Have you checked your sales tax obligations lately? If not, you might be walking into a compliance minefield. The September 2025 sales tax update has introduced changes that could significantly impact how you collect, report, and remit taxes across multiple jurisdictions. Moreover, ignoring these updates isn’t just risky; it’s potentially devastating for your bottom line.

Sales tax regulations never sleep. While you’re focused on growing your business, state and local governments continuously adjust their tax codes to capture revenue from evolving commerce models. Consequently, what worked last quarter might leave you exposed this quarter. This comprehensive guide breaks down exactly what changed in September 2025 and what you need to do about it right now.

What’s Changed in Sales Tax This September?

September 2025 marks another significant milestone in the constantly shifting sales tax landscape. So, what’s actually different? Let’s dive into the specifics.

Local Rate Adjustments Across Multiple States

The first half of 2025 represented an unusually busy period for local sales tax rate changes, with many localities across the country raising rates and only a few lowering them or allowing higher rates to expire (taxfoundation.org). Furthermore, this trend has continued into September with hundreds of jurisdictions making adjustments.

Think of your sales tax rate like a moving target. Just when you’ve got it calibrated, another jurisdiction shifts the bullseye. Here’s what’s happening:

• California continues experiencing the largest net increases, with multiple cities and counties adjusting their local option taxes
• Wyoming, Arizona, Utah, and Florida follow closely behind with significant rate modifications
• Over 1,200 local sales tax rate changes have occurred in states, cities, and counties across the United States (Sales Tax Rate Changes as of September 2025)

What does this mean for you? If you’re selling into multiple jurisdictions, your tax calculation system needs constant updates. Additionally, even a 0.25% miscalculation across thousands of transactions adds up quickly. In fact, that small percentage could mean thousands of dollars in liabilities or overpayments.

Washington State’s New Service Tax Expansion

Washington State is making waves with substantial changes taking effect October 1, 2025. Specifically, all temporary staffing services will now become taxable services subject to sales tax and retailing B&O tax, except for staff provided to certain hospitals (Changes Coming to the Washington Sales Tax Landscape on October 1, 2025 ). This marks a significant expansion of Washington’s taxable service base.

But that’s not all. Live presentation services, including lectures, seminars, workshops, and courses delivered live either in person or remotely via the Internet (Alvarez & Marsal) are now being brought under the tax umbrella. Therefore, if you’re providing these services in Washington, your entire business model might need adjustment.

Consider this: you’ve been hosting webinars, online courses, or providing consulting services to Washington clients. Previously, these might have flown under the sales tax radar. Now? They’re squarely in the crosshairs of state revenue departments.

Understanding September 2025 Sales Tax Law Changes

Why should you care about yet another round of tax changes? Because the September 2025 sales tax update isn’t happening in isolation. Instead, it’s part of a larger trend that’s reshaping American commerce.

Why These Updates Matter for Your Business

Sales tax compliance has become exponentially more complex since the landmark Wayfair decision. States have aggressively pursued revenue from remote sellers, and they’re not slowing down. In fact, thirty-nine states began 2025 with notable tax changes, including nine states cutting individual income taxes (Tax Foundation), demonstrating how actively states are modifying their tax structures.

Here’s the reality: every change creates potential liability. Miss one update, and you could face:

1. Back taxes on uncollected amounts
2. Penalties for non-compliance
3. Interest charges compounding daily
4. Audit exposure that scrutinizes your entire operation

Moreover, technology alone won’t save you. While sales tax automation software helps, it can’t replace human expertise in interpreting these complex regulations.

The Ripple Effect on Small and Medium Enterprises

Small businesses bear the heaviest burden. Unlike major corporations with dedicated tax departments, you’re juggling compliance alongside everything else. Furthermore, the September 2025 sales tax update affects various business models differently.

Are you an ecommerce seller? A service provider? A SaaS company? Each faces unique challenges. For instance, digital service providers must navigate the murky waters of product classification. Meanwhile, retailers selling through multiple channels need to track marketplace facilitator responsibilities versus their own obligations.

Think of it like playing a game where the rules change mid-match. Just when you’ve mastered one strategy, the field shifts. That’s the current sales tax environment.

Digital Products Face New Sales Tax Rules

The digital economy continues evolving faster than tax codes can follow. Consequently, states are scrambling to apply traditional tax concepts to modern business models.

Streaming Services Under the Microscope

Streaming services exist in a taxation gray zone that varies dramatically by state. States apply sales tax to digital goods whether they’re rented or owned, and the tax treatment depends on state-specific definitions (Avalara.com). Some states tax streaming subscriptions as services, others as digital goods, and some don’t tax them at all.

Here’s where it gets tricky: a Netflix-style subscription might be taxed differently than a pay-per-view movie. Additionally, educational streaming content might receive different treatment than entertainment content in certain jurisdictions.

What about your business? If you’re offering streaming media, online courses, or subscription-based digital content, you need state-specific guidance. The September 2025 sales tax update hasn’t created uniform rules; instead, it’s reinforced the patchwork nature of digital taxation.

Software as a Service Taxation Updates

SaaS sales tax represents one of the most complex areas in modern tax compliance. Is your software delivered via download or accessed through a browser? That distinction matters enormously.

Furthermore, states classify SaaS differently:

• Some treat it as tangible personal property (taxable)
• Others view it as a non-taxable service
• Several create special categories specifically for cloud-based software
• A few apply different rules for business-to-business versus business-to-consumer sales

States continue exploring taxation of digital goods and services, with ongoing challenges around classification and implementation (Sales Tax Institute). Therefore, if you’re in the SaaS space, your tax obligations might differ dramatically from one customer to the next based solely on their location.

