In the first half of 2025, states made 408 sales tax rate changes and new rates – a 24% increase compared to the first half of 2024 – as many local governments continue to grapple with the state of the economy and generating revenue. These findings are part of the 2025 Mid-Year U.S. Rates and Rules Report from Vertex Inc., a provider of indirect tax solutions.
Local jurisdictions, including cities and districts, account for most of these updates and while only one state raised its sales tax rate this year, more may follow given the evolving federal funding landscape and shifting tax policy dynamics. This depends on how several compounding factors evolve throughout the rest of 2025. These include rising inflation, ongoing global trade disruptions and diminishing consumer spending. Another key element is the growing uncertainty around federal tax policy, especially regarding tariffs, federal matching funds and the passage of the Federal Tax Act in July 2025.
“The sharp year-over-year rise in sales tax rate and rule changes highlights an increasingly urgent challenge for businesses operating in the U.S., as the sheer volume of these updates—particularly at the local level—is creating a complex and shifting compliance landscape,” said Michael Bernard, VP Chief Tax Officer, Vertex. “This year’s surge in new taxing jurisdictions and the accelerated pace of local-level changes—driven by expiring federal funding and mounting fiscal pressure—has expanded the patchwork of tax rules businesses must navigate, demanding greater agility and precision in compliance strategies.”
Amid evolving economic conditions, many jurisdictions are proactively adjusting tax policies to support essential services like road maintenance, public safety, and infrastructure. These shifts are reflected in several key findings from the Vertex 2025 Mid-Year Sales Tax Rates and Rules Report:
- A notable shift in state sales tax rates: One state, Louisiana, increased its sales tax rate from 4.55% to 5% on January 1. This marked a nearly 10% jump – a noteworthy increase as there have only been three other state sales tax rate changes since 2020, with none occurring in 2024.
- Local tax changes accelerated: County rate changes saw a significant rise of 42%, increasing from 36 in the first half of 2024 to 51 in the first half of 2025. Similarly, district rate changes increased by 23%, jumping from 26 to 32.
- Surge in new taxing jurisdictions: New taxing counties grew from 1 to 7, new taxing cities doubled from 30 to 60, and new district taxes spiked by 82%, from 77 to 140.
- City rate increases heavily outpaced decreases: 6:1 was the approximate ratio of city sales tax rate increases to decreases. Meaning for every one city rate decrease, there were nearly six (5.9) city rate increases. Despite a decline in the overall volume of city tax rate changes this year (from 159 in 2024 to 117), most of these changes were increases.
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