UK: 
USA:
Sales tax rules across the United States continue to evolve, particularly for businesses selling digital products and software. Rather than introducing a single national approach, individual states are expanding their own rules, making it increasingly important for businesses to keep track of their tax obligations.
1. Taxing SaaS and digital products
One of the biggest trends across US sales tax is the growing number of states taxing digital products and software. California and Colorado are both introducing significant changes from 1st January 2027, bringing many SaaS and software transactions into the sales tax regime. California will apply its 7.5% state sales tax to qualifying prewritten software and SaaS, while Colorado will tax SaaS, downloaded software and many mobile applications at its 2.9% state rate, before any applicable local taxes.
These changes add to an already complex picture for digital businesses. Taxability can differ from state to state, meaning businesses need to understand not only where they have an obligation to collect sales tax, but also exactly how their products are treated in each state.
2. Kentucky removes 200-transaction threshold
Kentucky has also changed how remote sellers determine whether they have economic nexus. From 1st August 2026, the state removed its 200-transaction threshold. Businesses selling into Kentucky now need to consider the $100,000 annual sales threshold, rather than also having to monitor the number of transactions they make.
3. South Dakota prepares for sales tax rate increase
Looking further ahead, South Dakota is set to increase its state sales tax rate from 4.2% to 4.5% on 1st July 2027. The increase will end the temporary rate reduction introduced in 2023, with the additional revenue being directed towards property tax relief.
While the change may seem small, businesses will need to make sure their tax technology and billing systems apply the correct rate from the effective date, particularly where transactions are processed automatically.
Together, these changes highlight the wider challenge of managing US sales tax. Rules around taxability, nexus and rates continue to change at state level, making it important for businesses to keep their tax determination systems and processes up to date.
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