Sales tax changes effective January 1, 2025

Numerous sales and use tax changes will take effect on January 1, 2025. Some are sweeping, like the state sales tax rate change in Louisiana. Others are more targeted, like Nevada’s new sales tax exemption on diapers. Keep reading for more details.

Effective January 1, 2025:

The Kansas state sales tax rate for unprepared food will drop from 2% to 0%. Food sales may still be subject to local sales taxes.

The Louisiana state sales tax rate increases from 4.45% to 5%.

Effective January 1, 2025:

Louisiana sales and use tax applies to digital products such as audiovisual works, audio works, books, codes, applications and games, and periodicals and discussion forums. 

Nevada is exempting diapers (for both adults and children) from sales and use tax.

Effective January 1, 2025:

Alaska is eliminating its 200-transactions economic nexus threshold. 

Illinois sourcing rules will change. Out-of-state sellers that have a physical presence in Illinois and in-state sellers must use destination sourcing when shipping goods from outside of Illinois, basing the use tax rate on the Illinois delivery address.

Effective January 1, 2025:

The vendor discount for remitting Illinois retailers’ occupation tax on time is capped at $1,000. Prior to January 1, 2025, the vendor discount was 1.75% of the retailers’ occupation tax collected.

Louisiana is lowering the vendor compensation credit. For businesses operating one or more locations within the state, the vendor compensation is dropping from $1,500 to $750 per calendar month. The vendor compensation credit for local taxes is also repealed. 

Effective January 1, 2025:

California is allowing the California Department of Tax and Fee Administration to send sales and use tax assessments and determinations to taxpayers electronically under certain conditions. It’s also changing the unremitted tax collected penalty.

Kentucky is increasing the de minimis threshold for service providers from $6,000 to $12,000. Qualifying service providers with less than $12,000 in gross receipts from enumerated services are not required to register for sales tax or maintain an active sales tax permit.

The Colorado Department of Revenue will collect and administer the city sales and use tax for Aspen, Colorado.

Starting January 1, 2025, states with local sales and use tax changes include:

• Arizona
• California
• Colorado
• Florida
• Georgia
• Illinois
• Iowa
• Kansas
• Louisiana
• Michigan (prepared sales tax fuel rates)
• Missouri
• Nebraska
• New Mexico
• North Dakota
• Oklahoma
• Texas
• Vermont
• Washington
• Wisconsin 
• West Virginia

It can be difficult to keep up with changing tax rates, rules, and requirements, especially if you do business in multiple states and manage tax manually. Automating sales tax calculation, collection, and filing helps ease the compliance burden.