As of July 1, 2025, several U.S. states have officially implemented significant tax changes, primarily targeting excise and sales taxes, alongside some adjustments to income and property taxes. These updates reflect a combination of statutory revisions, inflation-related adjustments, and new policies aimed at addressing evolving fiscal needs and emerging industries.
For multinational corporations and high-net-worth individuals, these newly effective tax changes present both opportunities and challenges, particularly in sectors such as technology, transportation, and consumer goods.
Key Tax Changes and Their Impact
Excise Tax Adjustments: Transportation and “Sin” Taxes
The majority of changes that took effect on July 1, 2025, involve excise taxes, particularly in transportation.
States including Alabama, California, Colorado, and Virginia have increased gasoline and diesel tax rates through statutory hikes or inflationary adjustments. For example:
- Alabama: Gasoline tax increased by 1 cent per gallon, now at 30 cents.
- California: Gasoline excise tax increased from 59.6 cents to 61.2 cents per gallon.
Additionally, states such as Hawaii and Colorado have introduced or adjusted road usage fees for electric vehicles (EVs):
- Hawaii: Imposed a new $50 cap on its EV Road Usage Charge.
- Colorado: Increased its Road Usage Fee for EVs.
Implications for Corporations:
- Transportation & Logistics: Companies with large vehicle fleets—especially in logistics, manufacturing, and delivery—are now facing higher fuel costs in these states. Organizations may need to reassess supply chain budgets or explore EV fleet adoption to minimize fuel tax impacts.
- EV Market Strategy: With new EV-specific fees, companies must carefully assess the cost-benefit of EV fleet transitions, balancing these fees against available incentives in each state.
Sin Taxes on Cannabis, Tobacco, and Sports Betting
Several states also enacted increases in excise taxes on cannabis, tobacco products, and sports betting:
- Cannabis Taxes:
- California: Increased from 15% to 19%.
- Maryland: Increased from 9% to 12%.
- Tobacco Taxes: Illinois and Indiana increased taxes on e-cigarettes and smokeless tobacco.
- Sports Betting: Illinois implemented a per-wager tax structure for sportsbooks.
Implications for Corporations:
- Consumer Goods & Retail: Companies in these industries should prepare for higher compliance costs and increased consumer price sensitivity. Strategic adjustments in pricing and marketing may be necessary to preserve market share.
- Regulatory Compliance: Multinationals must ensure accurate compliance with new and complex tax structures, especially in states like Illinois with nuanced sports betting taxes.
Sales and Use Tax Changes: Data Centers and Business Services
States such as Arkansas and Kansas are expanding or introducing sales tax exemptions for data centers to attract investments in AI, cloud computing, and quantum computing:
- Arkansas: Lowered data center investment threshold from $500M to $100M.
- Kansas: Introduced a new exemption for data center investments exceeding $250M.
Meanwhile:
- Minnesota repealed its data center sales tax exemption.
- Maryland imposed a new 3% sales tax on business-to-business services, including IT and data services.
- Mississippi reduced grocery sales tax from 7% to 5%.
- Utah eliminated its 200-transaction economic nexus threshold for remote sellers, maintaining a $100,000 revenue threshold.
Implications for Corporations:
- Tech Sector Opportunities: Companies in AI, cloud, and quantum computing sectors can benefit from tax incentives in Arkansas and Kansas when selecting sites for new data centers.
- Operational Costs in Maryland: The new 3% B2B services tax may significantly increase operational costs for tech firms in Maryland.
- E-Commerce Simplification: Utah’s streamlined rules ease tax compliance for remote sellers by focusing solely on revenue thresholds.
Income and Property Tax Updates
Although most income tax changes began on January 1, some noteworthy updates took effect on July 1:
- Alabama: Overtime pay income tax exemption expired.
- Kansas: Trigger-based income tax reduction plan begins, affecting the 2026 tax year.
- Washington: Estate tax became more progressive, with a new top rate of 35% on estates exceeding $9M—the highest in the nation.
- Maryland: Retroactively increased income tax rates and imposed a new capital gains surcharge:
- 6.25% on incomes over $500,000.
- 6.5% on incomes over $1M.
Implications for Corporations & High-Net-Worth Individuals:
- Executive Compensation: Alabama’s tax change affects companies with substantial hourly workforces. Payroll strategies may need to be adjusted accordingly.
- Estate Planning: High-net-worth individuals with assets in Washington must immediately revisit estate plans to minimize tax exposure.
- Retroactive Tax Planning: Maryland’s retroactive changes require immediate action for businesses and individuals to revise their 2025 tax strategies.
Emerging Trends: Extended Producer Responsibility (EPR) Programs
States such as Minnesota, Oregon, and Maryland are advancing EPR programs, imposing fees on producers for the lifecycle management of certain products (e.g., packaging, paper).
Implications for Corporations:
- Supply Chain Adjustments: EPR compliance costs may impact product pricing and supply chain decisions. Companies may need to redesign packaging or renegotiate supplier contracts.
- Sustainability Messaging: These programs provide an opportunity to highlight corporate sustainability efforts, which may appeal to eco-conscious investors and customers.
Strategic Recommendations
- Conduct State-by-State Tax Reviews: Multinationals should thoroughly assess operations in states with major tax changes—especially California, Maryland, and Washington—to uncover cost-saving and compliance risks.
- Leverage Data Center Incentives: Tech companies should prioritize Arkansas and Kansas for new data centers to capitalize on substantial tax savings.
- Adjust Pricing Models: Companies in transportation, cannabis, tobacco, and gaming industries should reassess pricing strategies in light of higher excise taxes.
- Proactive Estate Planning: High-net-worth individuals exposed to Washington’s estate tax should work with tax advisors to explore trusts, gifting, or relocation options immediately.
- Prepare for Retroactive Changes: Businesses and individuals in Maryland (and other states with retroactive tax provisions) should revise 2025 tax filings and set aside reserves.
While U.S. states adapt their tax systems to shifting economies and emerging industries, countries worldwide are also updating digital and indirect tax frameworks. Managing compliance across multiple jurisdictions has become increasingly complex.
TaxDo simplifies this complexity by providing tailored tax compliance solutions for multinational enterprises:
- Local tax representation
- Real-time tax ID verification
- GST/VAT registration, filing, and audit defense
- Management of state excise and sales taxes
With our expert team, your business can stay compliant while focusing on growth—turning tax compliance into a competitive advantage.
Contact TaxDo today to simplify your global tax obligations and stay ahead in an ever-evolving tax environment.