July 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 July 2026. Each could affect your business.

• State sales tax rules continue to shift. New exemptions, SNAP food restriction waivers, software taxability changes, and upcoming sales tax holidays mean compliance obligations are changing fast for retailers, software companies, and subscription businesses alike.
• Global tariffs remain volatile. New Section 338 tariffs on Canadian imports, ongoing IEEPA refund processing, and shifting de minimis policies are adding cost and complexity for businesses engaged in cross-border trade.
• AI and product innovation are reshaping compliance. Avalara continues to expand AI-powered capabilities and deliver smarter, faster tax workflows across the platform.

Colorado broadens software sales tax. Colorado HB 26-1223 repeals the state sales tax exemption for most, but not all, electronically delivered software starting January 1, 2027. Discover what’s changing and how it impacts your tax obligations.

Colorado and Netflix settle streaming tax dispute. In July 2026, Netflix and the Colorado Department of Revenue settled their decade-long legal dispute over the taxability of streaming services. Learn about the Netflix-Colorado case and what the settlement means for businesses that sell digital goods.

Connecticut creates two sales tax exemptions for school backpacks. Connecticut’s Public Act No. 26-68 created two sales tax exemptions for backpacks: one permanent, one tied to the annual tax-free week. Learn how the conflicting language could complicate compliance for retailers.

Sixteen states offer school sales tax holidays in August 2026. This August, 16 states will provide a temporary sales tax exemption for clothing and/or school supplies. See the full state-by-state guide to 2026 sales tax holidays for dates, price caps, and qualifying products.

SNAP waivers disrupt compliance for food retailers. The USDA has granted 23 states SNAP food restriction waivers excluding candy, soda, or other nonnutritious items from SNAP benefits. Each state’s rules are different. Learn how these waivers are disrupting compliance for businesses that accept SNAP benefits.

Texas resale certificates protect sellers from sales tax liability. Eligible businesses can purchase taxable inventory for resale without paying Texas sales tax if they provide the seller with a valid resale certificate. The resale certificate relieves the seller from liability for not collecting sales tax on the transaction. Review when Texas sellers need resale certificates and how to stay compliant.

Digital products taxability rules shift across states. States take different approaches to taxing digital goods and change taxability rules frequently. On January 1, 2027, Colorado will begin taxing most downloaded software, and California will start taxing prewritten software and SaaS. Use our updated state-by-state guide to the taxability of digital products to find out where your sales are taxable.

Streamlined Sales Tax (SST) simplifies multistate sales tax compliance. The SST program simplifies sales and use tax compliance for businesses selling across its 24 member states and provides free compliance services for qualifying volunteer sellers. Avalara is one of just five SST Certified Service Providers (CSPs) and assumes liability for calculation errors in SST member states. Learn how the Streamlined Sales Tax program works and whether your business qualifies for free compliance services.

Drop shipping complicates sales tax compliance. Drop shipping can confuse sales tax compliance because it involves two businesses, two sales transactions, and often multiple states. Whether the retailer or drop shipper is responsible for collecting tax depends on several factors, including which party has nexus in the customer’s state and whether a valid resale certificate is on file. Review the sales tax rules for drop shipping, and how to manage exemption certificates for drop shipment sales.

Recurring billing models create recurring tax obligations. Subscription businesses can trigger new sales tax requirements in multiple states faster than expected. See five subscription sales tax risks every growing business should know about.

U.S.-Canada trade war heats up. The U.S. is preparing to impose a new 50% tariff on certain Canadian imports, including some that would otherwise qualify for duty-free status under the United States-Mexico-Canada Agreement (USMCA). This will be in addition to the 10% tariff that took effect July 24, 2026. Stay current on U.S.-Canada trade war developments and the impact on cross-border compliance.

Tariff whiplash continues in 2026. Tariff policy in 2026 is proving to be as volatile as it was in 2025. Recent developments include the expiration of Section 122 tariffs and the announcement of new Section 301 and Section 338 tariffs. Get the full 2026 tariffs timeline and an overview of how new trade rules can impact your business.

More countries end de minimis exemptions for low-value imports. The U.S. isn’t the only country eliminating duty-free status for low-value imports. On July 1, 2026, the EU implemented a €3 customs duty on small parcels valued at €150 or less. Find out what the end of de minimis means for businesses that import or ship low-value goods.

New Section 338 tariffs target Canada. On July 20, 2026, President Trump invoked Section 338 to impose an additional 50% tariff on a wide variety of Canadian goods — effective August 19, 2026. Learn what Section 338 tariffs are, what goods are affected, and how to prepare.

At least four states are providing gas tax relief in 2026 to help consumers and businesses cope with higher fuel prices. Gas tax suspensions can complicate compliance for fuel sellers because they often take effect quickly and may only pause certain taxes while leaving others in place. See which states have gas tax holidays in 2026, the dates and affected taxes, and what compliance teams need to know.

Fuel tax volatility creates compliance headaches. Fluctuating fuel prices and new gas tax holidays are creating compliance headaches for fuel distributors and retailers. Automated fuel tax compliance solutions help businesses track rate changes, apply the right taxes, and reduce audit exposure. Read how fuel tax changes affect compliance.

Sales tax and excise tax require a unified compliance solution. Businesses in industries like fuel, tobacco, and alcohol often face both sales tax and excise tax obligations on the same transaction. The two tax types are calculated very differently, so a unified compliance solution can help businesses improve reporting accuracy, reduce audit risk, and simplify management across both tax types. Find out why businesses in fuel, energy, and other industries benefit from a single solution for both sales tax and excise tax.

Enterprises tackle tax issues with AI-enabled compliance. Fragmented compliance systems create “compliance debt” that drains resources, increases audit exposure, and limits scalability. Discover how leading enterprises are building compliance infrastructure that supports audit-ready outcomes, resilience, and stronger control for teams and jurisdictions.

Product Pulse highlights smarter tax workflows. The latest edition of Avalara Product Pulse describes product updates that incorporate more intelligent, in-context experiences throughout the Avalara platform. See the full list of Avalara platform enhancements for June 2026.

Avalara deepens Microsoft Dynamics 365 tax compliance integration. Avalara continues to invest in its integration with Microsoft Dynamics 365, offering built-in tax automation across Dynamics 365 Finance, Business Central, Field Service, Commerce, and Sales. Learn how Avalara and Microsoft Dynamics 365 work together to simplify tax compliance for your enterprise.

Businesses should monitor upcoming sales tax holidays, SNAP food restriction waivers, and new rules affecting digital goods.

Gas tax holidays, rate changes, and shifting excise tax rules can take effect quickly. Automated fuel tax compliance solutions help businesses apply the correct tax rates during holiday periods and reduce the manual effort required to track changes across jurisdictions.

Avalara Agentic Tax and Compliance™ solutions automate tax calculation, file returns, manage exemption certificates, and comply with cross-border obligations. With more than 1,400 signed partner integrations, Avalara is uniquely positioned to help businesses stay compliant as they grow.