Marketplace Facilitator Requirements Continue Evolving

Remember when selling on Amazon, eBay, or Etsy meant someone else handled all your sales tax headaches? Those days are mostly behind us, but the picture remains complicated.

What Sellers Need to Know About Platform Responsibilities

As states rushed to establish economic nexus laws, marketplace facilitator laws further transformed the collection and enforcement process to put the burden of tax collection on large marketplaces that lawmakers believed were more equipped to comply (numeralhg.com). This shift fundamentally changed ecommerce taxation.

Here’s what happens now: when you sell through a marketplace facilitator (like Amazon, Walmart.com, or Etsy), they typically collect and remit sales tax on your behalf. However, “typically” doesn’t mean “always.” Certain transactions, product categories, or state-specific rules might exclude marketplace collection.

Additionally, marketplace facilitator laws create a false sense of security. Many sellers assume they’re completely covered when they’re actually still responsible for:

• Sales made through their own website
• Transactions in states where the marketplace doesn’t have obligations
• Use tax on business purchases
• Proper documentation and record-keeping

Your Individual Compliance Obligations

Even when marketplaces collect tax, you still need to understand your economic nexus obligations. Why? Because marketplace sales count toward your nexus thresholds in most states.

Consider this scenario: Amazon collects tax on your marketplace sales in Texas. Great! But you also sell through your Shopify store. Those sales combined might push you over Texas’s economic nexus threshold, creating independent registration and filing obligations.

Moreover, the future of sales tax for small businesses looks increasingly complex as states refine their enforcement mechanisms. Consequently, the September 2025 sales tax update reflects states’ ongoing efforts to close perceived loopholes and capture revenue from all commerce channels.

Economic Nexus Thresholds and September 2025 Sales Tax Update

Economic nexus changed everything. Previously, you needed physical presence to create tax obligations. Now? Selling into a state remotely can trigger registration requirements.

Multi-State Selling Gets More Complex

Each state sets its own economic nexus threshold, typically based on sales volume or transaction count. Most states use $100,000 in sales or 200 transactions annually, but variations exist. Furthermore, some states count marketplace sales toward your threshold, while others don’t.

The September 2025 sales tax update hasn’t changed most thresholds, but enforcement has intensified. States are investing heavily in data analytics to identify non-compliant sellers. They’re:

1. Comparing marketplace reports against registered sellers
2. Analyzing cross-state sales patterns
3. Using sophisticated matching algorithms
4. Sharing information across jurisdictions

Think of it like a tightening net. The holes get smaller each year, making it harder to slip through undetected.

Tracking Your Sales Across State Lines

How do you monitor where you’ve triggered nexus? You need robust systems tracking:

• Total sales by state
• Transaction counts by jurisdiction
• Marketplace versus direct sales
• Digital versus physical products
• Taxable versus non-taxable items

Additionally, you must monitor these figures continuously. Waiting until year-end means you’ve already missed registration deadlines, accrued penalties, and created liability.

Many businesses discover hidden sales tax risks only after receiving a threatening letter from a state revenue department. Don’t be that business.

How to Stay Compliant with New Sales Tax Laws

Knowledge without action doesn’t protect you. So what should you actually do about the September 2025 sales tax update?

Documentation Best Practices

Start with impeccable records. You need to document:

• Where each sale occurs
• What products or services were sold
• Whether sales tax was collected
• Which jurisdiction’s rates applied
• Sales tax exemption certificates for wholesale customers

Furthermore, maintain these records for at least four years (some states require longer). During audits, poor documentation costs businesses dearly. Auditors assess tax on questionable transactions when you can’t prove exemptions or proper calculations.

When Automation Isn’t Enough

Yes, Avalara and TaxJar offer powerful automation tools. However, they can’t replace human judgment. Software calculates tax based on programmed rules, but it doesn’t:

• Interpret ambiguous product classifications
• Understand your specific business model nuances
• Represent you during audits
• File amnesty or voluntary disclosure applications
• Negotiate penalty abatements

Moreover, automation creates another risk: over-reliance. When software calculates incorrectly (and it does), you remain legally responsible. The state doesn’t care that your software made a mistake. They care that you didn’t collect the right amount.

The Critical Role of Expert Guidance

Here’s the truth: the September 2025 sales tax update is just one small piece of an enormous, constantly changing puzzle. New excise tax rules for 2025 include increases for nicotine and tobacco products and new taxes on vape products, while states are also rethinking tax policies related to electric vehicles (Avalara.com). Changes happen continuously at state and local levels.

Professional guidance offers:

1. Proactive monitoring of relevant changes
2. Strategic planning to minimize exposure
3. Audit defense if the worst happens
4. Nexus studies identifying your actual obligations
5. Compliance systems tailored to your business model

Think of sales tax expertise like insurance. You hope you never need it urgently, but when you do, it’s invaluable. Furthermore, good advice often costs far less than fixing problems after they occur.

Conclusion

The September 2025 sales tax update represents another chapter in the evolving story of American commerce taxation. With local rate changes affecting thousands of jurisdictions, Washington State expanding its taxable service base, and digital product rules continuing to perplex sellers, compliance has never been more challenging. Additionally, marketplace facilitator laws and economic nexus thresholds create layered obligations that demand constant attention. However, you don’t need to navigate this complexity alone. Understanding the September 2025 sales tax update is crucial, but implementing proper compliance measures protects your business from costly mistakes. Ready to ensure you’re handling these changes correctly? Contact My Sales Tax Firm today for a quick, free consultation. Our experts will review your specific situation and provide clear guidance on your obligations under the latest sales tax laws.