This blog was last updated on June 4, 2026

Sales and use tax compliance has never been a static exercise, but 2025 pushed the boundaries of what fast-moving really means. Across the United States, state and local taxing jurisdictions enacted a surge of rate changes, added new taxing authorities, expanded tax bases, and revised exemption frameworks. These shifts were driven by fiscal pressure, the ongoing digitization of commerce, and an evolving federal policy landscape. For businesses operating across multiple states, the compliance burden grew measurably in 2025. 

2025 Sales and Use Tax Rates at a Glance: The Numbers That Matter 

Sovos monitors sales and use tax developments across thousands of U.S. jurisdictions, covering every state, county, city, and special district where a rate or rule change could impact our customers’ tax obligations. In 2025, the scope of change was extraordinary: 

What Drove the Surge in 2025 

Several converging forces made 2025 one of the most active years for U.S. sales and use tax changes in recent memory. 

Fiscal Pressure and Revenue Diversification 

State and local governments entered 2025 facing tightening budgets, expiring federal pandemic-era funding, and growing infrastructure demands. Many jurisdictions responded by creating new taxing districts, raising local rates, or broadening the sales tax base to capture previously untaxed goods and services. The result: a sharp increase in rate changes at the city, county, and district level. 

The Expanding Digital Tax Base 

This past year saw continued momentum in states expanding their sales tax reach into digital services, SaaS, streaming, and data processing. Maryland’s new 3% tax on data and IT services, effective July 1, 2025, was among the most significant, applying to cloud hosting, software publishing, and systems design while simultaneously repealing the exemption for custom software. Maine moved to repeal its service provider tax and begin applying sales tax to streaming subscriptions. These developments reflect a broader national trend: as the economy becomes increasingly digital, states are working to align their tax bases with the way commerce actually operates. 

Exemption Expansions for Essentials and Investment Assets 

On the other side of the ledger, states also responded to consumer and political pressure by exempting essential consumer goods. Alabama exempted baby supplies, maternity products, diapers, and feminine hygiene products from state-level sales tax; Missouri followed with similar exemptions for diapers and incontinence products. Meanwhile, Florida and Kentucky expanded their bullion exemptions, joining the more than 40 states that now exempt at least some forms of investment-grade precious metals from sales tax. For sellers and tax engines alike, each new exemption demands precise product classification and jurisdiction-level configuration. 

Shifting Nexus Thresholds and Filing Requirements 

The post-Wayfair evolution of economic nexus standards continued in 2025, with states like Illinois dropping the 200-transaction threshold effective January 1, 2026, and moving to a revenue-only standard. These threshold changes can significantly alter filing obligations for e-commerce sellers and marketplace facilitators. The 204 form changes Sovos tracked during the year underscore the compliance challenge: even when rates stay the same, revised return formats, new schedules, and updated filing deadlines require constant vigilance. 

How Sovos Stays Ahead 

Sovos’s Regulatory Analysis & Design function exists to ensure that our customers never have to wonder whether their tax engine reflects the current state of the law. Our team of 25+ regulatory counsels and specialists, averaging more than 10 years of experience in sales and use tax, monitors every taxing jurisdiction in the country, analyzes more than 2,000 legislative bills during peak session, and pushes more than 30 content updates per year to keep our Global Tax Determination engine accurate and current. 

This work is underpinned by a content framework of more than 8,100 good/service codes and 490+ entity/use codes with exemption logic. This classification architecture allows Sovos to determine the correct tax treatment for any product or service at issue, sold to any type of purchaser, in any jurisdiction. When a state like Maryland expands its tax base to include IT services, or Florida eliminates the $500 threshold on its bullion exemption, the change is reflected in our engine before the effective date, not after an auditor finds the gap. 

Beyond rate and rule maintenance, Sovos’s regulatory team plays an active role in shaping the compliance landscape – spotting emerging legislative trends and informing the market, educating state regulators about the digitization of sales tax and the primacy of automation, and continuously expanding our content scope as our customers’ businesses evolve into new product categories and new jurisdictions. 

What to Expect in 2026

If 2025 is any guide, the pace of change is unlikely to slow. Early indications confirm it. During the first months of 2026, Sovos was tracking more than 2,400 active legislative bills at one time, a volume that signals another year of significant regulatory activity. And we have implemented more than 450 sales and use tax rate changes so far this year. We predict that several dynamics will further shape the 2026 landscape, including continued fiscal pressure at the state and local level, further expansion of digital services taxation, rising gas prices, and the ripple effects of federal tax policy developments. 

Sovos monitors over 13,000 U.S. taxing jurisdictions so you don’t have to. 

To learn how the Sovos Indirect Tax Suite can help your business stay ahead of the regulatory curve, contact us to discuss your specific business needs.