Navigating 2025 Sales Tax Changes: Simplifying Compliance and Reducing Headaches
Sales tax shouldn’t be your full‑time job
When the South Dakota v. Wayfair decision came down in 2018, it opened the door for states to collect sales tax from out‑of‑state merchants. Since then, navigating economic nexus thresholds, tracking rates in dozens of jurisdictions and staying on top of changing rules has felt like a second job. In 2025 the complexity isn’t going away, but some changes may actually simplify your life—if you know about them.
Joshua’s recent podcast episode breaks down four big changes:
Economic nexus thresholds are evolving. States like Alaska and Utah have removed their transaction thresholds. You now only need to register in those states if you cross a revenue threshold—$100,000 in Alaska’s case. That could reduce the number of states where you have to file returns.
Rates are going up in key states. Louisiana raised its base rate from 4.45 % to 5 % and now has the highest sales tax in the country. California adjusted its unified rate to 7.25 %. Local jurisdictions are adjusting rates too.
Digital products are being taxed. More states now tax downloadable apps, streaming services and other digital goods. If you sell ebooks or software, you may owe tax where you didn’t before.
Retail delivery fees are arriving. Colorado and Minnesota introduced per‑order fees on deliveries of tangible goods. Other states may follow. These charges aren’t sales tax but separate levies added to the invoice.
What do these changes mean for you?
Fewer filings—if you monitor your revenue
Removing transaction thresholds in Alaska and Utah is a win for small merchants. Under old rules, a merchant who sold just 210 low‑priced items into Alaska would have triggered the 200‑transaction threshold and been forced to collect tax, even if revenue was only $2,000. Now the only trigger is gross sales. You may no longer need to file returns in states where you were previously collecting tax.
However, that’s only true if you monitor revenue by state. Use accounting or e‑commerce software to track your gross sales and set alerts when you approach a threshold. If you drop below a state’s new threshold, consider deregistering to stop filing returns and remitting tax. Deregistration isn’t automatic; you need to work with your CPA or file paperwork with the state.
Higher rates silently erode margins
Rate hikes may seem small, but they add up quickly. Louisiana’s combined state and local rate now tops the charts. If your checkout isn’t updated, you’ll either under‑collect and pay the difference out of your pocket or over‑collect and risk non‑compliance. Update tax tables in your e‑commerce platform or use an automated tax service. Proactively communicate price changes to customers so they understand you’re passing through higher taxes, not increasing your product price.
Digital goods taxation widens the net
The boom in digital products means states are searching for new revenue. Audiobooks, apps, video games and streaming services are now taxable in many jurisdictions. Even downloadable worksheets and educational materials can be taxed. Review your product catalog and identify which items may now be taxable. You may need to configure tax rates by state if some jurisdictions tax digital goods and others don’t.
Retail delivery fees add complexity
Colorado and Minnesota have rolled out per‑order retail delivery fees. These are not sales taxes but separate surcharges tied to deliveries of physical goods. While the fees are small, they add complexity to invoicing and can confuse customers if bundled under “taxes and fees.” Display them as a separate line item and explain their purpose. Check whether your tax automation provider supports these fees; if not, you may need to switch providers. Expect more states to adopt similar fees.
A game plan for 2025 sales tax changes
Inventory your nexus states. Make a list of every state where you currently collect tax. Compare your gross sales against each state’s economic threshold. You may find you can deregister in some states and avoid filing returns.
Set revenue alerts. Use accounting software, spreadsheet formulas or calendar reminders to notify you when sales approach a threshold. Act promptly to register or deregister when you cross a line.
Review your product catalog. Identify digital goods and verify whether they are taxable in each state. Update your tax settings accordingly.
Update tax rates. Ensure your checkout system reflects Louisiana’s new 5 % base rate, California’s 7.25 % rate and any local changes. Consider using a tax automation tool to keep rates current.
Add retail delivery fee logic. If you ship to Colorado or Minnesota, implement logic to calculate and display the fee. Add a tooltip or FAQ explaining the fee so customers know it’s mandated by the state.
Communicate price changes. If rates increase your costs, let customers know. Transparency reduces sticker shock and builds trust.
Monitor legislative updates. Sales tax laws evolve quickly. Subscribe to a tax news service or follow your state’s tax authority. Encourage your software provider to notify you of changes.
Bringing it all together
Staying compliant with sales tax doesn’t have to consume your day. The removal of transaction thresholds in some states can actually reduce your workload if you monitor revenue. Rate hikes and digital goods taxation are manageable with updated tax tables and clear communication. Retail delivery fees are small but require attention. Dedicate a few hours to auditing your sales, updating your systems, and communicating with customers. Then get back to what you love, growing your business.
