March 2026 monthly roundup

This month’s tax roundup highlights new tax rules, policy shifts, and other key tax and compliance updates covered in our blog in March 2026. Each could affect your business.

States are rebalancing tax bases and enforcement. Washington state has enacted a new millionaires’ income tax. If the income tax is allowed to stand, the state will provide new sales tax exemptions.

Marketplace sellers need to pay attention to all taxes, not just sales and use tax. In two separate rulings, California courts determined that marketplace inventory in the state established income tax and franchise tax nexus for out-of-state marketplace sellers.

Agentic AI is moving into everyday workflows. The Avi for Chrome extension, embedded Outlook workflows, and agentic architectures support manufacturers, retailers, and tax teams with exemption management, use tax, research, and ERP-integrated automation.

Washington state ties new income tax to sales tax exemptions. Washington state has enacted a groundbreaking 9.9% tax on income over $1 million. If the millionaires’ tax is allowed to stand, Washington will provide new sales tax exemptions for diapers, over-the-counter drugs, and certain B2B services starting in 2029. The sales tax exemptions will be null and void if the income tax is struck down.

Washington state takes pity on taxpayers. Finding the October 2025 sales tax changes to be “challenging for many businesses to understand and follow before the law took effect,” the Washington Department of Revenue will temporarily waive certain penalties for businesses that voluntarily report and pay the tax due on affected services. Meanwhile, the Legislature is looking to exempt some of those services.

Marketplace inventory can trigger income tax nexus in California. In two separate rulings, California courts determined that storing inventory in Amazon fulfillment centers can create franchise tax and income tax nexus for out-of-state sellers. The decisions reinforce that marketplace activity may establish tax obligations unrelated to sales tax.

Nexus matters. Our updated guide reviews how out-of-state businesses can establish sales tax nexus, the connection that triggers sales tax obligations for businesses.

“No sales tax” states aren’t short on compliance complexity. Though there’s no state sales tax in Alaska, Delaware, Montana, New Hampshire, or Oregon, out-of-state businesses can develop other types of tax obligations in the states with no sales tax.

Tax rules related to digital products and services continue to evolve. States differ extensively in how they tax digital goods like SaaS, streaming, and downloads. Ongoing changes highlight the need for regularly updated tax content as definitions and rules evolve.

Exemption certificates require ongoing management. Missing or invalid exemption certificates can leave sellers liable for uncollected tax. Our updated state-by-state guide to exemption certificates details accepted forms, renewal rules, and expiration timelines.

2026 property tax deadlines vary by jurisdiction. Property tax timelines and billing formats vary widely. To avoid penalties or missed appeals and improve compliance, businesses should implement tools to track assessments and property tax payment due dates.

Cash rounding raises new sales tax questions. Now that the United States has stopped minting pennies, states must determine how to handle tax when rounding is required. We’re tracking their progress in this blog about the disappearing penny.

Tariffs 101. Still not sure what tariffs are, how they work, or how automation can help businesses fulfill changing tariff obligations? Find the answers to these questions and more in this primer on tariffs. To keep your finger on the pulse of tariff changes, check out this 2026 tariff timeline.

How to request IEEPA tariff refunds. U.S. Customs and Border Protection (CBP) is developing new processes to refund tariffs collected under the International Emergency Economic Powers Act (IEEPA), which the U.S. Supreme Court invalidated. Here’s what you need to know to request IEEPA tariff refunds.

Manufacturers can reduce audit exposure with agentic AI. Complex indirect tax rules and evolving requirements make tax and compliance challenging for manufacturers. Find out how Avalara Agentic Tax and Compliance™ can help improve tax and compliance for manufacturers, reducing audit risk and freeing time for more profitable activities.

Retailers can improve efficiency with automation. Multichannel retailers often find it challenging to research tax obligations, track nexus, and fulfill all other sales and use tax obligations. Integrated tax tools can save time and improve operational efficiency.

Construction: Managing multistate compliance. As contractors expand geographically, they must navigate changing sales tax requirements for construction contractors. Automating tax compliance can help construction contractors apply consistent tax logic across jobs and jurisdictions. 

Inside Agentic Tax and Compliance™ engineering. This technical deep dive explains how Avalara combines deterministic systems with AI agents to automate workflows like data validation and variance detection, while keeping human oversight in place.

The Avi for Chrome extension brings tax help into your workflow. Discover the latest developments in the Avi for Chrome browser extension, which integrates tax guidance directly into platforms like QuickBooks, Shopify, and WooCommerce.

Embedded Outlook workflows for Dynamics 365. Avalara agents can now process tax-relevant data directly from email, extracting and validating information before it enters the ERP. This reduces manual entry and helps improve data consistency.

Local service tax research expands to city and county level. Avalara Tax Research now includes local-level service taxability across jurisdictions. New tools, including AI-powered assistance, help teams compare rules and identify inconsistencies more quickly.

What changed in March 2026?

Key developments include Washington’s new millionaires’ income tax and California rulings on marketplace nexus.

How are tariff rulings affecting refunds?
The U.S. Supreme Court’s February 20, 2026, ruling on IEEPA tariffs is driving a large-scale refund process overhaul at CBP.

Where is agentic AI having the most impact?
Agentic AI is helping businesses automate a growing number of tax compliance tasks. This helps reduce manual work, and improves alignment between tax determination, documentation, and reporting.