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New Year, New Rules: Confirm Your 2026 Sales Tax!

Sales tax compliance remains a major hurdle for businesses in 2026. With several states moving toward simplified revenue-based nexus rules and the massive federal tax overhaul, the One Big Beautiful Bill Act (OBBBA) taking effect, staying up to date is no longer optional.

Key 2026 Nexus & Marketplace Developments

States are increasingly discarding complex “transaction count” thresholds (e.g., the 200-transaction rule) in favor of simple gross revenue benchmarks.

Removal of Transaction Thresholds: Illinois officially joined the trend on January 1, 2026, removing its 200-transaction count. Now, remote sellers only trigger nexus if they exceed $100,000 in sales.

Service Occupation Tax (SOT): Also new for 2026, marketplace facilitators in certain states are now liable for taxes on the transfer of tangible personal property, even when it is part of a service sale.

Uniformity: Expect more states to align their marketplace facilitator laws to require the collection of bundled goods, shipping, and delivery fees under a single collection requirement.

The Expanding “Digital Tax” Net

As the economy shifts further into the cloud, states are broadening their tax bases to fill budget gaps:

SaaS & Streaming: States such as Louisiana and Maryland have either solidified or expanded taxes on Software-as-a-Service (SaaS), digital advertising, and streaming subscriptions.

Generative AI: Indiana recently set a precedent for taxing AI-generated content and services. In 2026, expect more jurisdictions to categorize “AI-as-a-Service” as taxable software.

Exemptions for Necessities: In a counter-trend, Arkansas and Illinois have eliminated state-level sales tax on groceries as of January 1, 2026 (though local taxes may still apply).

New 2026 Compliance Hurdles

Retail Delivery Fees (RDF): Following Colorado and Minnesota’s lead, more states are considering per-order fees for e-commerce deliveries to fund infrastructure. Note: Colorado’s RDF rate was adjusted to $0.28 effective mid-2025 and remains a key tracking item for 2026.

The “15% Penalty” Rule: In some jurisdictions (such as Illinois), failing to provide proper location data for destination-based sales can result in a flat 15% tax rate applied to those receipts during an audit, a significantly higher cost than standard rates.

SALT Deduction Increase: Under the OBBBA, the federal State and Local Tax (SALT) deduction cap has been increased to $40,000 for 2026, reshaping the tax-planning landscape for business owners.

Proactive Steps for 2026

To avoid the steep penalties of non-compliance—which in states like New York can reach $500 per day for unregistered businesses—take these steps:

Audit Your Tech Stack: Ensure your tax engine can distinguish between AI services, SaaS, and digital goods.
Review Nexus Monthly: With the removal of transaction counts, “high-ticket, low-volume” sellers may find themselves below thresholds in some states and above them in others.
Leverage Compliance AI: Use automated tools to reconcile marketplace data against direct sales to catch “facilitator gaps” before an auditor does.

Important Note: AI is now a standard tool for state tax enforcement. Jurisdictions are using machine learning to cross-match payment processor data with reported returns in real-time.

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– Mike Doherty: Founder, Understanding eCommerce.