TX: New Sales Tax Laws: What You Need to Know

TX: In 2024, Texas introduced significant updates to its sales tax laws. These changes aim to modernize the tax system, address the rise of e-commerce, and ensure fair taxation across the board. Here’s a quick rundown of what you need to know.

Key Changes

1. Economic Nexus for Remote Sellers:

• New Threshold: Remote sellers must collect and remit Texas sales tax if they exceed $100,000 in gross revenue from sales into the state over the past 12 months.
• Impact: This affects businesses selling into Texas from other states, requiring them to register for a Texas sales tax permit and upgrade their systems to handle tax collection.

2. Marketplace Facilitator Laws:

• New Requirements: Marketplace facilitators like Amazon and eBay must now collect and remit sales tax on behalf of third-party sellers.
• Impact: Simplifies tax compliance for individual sellers using these platforms, shifting the responsibility to the facilitators.

3. Taxable Services Expansion:

• Broader Scope: More services, including digital goods, are now subject to sales tax.
• Impact: Service providers need to adjust their billing systems, and consumers might see higher costs for these newly taxable services.

4. Local Sales Tax Cap:

• Capped Rate: The combined state and local sales tax rate is now 8.25%.
• Impact: Prevents excessively high local tax rates, offering more predictability for consumers.

What to Do Next

For Businesses:

• Update Systems: Ensure your accounting and e-commerce systems are compliant.
• Educate Staff: Make sure your team is aware of the changes.
• Seek Advice: Consult with tax professionals if needed.

For Consumers:

• Stay Informed: Know which services and goods are now taxable.
• Budget Accordingly: Anticipate potential price increases on newly taxable items.

These updates are part of Texas’s effort to create a fair and modern tax environment. Staying informed and prepared will help businesses and consumers navigate these changes smoothly.

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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.