Sales tax has never been simple, and 2025’s flood of state changes has made the entire process even more chaotic for e-commerce sellers.
States expanded what they considered taxable and enforced those positions more aggressively. In turn, most companies found themselves dragged into reactive cleanup as states shifted positions mid-year and issued aggressive notices without warning.
While there were a few bright spots to balance the pressure, most developments this year added workload, risk, cost, or stress.
This blog breaks down the national shifts, legal actions, and state-level pivots that happened this year, along with what e-commerce sellers should be bracing for going into 2026.
Nationally, a few clear trends emerged in 2025.
First off, there’s the elephant in the room. Tariffs and supply chain costs kept climbing and supply chain costs kept climbing, with many companies adjusting pricing to survive.
However, every new tariff or fee has also driven up landed costs, forcing businesses to decide whether to absorb the hit or raise prices. Either choice has consequences. Absorbing the fee erodes margin, while passing it on increases the price customers pay.
Next, states continued to broaden their sales tax bases. Digital goods, software, and services that were once treated as non-taxable in many jurisdictions are now drifting into taxable-by-default territory, which forces e-commerce teams to constantly revisit assumptions they thought were settled.
Lastly, states have increasingly tightened notice timelines, and several have removed filing discounts that once reduced the cost of staying compliant. Exemption certificates and use tax filings also received more scrutiny than in prior years.
In 2025, two significant state decisions had an interesting impact on e-commerce businesses.
As of October 1st, Washington is now taxing digital advertising, as well as other key services. Digital ad platforms are easy for states to monitor, and they have high transaction volumes, which makes them a predictable revenue target.
For e-commerce businesses that rely on paid acquisition to help drive sales, the new tax adds a direct cost to every ad dollar spent. That burden cuts into marketing efficiency and leaves less room in already tight budgets to maintain growth.
Sadly, it also signals that states are looking at revenue behavior, essentially where money moves, and taxing the motion itself. Therefore, it’s not a question of if, but when will other states follow Washington.
Illinois opened a limited amnesty window in 2025 that lets businesses with past sales tax exposure clear liabilities with reduced penalties. For e-commerce sellers that triggered nexus in earlier years and never fully cleaned up their filing history, this is one of the few chances to settle old exposure without absorbing the full cost.
While, on paper, it’s a relief that businesses with penalties can lean on, in practice, it could also mean that Illinois is preparing to tighten enforcement on historical non-filers and late remitters. Past exposure is now acknowledged by the state, and silence will be harder to maintain going into 2026.
For anyone managing a supply chain, 2025 felt like a year of absorbing punches.
Thankfully, the formal pushback against that chaos is happening in one extremely important court case, V.O.S. Selections, Inc. v. United States. The case is a direct challenge to the unusual levels of presidential authority used to impose sudden “Liberation Day” tariffs under emergency trade acts.
Businesses actually won in the lower courts; a rare piece of good news. But the ruling is now pending review in the United States Supreme Court.
The final decision will either restore some sanity and predictability for importers, or it will formally confirm that massive, surprise cost hikes are a permanent risk of doing business.
While shrinking margins were the most obvious wound in 2025, the deeper damage came from the relentless theft of focus.
For most e-commerce sellers, this became a draining, three-front war:
For 2026, the goal is to not just survive, but find ways to thrive.
State enforcement is becoming more data-driven, which increases audit risk for everyone.
To uncover potential issues, we recommend conducting an internal review, and repeating this review process periodically. Assess your records to identify and resolve weaknesses on your own timeline, which will put you in a stronger defensive position.
Lingering sales tax exposure from prior years creates a constant, low-level risk that can derail future plans. And any discovery by a state means the audit happens entirely on their terms.
A voluntary disclosure agreement (VDA) flips that dynamic. You approach the state to settle past liabilities on a proactive basis. In return for coming forward, states will limit the lookback period and almost always waive what would have been costly penalties.
The trend in states expanding their tax base means that what we once thought was non-taxable might be taxable soon, or in the future.
A proactive step you can take is to look at your own business model and try to anticipate how these changes could affect you, so you can prepare for any possible shift.
Similar to expanding tax bases, unpredictable trade policy should be treated as the new normal and built into your financial planning. These preparations help reduce the shock of a sudden policy shift by giving you an executable plan.
A good place to start is to rework your pricing to account for potential cost hikes.
More importantly, identify and talk with alternate suppliers now. It might be better to have them on standby and not need them than to need them and not have them on standby.
You can also refer to our guide on the states that require sales tax on tariffs to determine when and where to follow these steps.
Looking back on 2025, the real story isn’t any single new rule, but the constant, draining effect of it all. The combination of aggressive state enforcement and unpredictable costs just kept pulling teams into a reactive loop, taking time and energy away from the work that actually grows a business.
It really reinforces that letting compliance be an afterthought is becoming a serious operational risk. So as we head into 2026, thinking about compliance as a core part of the business strategy feels less like a choice and more like a necessity. It’s the practical way to shield the company from that noise, so everyone can get back to focusing on customers and products.