2025 Sales Tax Trends: New Developments and State Strategies

# Sales Tax Trends Analysis – 2025

## Major Trend Categories

### State-Level Changes
– Louisiana is implementing significant changes:
– Increasing state sales tax to 5%
– Simultaneously cutting personal and corporate income taxes
– This will result in one of the highest combined sales tax rates nationally
– Alaska may consider implementing its first state-wide sales tax
– Motivated by growing network of communities with online seller obligations
– Governor supports under certain conditions, but immediate passage uncertain

### Economic Nexus Evolution
– Transaction thresholds are being eliminated in many states
– Already done in California, Colorado, Iowa, Louisiana, Maine, Massachusetts, North Dakota, Washington, and Wisconsin
– New Jersey considering similar changes
– Trend driven by recognition that transaction thresholds burden small sellers while providing minimal revenue benefit

### Digital Commerce & New Revenue Sources
– Digital goods and services taxation expanding
– States broadening definition of “digital” to capture more taxable items
– SaaS taxation particularly complex due to worldwide user bases
– Digital advertising becoming new focus for taxation
– Retail Delivery Fees (RDFs) gaining traction
– Colorado model (29 cents per motor vehicle delivery) attracting attention
– Minnesota has adopted similar approach
– New York considering implementation

### Emerging Issues
– Physical nexus via inventory becoming significant
– Growing concern with marketplace facilitators (e.g., Amazon)
– Warehouse locations could trigger nexus for small sellers
– Questions about inventory as nexus indicator remain largely unaddressed
– Grocery taxation remains politically significant
– Only 11 states maintain statewide grocery sales tax
– Five of these impose reduced rates
– Further eliminations likely

### Simplification Efforts
– Growing pressure for tax system simplification
– Small retailer exemptions being proposed
– Some retailers pursuing legal action over complex rules
– Senate subcommittee examining small business relief
– Illinois beginning simplification efforts
– National sales tax discussion continues but unlikely to progress soon

Source: taxconnex.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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