KING OF PRUSSIA, PA — Vertex Inc. (NASDAQ: VERX) has released its 2024 U.S. End-of-Year Rates and Rules Report, shedding light on significant growth in district-level tax activity that underscores the evolving complexities of the sales tax landscape. The findings highlight how local governments are leveraging taxes to address rising fiscal pressures and economic challenges.
The report shows that 171 new district taxes were enacted in 2024, marking the third-highest total in the past seven years. Additionally, 51 new taxing cities and three new taxing counties were introduced. Despite this surge, an unusual trend emerged as district tax rate decreases outpaced increases—a shift that signals evolving fiscal strategies in local governance.
“Looking back at 2024, the U.S. saw record-breaking activity at the city level with rate changes soaring and new district taxes reaching a 10-year high,” said Michael Bernard, Vertex VP and Chief Tax Officer. “Now that 2025 is underway, indirect tax leaders must leverage this data to inform and refine their plans – ensuring they are prepared to navigate substantial changes and increased complexities throughout the year.”
Key findings in the report also reveal a 30% rise in city-level tax changes compared to 2023, with 220 rate increases marking a nearly 40% jump. However, at the state level, the average tax rate dropped to 5.4%, its lowest point in a decade. Yet, uncertainties remain as pandemic-era federal funding expired at the end of 2024, potentially driving state-level tax increases in the near future.
Beyond U.S. trends, the report touches on global tax developments. Many countries, responding to inflation and rising social expenditures, have implemented VAT hikes and are focusing on digital taxation to boost collections. Innovations like e-invoicing mandates, particularly in Europe and Brazil, are creating additional complexities for businesses operating internationally.
Looking ahead to 2025, the report emphasizes the importance of technology and cross-functional collaboration for indirect tax teams managing these changes. Robust tax automation, streamlined workflows, and continuous education will be key to ensuring compliance and maintaining business continuity in a rapidly shifting tax landscape.
Vertex’s report offers crucial insights for businesses navigating these challenges, reinforcing the need for proactive planning in the face of continued transformation in tax policies worldwide.
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