The combined average U.S. sales tax rate rose for the first time in four years to a 10-year high of 10.1881%, according to a new report.
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More services and digital transactions are also being pulled into the mix, with states reconsidering how they tax services and digital offerings, creating new questions for businesses around what is taxable and where obligations apply.
"Businesses can no longer treat sales tax changes as routine compliance updates," said Vertex senior tax officer Chris Hall in a statement. "Rate and rule changes are happening with greater frequency at a local level across more categories of goods and services. As tax policy becomes more dynamic, businesses need greater visibility, agility and confidence in the systems they rely on to respond."
Jurisdictions are not only changing rates, but they're also redefining what is taxable, where obligations arise, and how quickly businesses are expected to respond, the report noted. As a result, tax is becoming a more strategic business function. Some of the signs include:
Local tax activity is accelerating: The first half of 2026 saw 463 total combined sales tax rate changes and new rates, compared with 408 during the first half of 2025. County-level rate changes have already surpassed the total number of annual county rate changes in each of the past five years, while city-level rate changes increased sharply compared with the first half of 2025.
Fiscal pressure is pushing more revenue activity to state and local levels: Pandemic response funds are receding, federal support for several programs is being reduced, and rainy-day fund measures are beginning to decline. At the same time, political pressure to reduce income and property taxes is leaving many jurisdictions with fewer levers beyond rate increases, base expansion, excise taxes, new fees and service reductions.
Tax base is evolving as services and digital offerings garner more attention: Texas expanded the range of data processing services subject to sales tax, Washington widened its retail sales tax to cover many business, personal and professional services, and states including Nebraska and Maryland have explored broader service tax changes. This indicates a larger shift as consumer and business spending continues to move from goods toward services and digital experiences.
Altogether, the three trends suggest sales and other forms of indirect tax are entering a new phase of complexity. Businesses are confronting a compliance environment that's more fragmented, localized, and tightly connected to broader enterprise decisions than in years past. That requires tax systems that can keep up with policy change, spot risks earlier and support more confident decision-making across finance and operations teams.
International taxes
The report mainly focuses on the U.S., but Vertex sees similar forces reshaping tax regimes abroad. For multinationals, there's now a more dynamic, interconnected regulatory environment, with the following characteristics:
Tax authorities increasing their use of advanced technology: Global tax administrations are piloting and expanding tools to detect anomalies, errors and fraud, while also enhancing customer service and workflow efficiency. As enforcement becomes more automated and data-driven, businesses need better confidence in the accuracy, consistency and audit-readiness of their tax data.
Temporary tax relief possibly creating future revenue pressure: VAT reductions, exemptions, sales tax holidays and excise tax cuts can offer short-term relief, but they can also reduce overall government revenues and increase pressure to raise indirect tax rates or expand the tax base later.
E-invoicing mandates accelerating unevenly: Recent e-invoicing developments have included activity in Spain, France, Germany, Belgium, Croatia, the UAE, Slovakia, Sri Lanka, Malaysia and the Dominican Republic. As more international markets move at different speeds and under different requirements, multinational tax teams face increased complexity in managing compliance across regions.
In short, tax is becoming more connected to how global organizations operate, transact and grow, especially as e-invoicing, real-time reporting and data-driven enforcement expand across markets.
