Sales tax is a moving target in the US, with states making changes throughout the year that impact how businesses manage their compliance. Since July 1 is the beginning of the fiscal year for multiple states, many of these changes occur in the month of July.
From legislation changes to updates in product taxability and filing frequency, businesses must adapt swiftly to manage their sales tax obligations. We’ll explain the key changes that have occurred in the first half of 2025 and how they may affect your operations and compliance strategy.

What’s in this article?

• Legislation changes
  
• Product taxability changes
  
• Sales tax rate changes
  
• Filing frequency changes
  
• How Stripe Tax can help
  

Legislation changes

Two notable legislation changes were introduced at the state level.

Utah

On July 1, 2025, Utah removed the 200-transaction threshold from its economic nexus requirements. By eliminating the 200-transaction threshold, businesses with average transaction amounts of less than $500 might be able to postpone economic nexus registration until they reach $100,000 in sales. This change also means that businesses will no longer need to keep track of their individual transaction count in Utah.

South Dakota

Certain states offer taxpayers a discount for filing sales tax on time or for filing electronically. While South Dakota provided a tax allowance credit to businesses that filed electronically in the past, the state has recently removed the credit, effective July 1, 2025 to June 30, 2028.

Product taxability changes

States have also made changes to the taxability of specific products or services.

Shipping

Louisiana has updated its shipping taxability rule. As of January 2025, the state generally taxes shipping as part of the sales price of a transaction, even if the business lists shipping separately on the invoice. If the shipped item is an exempt or nontaxable product or service, then shipping is not taxable.

Grocery items

States continue to remove or decrease the sales tax rate on grocery items. Since 2023, Kansas has slowly phased out sales tax on grocery items, and these items are fully exempt beginning in 2025. On July 1, 2025, Mississippi reduced the sales tax rate on grocery products from 7% to 5%.

IT services

On July 1, 2025, Maryland started taxing certain IT services at a reduced rate of 3%:

• Data processing
  
• Web hosting
  
• Web search portals, libraries, archives, and other information services
  
• Computer systems design and related services
  
• System software or application software publishing services
  

Sales tax rate changes

On July 1, 2025, new local sales tax rates went into effect for the following states:

• Arizona: The city of Phoenix increased its sales tax and use tax rates by 0.5%.
  
• Illinois: At least 50 cities and villages in Illinois increased local sales tax rates, ranging from an additional 0.25% to 2%.
  
• North Dakota: In North Dakota, the city of Dunseith increased sales tax from 1% to 2%. The city of Langdon increased sales tax from 2% to 3%.
  
• South Carolina: Clarendon County’s 1% School District Tax is expiring, reducing the county’s overall sales tax rate to 7%.
  
• Washington: In Washington, San Juan County decreased its sales tax rate by 0.15% to comply with the initial imposition of the Emergency Communication Tax. The City of Stevenson increased its sales tax rate by 0.3% to fund transportation services.
  

Filing frequency changes

States can require sellers to file and remit more or less frequently depending on revenue volume or transaction amount. Generally, high-volume businesses will file and remit more frequently than low-volume businesses. On July 1, 2025, the following states implemented new filing frequencies:

• Hawaii
  
• Kentucky
  
• Maryland
  
• Utah
  
• Virginia
  

If you have sales tax obligations in any of these states, look for communications from the state in your email or physical mail. If you receive a new filing frequency, be sure to file and remit sales tax by the due date to avoid penalties or interest.

How Stripe Tax can help

Stripe Tax reduces the complexity of tax compliance so you can focus on growing your business. Stripe Tax helps you monitor your obligations and alerts you when you exceed a sales tax registration threshold based on your Stripe transactions. In addition, it automatically calculates and collects sales tax, VAT, and GST on both physical and digital goods and services—in all US states and in more than 100 countries.

Start collecting taxes globally by adding a single line of code to your existing integration, clicking a button in the Dashboard, or using our powerful API.

Stripe Tax can help you:

• Understand where to register and collect taxes: See where you need to collect taxes based on your Stripe transactions. After you register, switch on tax collection in a new state or country in seconds. You can start collecting taxes by adding one line of code to your existing Stripe integration or add tax collection with the click of a button in the Stripe Dashboard.

• Register to pay tax: Let Stripe manage your global tax registrations and benefit from a simplified process that prefills application details—saving you time and ensuring compliance with local regulations.

• Automatically collect tax: Stripe Tax calculates and collects the right amount of tax owed, no matter what or where you sell. It supports hundreds of products and services and is up-to-date on tax rules and rate changes.

• Simplify filing: Stripe Tax seamlessly integrates with filing partners, so your global filings are accurate and timely. Let our partners manage your filings so you can focus on growing your business.

Learn more about Stripe Tax, or get started today.