Wipfli’s sales and local tax (SALT) team highlights the most recent hot topics in tax, including a new South Dakota law that streamlines sales tax collection, the potential elimination of Indiana’s income tax and a Wisconsin bill that would repeal the personal property tax.
South Dakota removes sales transaction threshold for remote sellers
When determining economic presence in South Dakota for nexus purposes, remote sellers will no longer be subject to South Dakota's 200-transaction threshold to collect and remit the state's sales tax. Instead, those sellers will only be required to remit the tax if their annual gross revenues from sales into South Dakota exceed $100,000.
In signing Senate Bill 30 on February 9, Gov. Kristi Noem stated that the legislation eliminates “a bureaucratic requirement affecting very few small businesses.” In streamlining the system for taxpayers, this move will not only relieve obligations for small businesses but also remove a provision that didn’t generate significant revenue for the state.
Indiana lawmakers advance bill to study potential end of state income tax
During a committee hearing on February 14, lawmakers discussed the possibility that Indiana’s finances could allow the state to consider changes to its tax structure. Senate Bill 3, which passed unanimously, created a task force to study Indiana’s tax laws, and the possibility of eliminating the state’s income tax.
Because states without income tax usually have higher sales taxes among other elevated taxes, the proposal raises concerns that eliminating the income tax could have a disproportionate impact on low-income families. State data shows income taxes make up more than a third of Indiana’s annual revenue.
Under Senate Bill 3, the study must be completed by December 2024, shortly before lawmakers write a new state budget in 2025.
Repeal of Wisconsin personal property tax
Wisconsin is reintroducing legislation to eliminate the personal property tax which would net more than $200 million to businesses. Currently, Wisconsin’s tax on personal property requires certain businesses to pay taxes on assets such as furniture, equipment and boats.
In 2017, the personal property tax was amended to exclude machines and tools (joining other exempt items including computers, motor vehicles, aircraft and livestock), but it did not eliminate the tax.
Many local municipalities rely on the revenue collected from personal property taxes, but some lawmakers challenge its value. “Municipalities often find themselves spending more resources to administer this tax than they end up collecting in revenue,” state Rep. Dan Knodl said. “There is absolutely no reason for this tax to exist anymore, and the time has come to bring it to the swift end it deserves.” We will continue to monitor for updates.
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