January 2023 sales tax changes

A new year might start with a trip to the gym, a blank page in your day planner, or a headache from New Year’s Eve celebrations the night before. Our new year always starts with fresh sales and use tax rates and legislative changes.

The following states are enacting rate changes on January 1, 2023:

• Arizona
• Arkansas
• California
• Colorado
• Connecticut
• Delaware
• Florida
• Georgia
• Illinois
• Kansas
• Kentucky — amendments to the transient room tax to include campgrounds and RV parks, new excise tax on vehicle rentals, car sharing rentals, limousine services, and more; plus an excise tax on electric vehicle power
• Louisiana — changes for Natchitoches Parish
• Michigan — inflation-adjusted rate on the Motor Fuel Tax Act
• Minnesota — change to the cigarette sales tax and an additional excise tax on cigarettes
• Missouri — economic nexus laws take effect
• Nebraska — new tax rates and municipal boundary changes
• New York — suspension of certain taxes on motor fuel and diesel motor fuel
• North Dakota
• Oklahoma
• Rhode Island — electronic filing requirement for large businesses
• South Dakota
• Texas
• Utah
• Washington
  

If you sell goods into the Show-Me State, you’ll need to start collecting Missouri taxes beginning January 1. This makes Missouri the last state with sales tax to get on board with economic nexus laws since the 2018 U.S. Supreme Court decision. Find out what this means for you.

In March 2022, the Kentucky General Assembly passed a measure to broaden sales tax to include services like conferences, events, lobbying, web hosting, and some excise taxes on electric vehicle power. These changes go into effect on January 1. Learn more at the Avalara Tax Desk.

Starting January 1, Colorado and Oklahoma will require online marketplaces to collect and report information on high-volume sellers.

Shoppers in Colorado and Iowa might find their trip to the drugstore or grocery less taxing than usual. As of January 1, both states are exempting diapers and feminine hygiene products from sales tax. Virginia is also lowering the sales tax rate on food and personal hygiene items.

Taxes on food and food ingredients in Kansas are dropping as of January 1, and will continue to lower until items are fully exempt in January 2025. Learn more about food tax exemptions.

Effective January 1, state sales and use tax rates on food and personal hygiene items (including diapers) are dropping from 2.5% to 1%. These items are, however, still subject to local taxes. 

California consumers will have more control over the personal information businesses collect as of January 1, when the state’s expanded privacy rights law takes effect. Retailers will have to adjust their business practices accordingly.

New excise taxes on crude oil and petroleum products and the Hazardous Substance Superfund tax on domestic crude oil and imported petroleum products take effect on January 1.

If you do business internationally, you’ll want to be aware of new e-invoicing requirements in several countries, including Portugal, Saudi Arabia, and Serbia. Learn more about e-invoicing.

Stay up to date on all the sales and use rate changes with the Avalara Tax Desk.