Top 2025 income and sales tax changes in the US
by April 15, 2025
Sales tax rules, rates, and compliance processes are dictated by each state, and are subject to change based on individual state government legislation. However, sales tax isn’t the only tax type that sees changes. The IRS announces federal income tax changes as well, and we’re highlighting a few of those updates going into effect in 2025, in addition to some sales tax changes that could impact businesses like yours.
Standard deduction increased
The IRS often makes inflation adjustments, and this year is no different. For the 2025 tax year (to file in 2026), the IRS has announced an increase in the standard deduction amount. For married couples filing jointly, the standard deduction is now $30,000 an increase of $800 from 2024. For single taxpayers and married individuals filing separately, the standard deduction is $15,000, an increase of $400 from 2024. Finally, for the heads of households, the standard deduction is $22,500, an increase of $600. If you are new to standard deductions, the IRS has more information listed on their website.
New and increased tariffs
Tariffs are not an income or sales tax, they are a type of tax levied when goods are imported into a country. Tariffs are paid by the person or business importing the goods, often during the customs clearance process. Many businesses pass the tariff costs onto the customer during the checkout process. Recently, the US has increased tariff rates (or created new tariffs) for goods imported into the country. On April 9th, President Trump announced a 90-day pause on these tariffs, with the exception of China, where the tariff rate was raised to 125%, effective immediately. However, there are 20 categories of electronic products not subject to the 125% tariff on imports from China.
While the majority of these tariffs are paused for now, it’s important to be aware of the different ways they could impact businesses. For businesses that import goods into the US, it’s likely that the increased tariff rates will result in increased operating costs, and potentially negatively impact profit margins.
Even if your business isn’t directly impacted by the tariffs, you will likely see prices go up from suppliers as the increased costs are passed along to the customer. It’s too soon to know the impact of the increased tariff rates, and companies should closely monitor the ongoing tariff news. While neither Stripe Tax or TaxJar offer support for tariff management. If you’re looking for help managing tariffs, we recommend Zonos.
401(k) limits have increased
In the US, individual retirement accounts, like a 401(k) or an IRA, have contribution limits in place to prevent high earners from benefiting more than the average worker. However, these limits are also subject to change based on inflation amounts. The IRS has announced a change that could impact individuals looking to contribute more to their retirement accounts in 2025. The contribution limit for employees who participate in 401(k), 403(b), governmental 457 plans, and the federal government’s Thrift Savings Plan, has increased to $23,500 from $23,000. The limit on annual contributions to an IRA for individuals remains $7,000.
Retail delivery fee legislation
A retail delivery fee is different from a sales tax. While each state has their own unique legislation, a retail delivery fee is generally defined as a fee that applies to transactions involving retail delivery made to a location within a state. A few states, such as Minnesota and Colorado, have had retail delivery fees in place for a while, and many states are following the trend. The following states have introduced or passed retail delivery fee legislation in 2025:
- New York: Twenty-five cent fee on every online delivery sale within New York City
- Hawaii: Fifty cent fee on non-food item deliveries into the state
- Indiana: Allows counties to impose a delivery fee (amount not specified)
- Maryland: Seventy-five cent fee on deliveries into the state, effective June 1, 2025
- Mississippi: Thirty cent fee on deliveries into the state, effective July 1, 2025
- Nebraska: Twenty-seven cent fee on deliveries into the state
- Vermont: Allows for a delivery fee (amount not specified)
Since the retail delivery fee is not a sales tax, TaxJar does not provide support for this fee. However, Stripe Tax does support a few of these retail delivery fees. TaxJar was acquired by Stripe in 2021 to accelerate the future of commerce and compliance. Available in over 100 countries, Stripe Tax enables you to automatically calculate and collect the right amount of tax based on where you are registered, where your customers are located, and what you are selling. Stripe Tax also helps you monitor your obligations and provides reporting for filing and remittance. Learn more about Stripe Tax here.
New states sales tax legislation
From rates, to product taxability laws, to state sales tax portals, many states are making sales tax changes in 2025.
Sales tax rate changes
States change their sales tax rates often, which is why manually managing sales tax compliance is challenging. California introduced over 100 new district sales tax rates that went into effect on April 1, 2025. Additionally. Wyoming introduced its first city-level sales tax in Casper, also effective April 1, 2025.
Given these changes can happen throughout the year, many businesses turn to an automated solution like TaxJar, to automatically calculate and collect sales tax. Our team constantly monitors the latest sales tax laws at the state, county, city, and special taxing district level. When tax rates change, we apply them immediately to our platform. You don’t need to keep up with all of the changes, and can rest assured that you are always collecting the right amount of sales tax. Try TaxJar for 30 days for free today.
Product taxability changes
On top of rate changes, states change which goods and services are taxable. For example, Louisiana recently updated how it taxed SaaS offerings, from exempt to taxable. The state also changed how it manages shipping taxability, determining that it’s generally taxable if shipping is part of the sales price of a transaction, even when separately stated.
Grocery item taxability is also seeing some change. Many states have exempted these items (or taxes them at a reduced rate) from sales tax for years, and additional states are passing legislation to join them. For example, in 2024, Oklahoma deemed grocery items exempt from sales tax, and in 2025, Kansas no longer taxes grocery items. This is part of a larger trend of states removing the sales tax on essential items, like diapers or feminine hygiene products.
New states sales tax portals
Three states: Kentucky, Nevada, and Ohio created new portals that sellers should use when managing their sales tax accounts. We’ve outlined what businesses need to know about these changes in this blog post.
How to manage your tax compliance
No matter the tax type, compliance can be challenging. For many businesses and individuals, managing tax requirements might require assistance. We encourage you to reach out to a tax professional that specializes in the specific tax type guidance. For sales tax support, we’ve highlighted a few important questions to ask when hiring a sales tax accountant here. For help with income tax questions, the IRS has a great resource to find the right tax professional for you.
If you’d like to automate your sales tax compliance, TaxJar is here to help. From automating calculation and collection, to filing and remittance, TaxJar can make compliance easier. To learn more about TaxJar and get started automating your sales tax compliance, start a free, 30-day trial today.
