Key takeaways
- Sales tax changes in 2026 expand digital taxability in several states, affecting streaming, subscriptions, and some SaaS and digital services.
- Economic nexus rules tightened in 2026 as states like Illinois removed transaction thresholds, increasing exposure for low-volume, high-ticket sellers.
- Sales tax exemptions changed in 2026 for categories like food, fuel, equipment, and bundled transactions, requiring item-level taxability reviews.
- No statewide base sales tax rate increases took effect in 2026, but changes to local rates, vendor discounts, and exemptions may still affect total tax owed.
Some years bring minor rate updates or administrative cleanups. 2026 is different. States are revisiting core sales tax rules that affect how products are classified, when sellers are required to register, and how often returns must be filed.
This guide highlights the most important confirmed sales tax changes for 2026 affecting ecommerce businesses, SaaS companies, and their finance teams, with a focus on updates that materially affect compliance.
What’s new in 2026: Five national trends sellers should watch
Digital goods taxation expands
Several states are widening the definition of taxable digital products. Maine is the most notable example for 2026, adding digital audiovisual and digital audio services to its taxable category.
Why it matters: SaaS, streaming, and subscription businesses may need to update product taxability and mapping.
Economic nexus rules tighten in specific states
Illinois joined a growing number of states by eliminating its transaction threshold for remote sellers, aligning fully to a revenue-only model.
Why it matters: Low-volume, high-ticket sellers may now trigger nexus sooner than expected.
Food and prepared-goods tax rules shift
Arkansas removed the state-level tax on food, while Utah is expanding sales tax on certain prepared/customized foods sold through convenience and grocery channels.
Why it matters: Grocery, C-store, and dine-in/dine-out hybrid retailers may need to revise item-level tax categories.
Filing cadence pressure increases
Several states require businesses to increase their sales tax filing frequency and file sales tax returns more often if they meet certain transaction-volume or tax-liability thresholds.
Why it matters: Growing businesses may receive a notice from a state requiring them to file monthly. This creates heavier compliance workloads and tighter reconciliation cycles.
Rate increases
No states enacted changes to their base statewide sales tax rates effective January 1, 2026. However, several states and local jurisdictions updated local rates, reduced vendor discounts, or altered exemptions that effectively change tax burdens for sellers across multiple markets.
Some local jurisdictions have special sales tax districts to generate revenue for specific projects or initiatives, such as community improvement or transportation.
Why it matters: Sellers operating across jurisdictions should verify both base and local rates and adjust tax configuration settings to reflect combined rates and any changes to exemptions or discounts.
2026 sales tax changes: State-by-state table
The table below summarizes the most significant statewide sales tax changes taking effect in 2026.
| State | Rate or Discount Changes | Nexus Updates | Exemptions | Notable Changes |
| Arkansas | No | No | Yes | Arkansas exempts sales of food and food ingredients from state-level sales and use tax effective January 1, 2026. |
| California | No | No | No | California’s battery-embedded products regulations require retailers of covered products to register with the state and collect a recycling fee at the point of sale. |
| Colorado | Yes | No | No | Colorado no longer allows retailers to retain a sales tax service fee, effective January 2026. |
| District of Columbia | Yes | No | No | D.C.’s sales tax rate on digital goods, taxable services, and tangible personal property increases after September 30, 2026. |
| Illinois | No | Yes | Yes | Illinois removed the 200-transactions threshold under its economic nexus rules as of January 1, 2026. |
| Indiana | No | No | Yes | As of January 1, 2026, Indiana does not consider applications by lawn care companies and similar exterior service providers to be taxable. |
| Maine | No | No | Yes | Effective January 1, 2026, Maine will tax digital audiovisual and digital audio services. |
| Maryland | No | No | No | Maryland announced changes to the appeals process for its Digital Advertising Gross Receipts Tax assessments effective January 1, 2026. |
| Michigan | No | No | Yes | Effective January 1, 2026, some motor fuel is exempt from sales and use tax. |
| Missouri | No | No | Yes | Effective January 1, 2026, Missouri will exempt broadband communications machinery and equipment from sales tax. |
| Nebraska | Yes | No | No | Nebraska reduced its monthly discount available to businesses that timely file returns, effective January 2026. |
| Ohio | Yes | No | Yes | Effective January 1, 2026, Ohio repealed certain sales tax exemptions and changed some sales tax discounts. |
| Rhode Island | Yes | No | No | Rhode Island increased its state and local hotel tax rate and created a new whole-home short-term rental tax as of January 1, 2026. |
| South Dakota | Yes | No | No | South Dakota suspended its discount for timely filed returns from July 1, 2025, to June 30, 2028. |
| Texas | No | No | Yes | Texas’ sales and use tax exemption for R&D equipment purchases ends on January 1, 2026. |
| Utah | Yes | No | No | Effective January 1, 2026, Utah’s restaurant and customized food tax will apply to certain sales by grocery stores, convenience stores, and gas stations. |
| Washington | No | No | Yes | As of January 1, 2026, Washington considers sales of precious metals and monetized bullion to be tangible personal property for sales tax purposes. |
State-by-state sales tax changes for 2026
Arkansas
Effective January 1, 2026, Arkansas’s Grocery Tax Relief Act exempts sales of food and food ingredients from state-level sales and use tax. Local jurisdictions may continue levying sales and use tax on these items.
