January 2026 Monthly Roundup

This month's tax roundup highlights new tax rules, policy shifts, and other January 2026 compliance updates that are covered in our blog and may affect your business. We've also included important news and analysis from November and December 2025 blog posts in this roundup. Read on to discover what's happened recently in the world of compliance.
 

Key takeaways

• January 2026 U.S. tax updates affect sales tax, reporting, and tax administration. Key developments include USPS postmark changes, 1099 reporting updates, property tax compliance issues, and a punitive tax rate.

• State legislatures are back in session and changing sales tax policies. Virginia may broaden its sales tax base and lower the state sales tax rate. Ohio has eliminated its expanded sales tax holiday.

• International tax requirements continue to shift and grow in 2026. U.S. tariff policies remain in flux, the E.U. is ending its de minimis exemption, France and Poland are advancing e-invoicing mandates, and the U.K. is implementing new digital tax obligations.
   

United States tax updates

Which states have sales tax holidays in 2026? Alabama and Maryland kick off the 2026 sales tax holiday season in February, and Ohio canceled its expanded tax holiday. Our 2026 sales tax holidays blog post tracks sales tax holidays throughout the year.

How do USPS postmark changes affect tax compliance? United States Postal Service (USPS) postmark dates are now likely to be later than the date mail is collected or dropped off — and delayed postmarks can affect the timeliness of tax payments and tax returns.

What should businesses know about 1099 reporting in 2026? With 1099 season upon us, businesses should review which vendors are reportable, understand which 1099 forms apply to them, and confirm compliance with related state tax obligations, like the Texas franchise tax.

What property tax issues should businesses review at the start of the year? It can be helpful to compare states' property tax requirements, review how to read property tax bills, and see what you can do if your property tax bill has gone missing (because you're still liable for the tax).

How does the end of penny production affect sales tax? Retailers that can't make exact change may need to round their cash transactions. Rounding can affect how sales tax is calculated, and states have different rounding rules.

What tax changes are covered in Avalara Tax Changes 2026? Our 10th annual tax changes report compiles key international and U.S. tax policy and compliance updates affecting businesses in 2026. Read a summary of Avalara Tax Changes 2026.

What sales tax changes are being considered in Virginia? Virginia lawmakers may lower the state sales tax rate, tax services and digital goods, and introduce a retail delivery fee.

Why can relying on AI for sales tax rates be risky? Sales tax rates changed in multiple jurisdictions in January 2026. Using third-party AI tools not backed by verified tax data may provide inaccurate or outdated rate information.

What is the undetermined location tax rate in Illinois? As of January 1, 2026, the Illinois Department of Revenue can assess taxpayers a 15% undetermined location tax rate on destination-sourced sales reported without the documents necessary to determine the destination address. This is higher than the highest combined sales tax rate in the state.
 

E-invoicing and VAT updates

Which countries are adding e-invoicing mandates in 2026? France and Poland are among the countries expanding their e-invoicing requirements in 2026. The new developments in Poland also have direct and critical implications for VAT reporting. Enterprises can prepare to meet upcoming mandates by scaling strategically.

What does Making Tax Digital mean for UK businesses? Making Tax Digital (MTD) is an initiative to modernize the United Kingdom's tax system. It replaces paper-based processes with digital recordkeeping and reporting, and requires businesses to use MTD-compatible software.

How are tariffs changing in 2026? Tariff policies in 2026 will likely remain volatile. Hang on to your hats and read how new tariff rules could impact your business, and how some manufacturers are responding to tariffs.

What is the country of origin for tariffs? The country of origin is one of four key pieces of information needed to assess the proper rate of duty. Find out how to determine the country of origin for tariffs.

How is the EU changing its €150 customs duty exemption? The European Union plans to abolish the customs duty exemption for parcels valued €150 or less. Once the new policy takes effect, low-value goods imported from non-EU countries will be subject to applicable customs duties.
 

What businesses should do next

• Get to know Avi for Tax Research, our AI-powered assistant trained to answer sales and use tax questions directly in the portal, if you use Avalara AvaTax and Avalara Tax Research.

• Download the free Avi for Chrome extension for Microsoft D365 Business Central and QuickBooks Online users; Avi delivers guided setup, contextual help, and real-time tax and compliance insights right in your workflow.

• Read this Avalara product and tech enhancement review to discover recent product innovations and a glimpse of what's to come in 2026.

• Bookmark the Avalara Tax Desk blog to help you keep your finger on the pulse of tax rule changes and compliance best practices.
   

Monthly roundup FAQ

What U.S. tax changes should businesses be aware of in January 2026?

January 2026 brings updates related to sales tax holidays, USPS postmark policies, annual 1099 reporting, property tax administration, and state-level tax policy and enforcement changes.

Which countries are expanding e-invoicing and digital VAT requirements in 2026?

France, Poland, and the United Kingdom are advancing e-invoicing and digital tax reporting mandates in 2026, affecting how businesses issue invoices and report value-added tax in those jurisdictions.

How can Avalara help businesses with tax compliance?

Avalara offers AI-powered tax compliance software that helps businesses calculate, collect, report, and remit transaction taxes while keeping pace with changing tax rules across jurisdictions.