It’s that wonderful time of year when sales tax changes are introduced – Wacky Tax Wednesday
With state legislatures in session in all but six states, lawmakers nationwide are busy, well, making laws. A lot goes into the process. In the coming months, many bills will be proposed and discussed; some will be approved, others rejected, and some left to die from neglect. It’s the start of fun times for sales tax bill-watchers like me, and some of you.
The breadth of considerations is astounding. For example, the Iowa Legislature will wrestle with whether to create a sales tax holiday for weapons, exempt diapers and feminine hygiene products (HSB 657, SSB 3316, and SF 173), or increase the sales and use tax rate. And that’s just a few of the bills under consideration in one state; more will likely be introduced before the end of the session.
Read on for a selection of proposed sales and use tax changes in some other states.
There’s a bill seeking to exempt building materials and supplies purchased by a qualified person to construct specified senior housing developments. Another would temporarily reduce California’s excise tax on recreational marijuana. And lawmakers are looking to extend temporary sales tax exemptions for diapers and menstrual hygiene products that are currently scheduled to expire January 1, 2025.
Bills related to an exemption for newspapers and an exclusion for low-emission motor vehicle trade-ins are already dead.
Lawmakers in the Sunshine State need to decide whether to adopt economic nexus, thereby requiring certain remote vendors to collect and remit sales tax. And, as most years, they’ll determine the fate of Back-to-school Sales Tax Holiday and Sales Tax Holiday for Disaster Preparedness Supplies.
Marketplace facilitators would be required to collect and remit tax on third-party sales if Senate Bill 399 is enacted. The Legislature is also looking to reduce the sales and use tax rate for food and food ingredients.
Legislators in Missouri must grapple with whether to eliminate the exemption for newsprint and other supplies used in producing newspapers, and they must decide if they should modify the exemption for aviation jet fuel. They may also require the state enter into the Streamlined Sales and Use Tax Agreement. Remote retailers should also keep an eye on SB 805, which would impose establish economic nexus and reduce local sales tax rates.
Nebraska lawmakers are looking to impose sales and use tax on digital advertisements. They may also broaden sales tax to a variety of services and reduce the overall sales and use tax rate.
A bill introduced in New Jersey would increase the state sales tax rate from 6.625% to 7% — but only for seven years.
A sales tax exemption for forestry equipment is under consideration in Oklahoma. Lawmakers may also authorize certain resident veterans to purchase taxable goods and services free from sales or use tax.
Some lawmakers in Washington would like to clarify and simplify nexus provisions, thus decreasing administrative and compliance burdens for tax officials and taxpayers alike.
That’s far from a wrap, but it gives you an idea of what’s percolating in capitol buildings across the country. Reoccurring themes include broadening sales tax, creating sales tax holidays, expanding exemptions for certain products, and fine-tuning requirements for remote sellers.
Automating sales tax collection and remittance can help deal with these and other changes, should they occur.
The 2021 sales tax changes report: midyear update
Your guide to navigating the complicated world of tax compliance and preparing for the future
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