California
California’s new battery-embedded products regulations (California Senate Bill No. 1215) require retailers of products containing embedded batteries to register with the state and collect a recycling fee at the point of sale.
The CalRecycle website offers a downloadable PDF answering frequently asked questions about the new law, including a list of excluded products.
Colorado
Before 2026, Colorado allowed retailers to retain a sales tax vendor fee, essentially a small percentage of each month’s collected sales tax, to offset the cost of compliance for timely-filed returns. The state eliminated this discount effective January 2026.
District of Columbia
Washington, D.C.’s sales tax rate on digital goods, taxable services, and tangible personal property will increase from 6% to 7.0% on October 1, 2026.
The D.C. Council also voted to extend an increase in the city’s hotel tax. The Council initially approved a four-year increase in the tax—from 14.95% to 15.95%—in 2022. In October of 2025, the Hotel Surtax Amendment Act of 2025 extended the increase through September 30, 2027.
Indiana
Indiana clarified that applications by lawn care companies and similar home exterior service providers are nontaxable transactions because they meet an exception to the state’s bundled transaction rules. This definition takes effect January 1, 2026.
Illinois
Effective January 1, 2026, Illinois eliminated its 1% state sales tax on food for human consumption. However, local governments may still charge their own 1% grocery tax.
Also taking effect on January 1, 2026, Illinois updated its remote nexus requirements for remote sellers, removing the 200-transaction count from its economic nexus definition. As of that date, out-of-state sellers who meet or exceed the $100,000 sales threshold are required to register and remit sales tax in the state, regardless of the number of transactions in Illinois.
Maine
Effective January 1, 2026, Maine will include digital audiovisual works and digital audio works in its definition of taxable services. This includes subscriptions and fees to access platforms like Netflix, Hulu, Spotify, Apple Music, and audiobook and podcast subscriptions.
Maryland
Maryland’s Digital Advertising Gross Revenues (DAGR) Tax applies to taxpayers with annual gross revenues over $100 million and $1 million in annual gross revenues from digital advertising services in the state.
Starting January 1, 2026, taxpayers subject to the DGAR tax must submit applications for revisions of an assessment or claims for refunds to the state Comptroller before filing an appeal in the Maryland Tax Court.
Michigan
Effective January 1, 2026, some fuel is exempt from sales and use tax. Eligible fuel includes motor fuel (gasoline, diesel fuel and kerosene), alternative fuel, and leaded racing fuel.
Also effective January 1, 2026, Michigan eliminated sales tax on interstate motor carriers that use motor or alternative fuel in Michigan.
Missouri
Effective January 1, 2026, Missouri exempts from state and local sales and use tax the sales, purchases, or use of machinery and equipment used by a broadband communications service provider to provide broadband communications services.
Nebraska
Nebraska reduced the discount available to businesses that timely file sales tax returns from 3% of the first $5,000 of sales tax (up to a maximum of $150 per month) to 2.5% of the total tax due, up to $75 per month, effective January 2026.
Ohio
Ohio’s 2026/2027 budget bill includes several changes to the state’s sales and use tax effective January 1, 2026. Changes include:
- Repeal of the 25% partial refund of sales tax paid by providers of electronic information services
- Repeal of the exemption for payment for a rented motor vehicle provided to the owner or lessee of a motor vehicle being repaired or serviced when the payment is reimbursed by a manufacturer, warrantor, or the services/maintenance provider
- Repeal of the exemption for sales of equipment such as telephones or computers used to accept direct marketing retail sales
- Limit the 0.75% sales tax vendor discount to $750 per month for all retailers who timely collect and remit sales tax to Ohio.
