What’s new in sales tax in 2025?

There’s always something changing in the world of sales tax, and this year has been no exception. Here’s a look at the major trends.

Rates elevator. Some have gone up, some have gone down.

Louisiana, for instance, hiked its sales tax and made its combined rate among the highest in the country. Chicago raised its Personal Property Lease Transaction Tax to 11%, up from 9%, and California’s Bay Area saw increases in sales taxes after voters approved the district tax changes last November.

Mississippi passed a bill to eliminate the state income tax but also trim the state’s high taxes on groceries but potentially raise municipalities’ sales taxes. Kansas finally dropped its sales tax on some groceries to zero. Eliminating sales tax on groceries remained top of mind in states like Tennessee, Utah, Alabama, Arkansas and Mississippi.

Define ‘easier.’ Some states tweaked their sales tax compliance systems to help retailers. Utah, for instance, was among the growing number of states to repeal its transaction threshold (200 transactions) for a remote seller to establish economic nexus in the state. Colorado lowered its retail delivery fee, and the state also enhanced its Sales and Use Tax System and beefed up its refund tool and its search engine to find sales tax information.

Nevada launched the portal My Nevada Tax to manage accounts, file returns, make payments and access other services. California extended the deadline for sales and use tax filing in response to recent wildfires in the state, perhaps part of a growing trend of states offering sales tax filing relief much like the federal government offers relief on income tax filing after natural disasters, and this summer Idaho began exempting sellers from collecting and remitting sales and use tax, specifically state residents whose total gross receipts do not exceed $5,000 in the current or previous calendar year.

Some states curtailed conveniences for remote sellers, though. Washington decided to add business activities to the definition of retail sales subject to sales tax effective Oct. 1. Louisiana is no longer printing and mailing copies of the state sales tax return to businesses registered for sales tax, pivoting instead to all-electronic payment and filing options.

Louisiana also joined Mississippi in looking to make hotel booking services responsible for collecting sales tax, and Nebraska also updated guidance to stipulate that retailers may not advertise falsely about paying, assuming or absorbing sales tax for their customers or that sales tax will not be added to the selling price.

Sourcing. This year, Illinois retailers have become responsible for destination-based sourcing for sales tax purposes. The new law mandates that retailers who maintain a place of business in the state and who sell tangible personal property from a location (or locations) outside Illinois will be required to collect all state and local taxes at the location where the item is shipped or delivered or where the buyer takes possession.

In the news. Some communities along the Canadian border reported that their sales tax revenue dropped earlier this year due to the lack of Canadian shoppers occasioned by President Trump’s trade war with Canada.

As services continue to evolve, so do sales tax questions about them. Uber Technologies, for instance, had to pay $8.92 million in sales tax on rides in Georgia from 2012 to 2015 after s state court bounced the company’s argument that the state should have collected that amount from drivers, not from the app. Iowa, increased sales and use tax breaks for data centers to include leased facilities.

No doubt the second half of 2025 will be just as busy.

If you think your business may be impacted by sales tax developments, contact TaxConnex. TaxConnex provides services to become your outsourced sales tax department. Get in touch to learn more.