States are reducing transaction thresholds for tax online goods and services, according to Avalara Tax Changes 2024 special report. Driven by the volume of inexpensive goods that could be taxed, the change is likely to be assisted by the Streamlined Sales and Use Tax Governing Board which is encouraging members to elimination transaction thresholds.
“The SST states are the majority of states that have a transaction threshold,” Scott Peterson, Avalara’s VP of government relations, and former Executive Director of SST, said in a prepared statement. “If they get rid of it then very few states will have it.”
Peterson notes that since the Wayfair decision from the U.S. Supreme Court gave states the right to tax online sales from companies outside their borders, states have realized there are many very inexpensive products which produce an amount of tax less than the cost of compliance.
Fourteen states—largely south and southwestern—never imposed thresholds: Alabama, Arizona, Florida, Idaho, Kansas, Mississippi, Missouri, New Mexico, Oklahoma, Pennsylvania, South Carolina, Tennessee and Texas.
Another ten estates—heavily northern—have reduced thresholds California, Colorado, lowa, Louisiana, Maine, Massachusetts, North Dakota, South Dakota, Washington and Wisconsin
