Understanding the New Sales Tax Updates for 2025

As we enter 2025, businesses and consumers alike should prepare for new changes to sales tax laws. Staying informed about these updates is critical to maintaining compliance and ensuring smooth operations.

Here’s a quick overview of what to expect and how you can adapt.

Key Changes in Sales Tax for 2025

1. New Tax Rates Several states have adjusted their sales tax rates. While some jurisdictions have increased rates to address budget shortfalls, others have reduced them to stimulate local economies. Check your state’s Department of Revenue website for specific changes.
2. Expansion of Taxable Goods and Services In a continued effort to capture revenue from the modern economy, many states are broadening their taxable bases. Expect more digital goods, streaming services, and gig economy transactions to fall under the sales tax umbrella.
3. Remote Seller and Marketplace Facilitator Requirements States are refining their rules for remote sellers and marketplace facilitators, building on the precedent set by the Wayfair decision. Thresholds for economic nexus may change, and platforms might face stricter reporting and remittance obligations.
4. Green Tax Initiatives Some states are introducing or increasing sales taxes on products deemed harmful to the environment while incentivizing eco-friendly alternatives. For example, new taxes on single-use plastics and subsidies for renewable energy products should be expected.

Tips for Businesses

• Audit Your Compliance: Review your systems to ensure you charge the correct rates accurately and track taxable goods or services.
• Stay Updated: Subscribe to your state’s tax updates or work with a tax professional to navigate the changes.
• Educate Your Team: Train employees on how these updates affect your operations, especially in sales and accounting.

The sales tax landscape is ever-evolving, and 2025 is no exception. Understanding and preparing for these changes can avoid penalties and keep your business running smoothly. If you have questions, contact a trusted advisor like Davis Davis & Harmon LLC for expert insights.

About Davis Davis & Harmon LLC – Sales Tax Experts: Headquartered in Dallas, Texas, Davis Davis & Harmon LLC – Sales Tax Experts specializes in sales/use tax refund recovery and audit defense. Our team of consultants is comprised of former Big 4 sales tax consultants and state sales tax auditors. Each of our consultants has 15 to 20 years of experience, providing our clients with access to a highly specialized team of sales/use tax professionals. At Davis Davis & Harmon, LLC, we are committed to maintaining the highest standards in our talent pool. We work hard to meet our clients’ needs by ensuring that you view our firm as an extension of your company and a member of your team.