No Sales Tax on Groceries
Oklahoma has passed Enrolled House Bill No. 1955, which amends the Oklahoma Sales Tax Code to introduce a zero state sales tax rate on certain food items and defines terms such as “bundled transaction” and “distinct and identifiable products.” It also expands definitions related to tangible personal property and outlines the effects of sales tax levies by political subdivisions, including prohibitions on modifications to the levy of sales tax for a specified duration.
The Act clarifies calculations for "gross receipts" and "sales price," outlines conditions for bundled transactions, dietary supplements, and software, and addresses price reductions, business presence, and manufacturing activities. It also defines classifications for over-the-counter drugs, prepared foods, and provides guidelines for the sale and resale of tangible property and services.
New provisions impose a zero-percent excise tax on retail sales of food and food ingredients for off-premises human consumption until June 30, 2025, and require counties or municipalities to exclude “food and food ingredients” from any increased sales tax rate when submitting tax questions to voters.
Tax Surge on Phone Bills
The Tax Foundation reports that a typical American household with four phones on a family share plan, paying $100 per month for taxable wireless service, would pay nearly $320 per year in taxes, fees, and government surcharges, up from $294 last year. Nationally, taxes, fees and government surcharges make up a record-high 26.8% tax on taxable voice services.
After decreasing in 2023, the Federal Universal Service Fund charge increased in 2024 from 10.8% to 12.8%. State and local taxes also increased, from 13.7% to 14%.
Oklahoma had the largest increase of any state in 2024, from 26.9% to 31.1%, due to increases in the 911 fee and the State Universal Service Fund charge. Illinois residents continue to have the highest wireless taxes in the country, at 36%, followed by Washington (34.4%) and Arkansas (34.2%). Idaho residents pay the lowest wireless taxes, 16.1%.
Corn Just Got More Expensive
The Nebraska Department of Revenue announced changes in local sales and use tax rates as of Oct. 1: Adams will impose a new 1% rate; Grafton and Kenesaw will each impose a new 1.5% rate; Lyons will increase its rate from 1.5% to 2%; and Mullen and Nelson will each increase their rate from 1% to 1.5%.
With the recent approval by the Nebraska Department of Economic Development of two additional Good Life Districts (GLD), the state sales tax rate of 2.75% will be effective on October 1, 2024, on taxable transactions occurring within these GLDs that are also located within the city boundaries. The two newest GLDs are located in Grand Island and Bellevue.
No Seller Left Untaxed
Starting in January, Illinois will implement changes to its sales tax sourcing rules for out-of-state sellers. Public Act 103-0983 aims to simplify tax compliance by applying destination-based sourcing uniformly for both remote retailers and out-of-state sellers shipping goods from outside the state.
Out-of-state retailers with a physical presence in Illinois will be required to collect state and local taxes at destination-based rates when shipping from outside Illinois, aligning them with the tax obligations of remote sellers. Sellers shipping from within Illinois will pay taxes based on the ship-from address, while those shipping from outside the state are subject to the state use tax without additional local taxes.
Marketplace inventory used solely for registered marketplace facilitators does not create a physical presence for sellers, as the facilitator is responsible for tax collection. Sellers without a physical presence in Illinois will continue to follow destination-based sourcing, charging taxes based on the delivery address.
States Urged to End Sales Tax Guesswork
At recent U.S. Senate Finance Subcommittee hearings on Fiscal Responsibility and Economic Growth, witnesses at recent hearings emphasized the need for states to simplify the patchwork of sales tax regulations and remote-seller obligations to provide relief for small businesses.
Testimonies were provided by Joe Bishop-Henchman, executive VP of the National Taxpayers Union Foundation; Craig Johnson, executive director of the Streamlined Sales Tax Governing Board; and Diane L. Yetter, president of Yetter Consulting Services and the Sales Tax Institute. Yetter emphasized that determining the correct tax to collect shouldn’t be a "guessing game" for sellers, calling for clear, accessible, and fair tax rules.
Witnesses advocated for uniform nexus requirements and definitions, urging states to simplify compliance and improve transparency. Bishop-Henchman suggested that even states not joining the Streamlined Sales Tax Agreement could still demonstrate efforts to reduce compliance costs for businesses.
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