January 2022 sales tax changes

Change is a common theme at the start of a new year, and it typically extends to sales tax. Thus, as of January 1, 2022, there will be sales and use tax rate changes in the following states:

• Arizona
• California
• Colorado (check this Colorado Department of Revenue page on and after January 1, 2022)
  • Local governments may also institute local rate changes, as Vail is doing
• Florida (Glades County and Okaloosa County)
  • There will also be new fuel tax rates
• Georgia
• Illinois
• Kansas
• Louisiana
• Michigan (new prepaid sales tax rates for diesel and gasoline)
• Minnesota
• Nebraska (boundary changes)
• North Dakota (boundary changes)
• Ohio
• Oklahoma
• South Carolina
• South Dakota
• Texas
• Washington (rate changes and new location codes)
• West Virginia
• Wisconsin

Of course, new local sales and use tax rates are just some of the upcoming changes that can affect businesses. Others include new tax collection obligations, new exemptions or taxes, and new sourcing rules.

Maine is eliminating its economic nexus transaction threshold effective January 1, 2022. From that point forward, a remote seller must have $100,000 of gross sales of tangible personal property and taxable services in Maine in the current or previous calendar year to establish economic nexus with Maine.

Furthermore, effective January 1, 2022, Maine is repealing the “rebuttable presumption of nexus for persons presumed to be engaged in the business of selling tangible personal property or taxable services in the state.” The state has also clarified certain other aspects of what makes a retail sale in the state. Maine Revenue Services offers additional guidance. 

All retailers that collect Colorado sales and use tax must use destination sourcing rules starting February 1, 2022, as a temporary exception for small businesses is expiring.

Certain items that help individuals live independently, such as grab bars, are exempt from Florida sales and use tax starting January 1, 2022.

Starting January 1, 2022, qualifying farmers in Kentucky need a new agricultural exemption number to take advantage of the agricultural exemption for certain products.

Maine is providing a sales tax exemption for sales to area agencies on aging, effective January 1, 2022, as well as for sales to a cemetery company that’s exempt from federal income tax. Additionally, firearm safety devices are exempt from Maine sales tax starting the first of the year.

A variety of commercial forestry service equipment is exempt from Oklahoma sales tax as of January 1, 2022. Furthermore, retail sales of “tangible personal property manufactured for the purpose of initiating, supporting, or sustaining breast feeding is exempt from sales and use tax” in Oklahoma after December 31, 2021.

Maryland adopted a tax on digital advertising services in early 2021. After concerns were raised, the tax was given an effective date of January 1, 2022. On December 3, 2021, the Maryland Comptroller published regulations pertaining to the new digital advertising tax, with an effective date of December 13, 2021. Additional details.

Several localities in Virginia are instituting a tax on disposable plastic bags as of January 1, 2022.

A Connecticut tax amnesty program that began November 1, 2021, is concluding January 31, 2022.

Avalara helps businesses of all sizes and industries apply the latest sales and use tax rate to each transaction.