Key takeaways
- State-specific updates impact multiple industries: From software and NFTs to leasing and infrastructure, several states—including Maine, Michigan, and Vermont—have introduced new or clarified tax rules.
- Exemptions and incentives expanded: States like New Jersey, Tennessee, Texas, and Washington have introduced or extended tax exemptions to support investment, construction, and technology sectors.
- Compliance reviews required: Illinois now mandates annual reviews for Direct Pay Permit holders, emphasizing the growing importance of accurate, state-level sales tax compliance.
In short: Several US states changed their sales tax rules in 2024 and 2025. Vermont now taxes all prewritten software, and Maine taxes each lease payment. Michigan taxes some NFTs. New Jersey, Tennessee, Texas and Washington added or extended exemptions, and Illinois requires annual reviews for Direct Pay Permit holders.
Update (October 2026): Vermont's tax on all prewritten software, including software accessed remotely, took effect on July 1, 2024. Maine's tax on each lease or rental payment took effect on January 1, 2025.
Here is an overview of the recent sales and use tax updates in each state.
Illinois
Illinois Direct Pay Permit holders must now review their purchase activity every year to verify compliance. The review covers purchases made in the preceding 12-month period. It helps ensure accurate tax reporting and compliance with state rules.
Maine
From January 1, 2025, Maine will charge sales tax on each payment a lessee makes for leased or rented tangible personal property. This affects businesses with leasing agreements. They will need to adjust their sales tax processes.
Michigan
Michigan has clarified how it taxes non-fungible tokens (NFTs). If an NFT represents ownership of tangible personal property, the sale of the NFT counts as a taxable sale of tangible personal property. Businesses in the NFT marketplace should check how this ruling affects their tax liabilities.
New Jersey
New Jersey will now exempt sales of investment metal bullion and investment coins from sales and use tax. This gives investors relief and makes buying precious metals in the state simpler from a tax point of view.
Vermont
From July 1, 2024, Vermont will charge sales and use tax on all sales of prewritten computer software. This includes software bought on physical media, downloaded or accessed remotely over the internet. Businesses should prepare for possible cost increases and adjust their pricing as needed.
Tennessee
The Tennessee Department of Revenue ruled that piping bought by a contractor for a municipal fresh water plant counts as industrial machinery. This makes the piping exempt from sales and use tax. The ruling shows the state's support for municipal infrastructure projects.
Texas
The Texas Comptroller ruled that materials used to build new railroad tracks or roadbeds are essential to locomotive and train operations. These materials are therefore exempt from sales and use tax. The ruling benefits the rail industry and supports infrastructure development.
Washington
Washington has extended two tax breaks until December 31, 2033. These are the reduced business and occupation (B&O) tax rate and the sales and use tax exemption for gases and chemicals used to make semiconductor materials. The aim is to strengthen the semiconductor industry and encourage innovation.
What does this mean for businesses?
The two changes with the widest reach are in Vermont and Maine.
- Software sellers in Vermont: Prewritten software is taxable however it is delivered, including software accessed remotely. Custom software written only for one customer is not taxable. A separately stated charge for customizing prewritten software is also exempt. If the vendor does not collect the tax, the buyer owes use tax.
- Lessors in Maine: Tax applies to each periodic payment on leases in effect on or after January 1, 2025, not only on new leases. Lessees claiming an exemption must give the lessor a completed exemption certificate or affidavit.
- Vehicle leases in Maine: Automobile rentals of less than one year stay at the 10% rate. For automobile leases of one year or more, the full tax is still due in the month the lease begins.
- Maine refunds: Lessors who paid Maine sales or use tax on qualifying property bought between 2023 and 2025 may request a limited refund between January 1 and March 31, 2027.
You can find the details on the Vermont Department of Taxes page and in the Maine Revenue Services notice to lessors.
Key dates
- July 1, 2024: Vermont starts taxing all prewritten software, including software accessed remotely.
- January 1, 2025: Maine starts taxing each lease or rental payment.
- January 1 to March 31, 2027: Window for Maine lessors to request a limited refund.
- December 31, 2033: Washington’s semiconductor tax breaks are extended to this date.
Do you need help with your sales tax compliance? Book a free call with one of our tax experts to find bespoke solutions for your business, optimize your tax costs, and reach millions of new potential customers.
How Taxually handles this
Taxually’s LumaTax runs a nexus analysis on your sales, helps you register in the states where you must collect, and prepares and files multi-state sales tax returns, including Canadian GST/HST. LumaTax is currently available to enterprises and accounting firms. For the full workflow, read how to automate US sales tax filing in every state.
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Frequently asked questions
Which states have recently changed their sales tax regulations?
Recent updates affect Illinois, Maine, Michigan, New Jersey, Vermont, Tennessee, Texas, and Washington, covering new rules, exemptions, and compliance requirements.
What is the key change in Illinois?
Illinois Direct Pay Permit holders must now complete an annual compliance review of their purchase activity to ensure accurate reporting for the previous 12 months.
How does Maine’s new rule affect leasing businesses?
Starting January 1, 2025, Maine will impose sales tax on each lease payment for tangible personal property, requiring businesses to update their billing and tax processes.
Are digital products and NFTs affected?
Yes. Vermont now taxes all prewritten software—whether downloaded or cloud-based—and Michigan considers certain NFTs tied to tangible property as taxable sales.
Is SaaS taxable in Vermont?
Yes. Since July 1, 2024, Vermont taxes all prewritten computer software, including software accessed remotely over the internet. Custom software written exclusively for one customer is not taxable.
Which industries benefit from new exemptions?
- New Jersey: Investment metals and coins are now tax-exempt.
- Tennessee and Texas: Infrastructure and construction materials qualify for exemptions.
- Washington: Semiconductor producers enjoy extended tax relief until 2033.
