Avalara Tax Changes 2026 Reveals Major Shifts Impacting Businesses Worldwide

10th annual report outlines rising compliance costs, expanding tax obligations, and accelerating digital mandates in the year ahead

DURHAM, N.C., Jan. 14, 2026 /PRNewswire/ -- Avalara, Inc., the agentic tax and compliance leader, has released its annual outlook on the evolving tax and compliance landscape, outlining the key trends expected to shape 2026. The findings come from the Avalara Tax Changes 2026 report, which examines U.S. sales tax developments, global trade and tariff shifts, and major international tax modernization efforts.

As governments worldwide pursue new revenue streams and intensify enforcement, businesses enter the year facing heightened compliance costs, growing complexity, and increased operational risk. Key findings from the 10th annual Avalara Tax Changes report include:

States Move Aggressively to Expand Sales Tax Bases

With rising budget pressures and the fiscal impact of the One Big Beautiful Bill Act (OBBBA), states are increasingly turning to sales tax expansion as a stable revenue source. In 2025, nine states broadened their sales tax bases, with many targeting digital goods, services, and marketplace activities. More states, including Georgia, Kansas, Pennsylvania, and Wyoming, are exploring similar measures in 2026. This marks a nationwide shift toward modernizing sales tax systems long misaligned with today's service-driven economy.

"Many states have debated replacing their income or property tax with a very broad sales tax, but those efforts have failed for many reasons," said Scott Peterson, VP of Government Relations at Avalara. "What happened in 2025, and what seems to be happening more consistently, is the slow expansion to taxing digital services and marketplace services. The long list of states that broadened their sales tax in 2025 is indicative of what's likely to be repeated in 2026."

Tariff Volatility and De Minimis Repeal Reshape Global Commerce

U.S. tariff activity surged in 2025, adding nearly 3 million new tariff rates worldwide and creating the largest U.S. tax increase in decades. The abrupt elimination of the U.S. de minimis threshold further disrupted international ecommerce, requiring full customs documentation and classification for every shipment. This shift increases import costs, complexity, and compliance risk for global sellers heading into 2026.

"While it's likely the U.S. will eventually slow its pace of tariff changes, there's a chance the president will pursue punitive measures as world events attract his attention," said Craig Reed, General Manager of Cross Border at Avalara. "Additionally, as more U.S. trade agreements are completed, we expect the rest of the world to actively pursue trade pacts with other countries or blocks of countries to mitigate the effects of the U.S. protectionist stance."

Global Tax Systems Accelerate Digitalization: E-Invoicing and Real-Time Reporting

International tax authorities are rapidly adopting mandatory e-invoicing, real-time reporting, and digital VAT systems, led by the EU's VAT in the Digital Age (ViDA) initiative. More than 60 countries now require or are rolling out structured e-invoicing, with major mandates taking effect in 2026 across Europe, Australia, New Zealand, and others. This global trend is pushing businesses toward automation, data-driven compliance, and scalable tax technology.

"E-invoicing is no longer a passing trend, it's a fundamental shift in how global businesses manage compliance," said Matt Hammond, General Manager of E-Invoicing at Avalara. "Companies can no longer afford a patchwork of local solutions for each mandate."

Download the report now to see how upcoming tax shifts will impact businesses in 2026.

About Avalara
Avalara is the agentic tax and compliance leader. For more than two decades, Avalara has developed one of the most expansive libraries of tax content and integrations in the industry, supporting over 43,000 businesses and government entities across more than 75 countries. The company's purpose-built AI agents automate end-to-end compliance processes with greater precision, from tax calculations and return filings to exemption certificate management and beyond. For more information, visit Avalara.com.

SOURCE Avalara, Inc.