, Wisconsin to buy gas and other items. Eccezion

This is the same dynamic we've covered all year — from Massachusetts residents crossing into New Hampshire to Indiana's gas tax suspension driving border decisions. When a combined rate hits 10.5%, the calculation for major purchases changes.

What Small Businesses Are Saying

Sara Plocker, owner of local boutique Sara Jane, said: "All we ever do is just keep raising the prices and raising the prices and raising the prices, and doing more, not cutting back on anything, or living within the lane that you should or what we can afford." WGN Radio

The frustration reflects a broader reality for Chicago-area small retailers. Illinois already has the highest average combined sales tax rate in the Midwest at 8.98% statewide. The City of Chicago has layered multiple additional local taxes on top of that — a home rule tax, a Chicago Simplified Municipal Tax, the new NITA rate, and various transaction-specific taxes on restaurants, parking, and hotels.

For retailers already operating on thin margins in one of the country's most competitive urban markets, a 0.25% increase may seem small in isolation. In context — stacked on top of years of incremental increases — it feels like one more weight on an already strained balance sheet.

The Second-Highest-in-the-Nation Context

Chicago's 10.5% combined rate makes it the second-highest sales tax rate in the nation, following only Seattle. Porte Brown

That comparison is worth sitting with. Seattle's high combined rate — driven by Washington State's lack of an income tax and significant local additions — has been a well-documented source of consumer behavior effects, border shopping, and business location decisions for years.

Chicago's rate is now in the same territory. At 10.5%, a consumer buying a $1,000 item in Chicago pays $105 in sales tax. The same item purchased online from an out-of-state seller without nexus in Illinois — while technically subject to use tax — may escape collection entirely if that seller hasn't registered.

The enforcement pressure to close that gap is growing. Illinois's AI-powered audit selection capabilities have improved significantly in 2026. The economic incentive for out-of-state sellers to avoid Illinois registration — which always existed — is now larger than ever. Both dynamics will intensify the compliance environment for registered sellers in the months ahead.

What Ecommerce Sellers Need to Know

The NITA increase is destination-based — it applies where the customer is, not where the seller is.

Whether you operate a storefront, sell online, or deliver products into these counties, reviewing your sales tax setup now can help you avoid collecting the wrong amount of tax and reduce potential compliance issues. Ymaws

For ecommerce sellers with Illinois economic nexus — $100,000 in annual Illinois sales — the August 1 rate change means every delivery to a Cook County, DuPage County, Kane County, Lake County, McHenry County, or Will County address now carries a higher rate than it did on July 31.

If your tax software updates automatically, verify the update happened correctly. If you manage rates manually, update your rate tables for all six affected counties immediately. If you use a marketplace facilitator that collects Illinois taxes on your behalf, verify the platform updated its rates for the affected jurisdictions on August 1.

The Compliance Checklist — What To Do Right Now

Businesses should update their point-of-sale and accounting systems to make sure cash registers, point-of-sale software, accounting software, and any other systems used to calculate sales tax are updated to use the new tax rates beginning August 1, 2026. Continuing to use outdated rates could result in collecting the wrong amount of tax from customers. Illinoisstateauthority

The specific steps:

1. Identify every location and delivery address in the six-county NITA area. The affected counties are Cook, DuPage, Kane, Lake, McHenry, and Will. Any retail location or ecommerce delivery address in these counties needs the updated rate.

2. Apply the correct NITA rate for your county. Cook County businesses apply 1.25% for general merchandise and 1.50% for groceries and drugs. Collar county businesses apply 1.00% for all categories. These rates are not interchangeable.

