Multi-State – Sales Tax Changes Accelerating

by Michael Cohn
September 7, 2017

States and localities made nearly 400 sales tax rate changes in the first half of this year, a big jump of over 30 percent from the same period last year.

Sales tax technology developer Vertex found 398 sales tax rate changes in the first six months of 2017, a 30.49 percent increase from the 305 changes in the first six months of 2016.

Two of the biggest changes happened in California and New Jersey. Effective Jan.1, 2017, California dropped its sales tax rate from 6.25 to 6.00 percent, though that didn’t change the combined tax rates because the 0.25 reduction from the state was added to all of the Golden State’s counties. Also taking effect on Jan. 1, 2017, New Jersey dropped its sales tax rate from 7.00 to 6.875 percent.

Sales tax rates are always changing while new taxes are always being added, Vertex noted. Over the past 10 years, there were 2,361 new sales and use taxes, an average of 224 per year; plus 4,209 sales and use tax changes, an average of 400 a year; adding up to a total of 6,570 new and changed sales and use tax rates, or 625 per year on average.

Puerto Rico now has the highest “state” sales tax rate in the country: 10.50 percent. The commonwealth enacted a value-added tax in 2015, and it was set to take effect last year. But the VAT was delayed and eventually the legislation was repealed. Instead, Puerto Rico will continue with its existing sales and use tax.

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