QuickBooks Sales Tax Rate and Rule Updates January 1, 2026 Thank you for using QuickBooks Sales Tax. Each month states make changes to rates and rules. To keep you ahead of these changes we have put together the following summary of rate and rule changes that will occur in QuickBooks Sales Tax this month and may affect your business transactions. Knowing these changes will eliminate surprises to you or your clients. You can use our free sales tax calculator anytime to find rates for any US address. Save time with QuickBooks filing
Simply review, approve, pay, and send. Find out more here. RATE UPDATES Rate changes will take place in the following locations on January 1, 2026. All states that are listed have local rate changes unless otherwise noted as also having a state rate change
TAX ADMINISTRATION UPDATES Alabama
Haleyville, AL
City of Haleyville is changing tax administration from PREMA to ALDOR for its sales and use taxes, impacting reporting on or after February 1, 2026. The city PJ rates are ½ the corporate limit rates.
Rainsville, AL
City of Rainsville is changing tax administration from Avenu to ALDOR for its sales, use, and rental taxes, impacting reporting on or after February 1, 2026. The city PJ rates are ½ the corporate limit rates.
Riverside, AL
City of Riverside is changing tax administration from Avenu to ALDOR for its sales and use taxes, effective January 1, 2026, impacting reporting on or after February 1, 2026. The city PJ rates are ½ the corporate limit rates.
Semmes, AL
City of Semmes, AL, is changing tax administration from Avenu to ALDOR for its sales, use, and rental taxes, effective January 1, 2026, impacting reporting on or after February 1, 2026. The city PJ rates are ½ the corporate limit rates.
Walker County, AL
Walker County, AL, is changing tax administration from Avenu to ALDOR for its sales, use, and rental taxes, effective January 1, 2026, impacting reporting on or after February 1, 2026.
Westover, AL
City of Westover, AL, is changing tax administration from Avenu to ALDOR for its sales, use, and rental taxes, effective January 1, 2026, impacting reporting on or after February 1, 2026. The city PJ rates are ½ the corporate limit rates.
Colorado
Gunnison, CO
The city of Gunnison, CO, sales and use tax will be administered by the Colorado state Department of Revenue, effective January 1, 2026, impacting reporting on or after February 1, 2026. For more information, click here. CONTENT UPDATES Alaska - Juneau
Effective January 1, 2026, the Juneau single item and single service cap level will be increased to $15,000. As a result, only the first $15,000 of the selling price of a single item or single service will be subject to sales tax.
Arkansas
Effective January 1, 2026, Act 1008 implements a state sales and use tax exemption for the sale of food and food ingredients. While this legislation removes the state-level tax, gross receipts and proceeds from these sales will continue to be subject to sales and use taxes levied by municipalities and counties. The relevant tax categories have been updated to reflect this exemption.
Illinois
Effective January 1, 2026, Illinois is eliminating the 1% retailer’s occupation tax on sales of food for home consumption; however, local jurisdictions are permitted to impose a 1% local tax. Locals that filed ordinances with the state prior to October 1, 2025 will have a 1% local tax on food for home consumption effective January 1, 2026. As such, sellers doing business in the over 600 local jurisdictions that have adopted the 1% tax will see no change in the rate applied to food; while sellers operating in jurisdictions that have not opted into the 1% tax on food for home consumption will see a full exemption for these sales effective January 1, 2026. More information may be found here.
Indiana
Indiana has recently clarified its treatment of lawn care services where both a service and a product are bundled together as one line item. Effective January 1, 2026, Indiana looks to the true object of the transaction, making an exception to its bundled transaction rules. Lawn care services, as well as similar home exterior services, that include both the service and the product bundled into one line item, will be exempt beginning January 1st. All relevant tax categories are exempt beginning on that date. More information may be found in Indiana’s revised Sales Tax Information Bulletin #21.
Maine
Effective January 1, 2026, Maine will begin taxing digital audiovisual and audio services. These services are defined as “the electronic transfer of digital audiovisual works and digital audio works to an end user with the right of less than permanent use granted by the seller, including when conditioned upon continued payment from the purchaser or a subscription.” The relevant tax categories are taxable.
Effective January 1, 2026, Maine will exempt certain medical related items. The legislation has added exemptions for breast pumps, durable medical equipment, and mobility enhancing equipment, all for home use only. The relevant tax categories are exempt beginning January 1, 2026. More information on both law changes may be found here.
Maryland
Effective January 1, 2026, Maryland is increasing the recycling fee on sales of new tires from $0.80 to $1.00. The state is also imposing a new and additional fee on sales of new tires in the amount of $5.00 per tire to fund the Transportation Trust Fund. Therefore, first sales of new tires in Maryland will be subject to $6.00 in fees effective January 1, 2026. For more information, click here.
Washington
Effective January 1, 2026, the state tax exclusion for selling precious metal bullion and monetized bullion is eliminated under Engrossed Substitute Senate Bill 5794 (Chapter 423, Laws of 2025). This means gross income from sales of items like gold bars, processed silver, and metal coins will now be taxable as tangible personal property subject to Business and Occupation (B&O) tax and retail sales tax. The relevant tax categories have been updated to reflect this law change. SALES TAX HOLIDAYS Puerto Rico
Puerto Rico is holding its annual back to school sales tax holiday January 2-3, 2026. During this time, certain school uniforms and school supplies will be exempt. The relevant tax categories have been updated to reflect this exemption during the holiday. NEW TAX CATEGORIES Did you know that mapping your products or services to tax categories will automatically calculate any special rates or exemptions? Assigning a QuickBooks Tax Category to the products and services you sell helps ensure you are properly collecting sales tax in every jurisdiction where you make sales. We have over 1900 tax categories in QuickBooks. If you are curious about how to map your products and services to tax categories, you can learn how in this quick tutorial. You will find the newest tax categories added within the following classifications:
SALES TAX NEWS California
Pursuant to Senate Bill 1215, the Electronic Waste Recycling Act is amended and adds covered battery-embedded products to the CEW Recycling Program. This applies to electronic devices with embedded batteries or batteries that are difficult to remove, with limited exceptions. Therefore, sellers of impacted products will be subject to a 1.5% fee (not to exceed $15.00) as of January 1, 2026. CalRecycle provides a Q&A sheet on this change here.
Florida
The new eFile and Pay System launched on December 1, 2025. Current login information can be used to access the new system. We anticipate launching filing in Florida in the coming months, allowing users to file their sales tax return directly from the sales tax app of QuickBooks Online.
Illinois
Effective January 1, 2026, Illinois has removed the 200 transaction threshold that requires remote sellers to collect and remit tax. Sellers are still required to remit tax if their annual gross revenue from sales into Illinois exceeds $100,000, based on a review of the prior 12 months sales after each quarter-end. The rule is found here.
Please note that these are the changes that have been released by the states as of the date of this e-mail and there is a possibility other small changes could be enacted late or retroactively by the states.
QuickBooks has been updated to account for these changes. Now you will get the updated rates and rules applied automatically to your invoice. Click below to try it out.
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