3. Verify your software updated on August 1. If your business uses a third-party provider to calculate sales tax automatically, contact them to confirm they are aware of the changes and have updated accordingly. Don't assume — verify. Illinoisstateauthority

4. Use the MyTax Illinois Tax Rate Finder. You can look up your local tax rate using the MyTax Illinois Tax Rate Finder to confirm your updated combined sales tax rate for any specific address in the affected area. CJBS Accounting Firm

5. Review your August transactions. If you've been collecting the old rate since August 1, you've been under-collecting. Address the gap immediately — the liability sits with the retailer, not the customer, in most cases.

6. Update your Illinois NITA-period returns. When filing your August Illinois return — due September 22 because September 20 falls on a Sunday — make sure the new NITA rate is reflected in your reported collections for Cook County and collar county transactions separately.

The Broader Illinois Context

This rate change doesn't exist in isolation. August 2026 has been one of the most complex compliance months in Illinois history.

Illinois started August with the back-to-school holiday reducing the state rate on qualifying clothing and school supplies to 1.25% through August 16. Simultaneously, the NITA increase added 0.25% to six counties' base rates from August 1. And the Illinois budget passed June 1 included new taxes on social media, digital assets, fantasy sports, and crypto that are working their way through implementation.

For businesses operating in Illinois — particularly in the Chicago metro area — 2026 has required more active compliance monitoring than any recent year. The rate you were collecting in January is not the rate you should be collecting in August. And the rate you're collecting in August may not be the rate you'll collect in October when Washington D.C.'s 7% rate takes effect and other state-level changes roll through.

The compliance environment is not getting simpler. The businesses that stay ahead of it are the ones that build a process for monitoring rate changes rather than reacting to them after the fact.

Operating a business in the Chicago metro area or selling to customers in Cook County or the Illinois collar counties — and want to confirm your systems reflect the correct NITA rates for every affected jurisdiction? Book a free consultation with our team at sales.tax. We'll verify your Illinois compliance setup and make sure you're collecting the right amount before your next filing deadline.

Missouri Voters Just Killed the Biggest Sales Tax Expansion in State History - By a Landslide.

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.

What Missouri Voters Were Actually Deciding

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:

Required the legislature to phase out the individual state income tax over five years as state revenues grew
Authorized the expansion of sales and use taxes to whatever categories lawmakers chose — potentially including services, healthcare, and groceries that are currently exempt
Prevented Missouri from implementing income taxes in the future
Required local tax rate cuts if local sales tax revenue increased

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.

Why It Failed So Badly

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.

The REALTOR Factor — Who Funded the No Campaign

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.

Governor Kehoe Is Not Done

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.

What This Means for Missouri's Sales Tax Landscape

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.

The National Signal This Sends

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.

The Lawsuit That Tried to Stop It — And Almost Did

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%.

The Bottom Line for Missouri Businesses

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.

The Tax Foundation Just Released Its 2026 Midyear Sales Tax Rankings. Here's Where Every State Stands.

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 Highest Combined Rates in the Country

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.

The Five Lowest Combined Rates

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.

No State Changed Its Base Rate — But Local Changes Moved the Map

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 National Average — And What It Means

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.

The States to Watch for 2027

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.

What the Rankings Don't Tell You

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.

The South Dakota Sunset You Should Know About

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 Practical Takeaway for Businesses

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.

Charlotte Just Got Its First Sales Tax Increase in 28 Years. Here's What Every Business Selling Into Mecklenburg County Needs to Do Today.

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.

What Actually Changed — The Full Rate Breakdown

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:

North Carolina state rate: 4.75%
Mecklenburg County rate (existing): 2.00%
Transit district rate (existing): 0.50%
New additional county rate: 1.00%
Combined total: 8.25%

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.

What the 1% Increase Costs in Real Terms

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.

What's Excluded From the New 1%

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.

The New Forms Requirement Nobody Is Talking About

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.

The South Carolina Effect — Border Shopping Is Already Starting

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.

How Charlotte's 8.25% Compares Nationally

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.

What Remote Sellers Need to Know

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.

The Complete Compliance Checklist for Today

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.

The 28-Year Gap — What It Means Going Forward

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.