Tax legislation is constantly evolving, and it can be nearly impossible to keep track of all the nuances. That’s why, for our multistate readers, we believe it’s helpful to have a state tax consulting partner to help. It is crucial to stay as up to date as possible to ensure you meet all of your sales (and other state) tax obligations. In this article, we dive into some of the most relevant 2022 tax reforms we have seen so far this year.
Kansas Food Tax Reform
Back in December, we published an article about Kansas Gov. Laura Kelly’s plan to introduce a bill to “Axe the Food Tax” and completely eliminate sales tax on groceries in the state. In the beginning of May, the Kansas Legislature passed a bill with strong support from both parties to gradually decrease the tax over the next three years.
The first sales tax decrease from 6.5% to 4% will go into effect in the beginning of 2023, will drop from 4% to 2% in 2024 and will be eliminated entirely by the beginning of 2025.
Some foods do not qualify and will still be taxed at the same rate. For a full list of items which remain subject to tax, check out this link, but they include prepared foods, alcoholic drinks and food sold with eating utensils.
Other states, including Illinois, Oklahoma and Tennessee, are considering proposals to temporarily suspend sales tax on groceries as well.
Income And Sales Tax Reductions
With many states experiencing budget surpluses this year, tax reform has become a popular trend. As discussed previously, one example of this is states suspending sales tax on groceries, but another has to do with income tax. Multiple states have already enacted income tax reductions this year including individual income tax reductions in Idaho, Indiana, Iowa, Utah and Mississippi. Additionally, Idaho, Iowa and Utah have enacted corporate income tax reductions and New Mexico has permanently reduced sales tax with legislation enacted on March 8th. The bill is set to reduce the GRT rate from 5.125% to 5% on July 1, 2022 and to 4.875% on July 1, 2023. To learn more about the change in New Mexico, click here. Many other states have legislation currently being considered. For more information on how income tax reform may continue to develop, visit this link.
Gas Tax Reform
With gas prices hitting an all-time high, another area of 2022 tax reform we have seen so far has been the suspension of the gas tax. Connecticut, Georgia, Maryland and New York have already enacted legislation for this summer and lawmakers in 22 states have introduced legislation to do the same. To see if gas reform legislation in your state has been vetoed, introduced or neither, check out this helpful guide.
Colorado To Simplify Sales Tax Burden For Retailers
Back in February we wrote an article about the complex sales tax state of Louisiana, where they require retailers to collect and remit sales tax in each parish (or county) in addition to the state level. Colorado is another state with similar legislation, but in April Gov. Polis signed Senate Bill 32 to ease some of this burden on their retailers and simplify the sales tax requirements in the state.
The new law is set to begin July 1, 2022, and requires each local jurisdiction to grant a free general business license to retailers who have a standard retail license issued by the state (unless the retailer’s business license has been revoked in the past for noncompliance). Another part of the bill prohibits the local taxing jurisdiction from requiring a retailer with a license to apply separately to them for a business license. This begins in July of 2023. For more information on Senate Bill 32, visit this website. We plan to keep you updated on this major legislation on our blog, so stay tuned!
Do You Need Help With Your Sales Tax Compliance?
As you can see, taxes are constantly evolving and it is important to ensure you meet all of your sales tax compliance requirements. Working with an experienced team of state tax consultants like Miles Consulting Group is a great way to do this. If you have questions about your tax liability or have any other state sales tax compliance questions, please contact us today. We’re happy to clarify any multi-state tax issues you’re trying to navigate.
