US – Key Sales Tax Changes for 2025

The year 2025 has brought many significant changes regarding sales tax compliance in the U.S. The scope of novelties already introduced and those that will be effective in the following months impact the economic nexus calculations, the introduction of retail delivery fees, the expansion of the scope of what is treated as a digital service, and new sales tax rates. 

The wave of legislative changes in sales tax will impact different categories of businesses and customers. Economic nexus calculation threshold changes will positively affect many small e-commerce or digital retailers. 

Economic Nexus Thresholds 2025

After the landmark Supreme Court decision in 2018 and the introduction of the economic nexus concept to expand the tax base and capture out-of-state sellers (mainly e-commerce vendors and marketplaces), the US tax system has entirely reshaped itself, state by state. 

In most cases, the trigger that activates the economic nexus on the state level, which automatically necessitates the vendor or marketplace to register for sales tax, is based on two different kinds of threshold calculations. The first triggering event is based on the calculation of gross sales made in the state, and the second(if adopted) is based on the number of transactions made in the respective state. 

The second triggering event (the number of transactions) hasn’t been introduced in all US states. The threshold calculation for sales tax registration expands the scope of applicability to most small retailers, even if they don’t reach the gross sales threshold. The costs of sales tax compliance are very high for these businesses, so many states are considering removing the transaction-based threshold. 

Starting January 1, 2025, Alaska has removed the transaction threshold. Many small retailers can opt out (deregister) from sales tax if their gross sales are below the threshold. 

Utah is following the same suit. Starting from July 1, 2025, it will also remove the transaction-based threshold.

Sales Tax Rate 2025

Few states have increased their sales tax rates: 

• Louisiana: Increased from 4.45% to 5% (when combined state+local rate ranked as no.1 in the US);
• California: Adjusted the sales tax rate to 7.25% (unified approach).

Digital Supplies 

More than a few states have introduced digital services or products under the taxable supplies category to expand the scope of taxability. The impact of the digital economy calls for continuous legislative reaction by respective authorities, so introducing new taxable supplies within the sales tax codes was and is a necessity.

Some of the supplies that have been moved into the taxable ones are: 

• Digital products (custom software, audiobooks, e-books, apps, video games);
• Streaming services pay per view or the subscription-based;
• Provision of new types of e-marketplace services.

Retail Delivery Fees 

Retail delivery fees represent a new type of cost that businesses should include in their retail or e-commerce supplies(when delivery is involved) when the place of supply is within the state that introduced this type of levy. So far, Colorado and Minnesota have introduced this additional levy on retail supplies. 

Retail delivery fee isn’t a tax, it’s a type of “levy” or fee that state demands from the local or out-of-state vendors to include in their invoices or receipts, when there is a taxable supply of tangible personal property being delivered, sold or shipped to the address that is within the respective state jurisdiction. 

After successfully introducing this type of levy in Colorado and Minnesota, other states are now also looking into it. 

E-commerce businesses and digital service providers should be aware of the many sales tax-related changes across the US. To expand the tax base and increase sales tax revenue, US states are introducing new types of levies, increasing sales tax rates, and introducing new taxable supplies. 

There are also some benefits for small-scale businesses, and that is that some states have decided to eliminate the transaction-based threshold, and in that manner, to reduce sales tax compliance costs for micro and small businesses.