Rhode Island
Effective January 1, 2026, Rhode Island increased its local hotel tax rate from 1% to 2%. This tax applies to all short-term rentals, including hotels and rentals through platforms like Airbnb and VRBO.
The state also creates a new 5% whole-home short-term rental tax that applies to the short-term rental of a residential dwelling in its entirety.
South Dakota
South Dakota suspended its discount for timely filed returns from July 1, 2025, to June 30, 2028.
Texas
Texas’ sales and use tax exemption for research and development (R&D) equipment purchases ends on January 1, 2026. Businesses will have to start paying sales tax on equipment purchases, leases, and rentals for research activities.
Utah
Effective January 1, 2026, Utah’s restaurant and customized food tax will apply to certain sales by grocery stores, convenience stores, and gas stations. The tax applies to “customized foods,” which include any food prepared or heated at a customer’s request for on-site or immediate consumption.
Washington
Effective January 1, 2026, Washington will treat sales of precious metals and monetized bullion as tangible personal property for sales tax and business and occupation (B&O) tax purposes. Previously, these items were excluded from the state’s definition of a wholesale or retail trade.
Washington State announced a pilot Voluntary Disclosure Agreement (VDA) program targeting international remote sellers and marketplace facilitators. The program runs from February 1 through May 31, 2026.
The program offers a limited lookback period and offers to waive up to 39% in potential penalties.
States with no major statewide sales tax changes in 2026
Alabama, Alaska, Arizona, Connecticut, Delaware, Florida, Georgia, Idaho, Iowa, Kansas, Kentucky, Louisiana, Massachusetts, Minnesota, Mississippi, Montana, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Oklahoma, Pennsylvania, South Carolina, Tennessee, Vermont, Virginia, West Virginia, Wisconsin, Wyoming.
Seller checklist: How to prepare for 2026 sales tax changes
Use this checklist to confirm what you need to review or update for 2026 so your registrations, tax settings, and filings stay accurate.
- Review 2026 rate and rule changes in every state where you have nexus, including state and local rates, exemptions, and special tax categories.
- Recalculate your economic nexus exposure, especially in states that lowered sales thresholds or removed transaction-based tests.
- Review product taxability classifications for digital goods, groceries, prepared foods, and bundled items to ensure correct collection.
- Confirm marketplace responsibilities if you sell both directly and through platforms like Amazon, Etsy, or eBay, and separate marketplace-collected transactions from those you must still file.
- Update exemption certificate records to reflect any newly added, changed, or discontinued exemptions.
- Adjust internal processes if your filing frequency increases from quarterly or annual to monthly.
- Audit system integrations to confirm ecommerce platforms, accounting tools, and tax engines are configured for 2026 rules and rates.
Stay ahead of 2026 rule changes with TaxCloud
Managing sales tax changes across multiple states doesn’t have to be manual. TaxCloud tracks rate and rule updates, monitors nexus exposure, and automates calculation, filing, and remittance in every U.S. state.
As a certified service provider in the Streamlined Sales Tax program, eligible sellers can also file for free in SST states.
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Frequently asked questions
Will sales tax rates increase in 2026?
No states increased their general statewide sales tax rates in 2026. However, several states adjusted exemptions, discounts, or local rates, which can change the total tax owed. Sellers should review each jurisdiction where they have nexus to ensure accuracy.
What states have major sales tax changes in 2026?
States with notable 2026 changes include Arkansas, Illinois, Maine, Missouri, Nebraska, Ohio, Rhode Island, Texas, Utah, Washington, and the District of Columbia. These updates include changes to taxability rules, nexus standards, exemptions, and vendor discounts.
Do I need to change how I file sales tax in 2026?
Possibly. Filing frequency rules vary by state and are often based on sales volume or tax liability. If your filing requirements change, the state will notify you, and you’ll need to adjust your filing schedule and processes accordingly.
How do sales tax changes affect nexus?
Changes to economic nexus rules can expand your obligation to register and collect sales tax in additional states. For example, removing transaction thresholds can impact low-volume, high-ticket sellers that previously did not meet nexus requirements.