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.
There have been a number of changes to sales tax regulations in several states across the US in recent months. Here is an overview of those updates.
Illinois
Illinois Direct Pay Permit holders must now conduct an annual review of purchase activity to verify compliance. This review will focus on purchases made during the preceding 12-month period, ensuring accurate tax reporting and compliance with state requirements.
Maine
Beginning January 1, 2025, Maine will impose a sales tax on each payment made by the lessee for leased or rented tangible personal property. This change impacts businesses with leasing agreements and requires adjustments in their sales tax processes.
Michigan
Michigan has clarified that if a non-fungible token (NFT) represents an ownership interest in tangible personal property, the sale of the NFT is considered a taxable sale of tangible personal property. Businesses involved in the NFT marketplace should assess how this ruling affects their tax liabilities.
New Jersey
New Jersey will now exempt the sale of investment metal bullion and investment coins from its sales and use tax. This exemption provides relief to investors and simplifies the tax implications of purchasing precious metals in the state.
Vermont
As of July 1, 2024, Vermont will subject all sales of prewritten computer software to sales and use tax. This includes software purchased on physical storage media, downloaded, or accessed remotely via the internet. Businesses should prepare for potential cost increases and adjust pricing strategies as needed.
Tennessee
The Tennessee Department of Revenue ruled that a contractor’s purchase of piping for a municipal fresh water plant qualifies as industrial machinery, making it exempt from sales and use tax. This exemption underscores the state's commitment to supporting municipal infrastructure projects.
Texas
The Texas Comptroller determined that materials incorporated into the new construction of railroad tracks or roadbeds are essential to locomotive and train operations and are therefore exempt from sales and use tax. This ruling benefits the rail industry and supports infrastructure development.
Washington
Washington has extended, until December 31, 2033, the reduced business and occupation (B&O) tax rate and the sales and use tax exemption for gases and chemicals used in producing semiconductor materials. This move aims to bolster the semiconductor industry and encourage innovation.
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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.
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.
