Sales tax rates change every quarter somewhere in the US, and most finance teams hear about it late. Sometimes a customer flags an odd invoice. Sometimes it is an auditor. More often it is a liability account that drifts a little further from the return each month until somebody finally asks why.
October 1, 2026, was busier than most. Kintsugi’s tracker counted 223 local rate changes across 18 states taking effect that day. Pennsylvania began enforcing a new sourcing rule for its two local taxes. And Washington, D.C., where much of the compliance industry spent the summer telling sellers to get ready for a 7% rate, kept its rate at 6%.
That last one is the easiest to get wrong. A billing system that switched D.C. to 7% on October 1 has spent two weeks charging customers a tax the District never levied. Collecting too much is not a harmless cushion. In many states, tax collected from a customer belongs to the state once it is collected, whether the rate was right.
None of this needs a tax researcher. The rates are published. What it needs is a close process that checks the rate your system charged against the rate actually in force, jurisdiction by jurisdiction, before anyone signs off in October.
What sales tax changes took effect on October 1, 2026?
Three changes matter most for businesses selling into several states. There were 223 local rate changes across 18 states. Pennsylvania started enforcing destination sourcing for the Philadelphia and Allegheny County local taxes. And Washington, D.C. delayed its move to a 7% general rate until October 1, 2027. No state changed its statewide base rate.
Of Kintsugi’s 223 local changes, 199 were increases and 15 were decreases. The other 9 were Alaska towns switching to their off-season rates, as they do every October. Other trackers group local changes differently, so expect slightly different totals depending on whose list you read.
The changes are concentrated in two metro areas. Missouri accounts for 98, mostly municipalities in St. Louis County, where most rates rose by about a percentage point. California accounts for 66. The CDTFA notice shows the Los Angeles County district rate in unincorporated areas moving from 9.75% to 10.25%, with 63 cities in the county moving alongside it to combined rates between 10.75% and 11.75%. Perris and Red Bluff are the only California changes outside LA County.
If you ship into greater Los Angeles or the St. Louis suburbs, assume something on your October invoices changed. ZIP codes do not follow city limits, so a system that assigns rates by ZIP rather than by street address can charge the wrong local rate even when its rate table is current.
Is the Washington, D.C. sales tax going up to 7%?
Not this year. D.C.’s general sales tax rate stays at 6% through September 30, 2027, and is now scheduled to rise to 7% on October 1, 2027.
The increase has been pushed back twice. It was first set for October 1, 2025, then moved to October 1, 2026. In August 2026 the D.C. Council delayed it again through the Sales Tax Increase Delay Emergency Amendment Act of 2026, part of the fiscal 2027 budget support legislation, effective August 13. The Office of Tax and Revenue now carries a notice that the rate remains 6% through September 30, 2027.
Two cautions. Emergency acts in D.C. are temporary, and the permanent version was still in congressional review in late September, so check OTR before treating 2027 as settled. And a lot of guidance published over the summer still describes 7% as live from October 1, 2026. If your team or your tax software followed it, D.C. invoices since October 1 may carry the wrong rate.
So what happens to the extra point? Rules differ by jurisdiction, but the general principle is strict. North Carolina’s statute is a typical example. It requires over-collected tax to be remitted to the state, and the seller only gets a refund after first crediting the customer. Confirm D.C.’s own procedure with OTR or your tax advisor, and correct the rate in the billing system before you do anything else.
Is SaaS taxable in Washington, D.C.?
Yes. D.C. taxes SaaS and hosted software delivered to customers in the District at the general sales tax rate, which is 6% today. Downloaded software, e-books, and streaming have been taxable there since the district’s 2018 internet sales tax legislation. For software companies, that turns the rate question above into a problem on nearly every subscription invoice sent into D.C.
What is Pennsylvania's destination sourcing change?
Pennsylvania now sources its two local sales taxes, 2% in Philadelphia and 1% in Allegheny County, to where the product or service is delivered rather than where the seller is based. The law is Act 21 of 2026 (Senate Bill 146), enacted July 12 and retroactive to January 1, 2026. The Department of Revenue began enforcing it on October 1, 2026.
Under the old origin rule, a seller based in Philadelphia charged the city’s 2% on sales across Pennsylvania, while a seller in Harrisburg delivering into Philadelphia charged none. Both are now wrong. The Philadelphia seller should drop the local tax on deliveries outside the city, and the Harrisburg seller should start charging it on deliveries in. Allegheny County works the same way at 1%. Remote sellers with economic nexus in Pennsylvania who deliver into either area are caught by the change too.
Because the Act reaches back to January, the enforcement date and the effective date are not the same thing. Ask your advisor whether January through September 2026 needs a second look.
When will October's changes show up on a return?
October activity lands on the first return filed after month-end. A D.C. monthly filer reports October by November 20, and quarterly filers will usually see it on the fourth quarter return due in January. For a monthly filer, that leaves about seven weeks between the rate change and the moment an error goes on record. Two of those weeks are already gone.
What should finance teams check before closing October?
Six checks cover most of the exposure. None of them takes long if your sales data can be cut by ship-to jurisdiction. If it can’t, that is your first finding.
- Pull October invoices shipped into Los Angeles County, St. Louis County, Philadelphia, and Allegheny County, and compare the rate charged with the rate published for that address.
- Filter D.C. invoices for any line taxed at 7%. If you find them, fix the billing system first and then work out the customer credits.
- Ask whether your tax engine assigns rates by full street address or by ZIP code. If it is ZIP, expect mismatches near city boundaries.
- Reconcile the sales tax liability in the general ledger to the tax calculated on your return workpaper by jurisdiction, not just in total. Offsetting errors hide comfortably inside a total.
- Check the buying side. When a vendor under-collects on something you bought, the use tax is yours, so your accounts payable process should flag vendor invoices from jurisdictions that changed.
- Write down who owns the quarterly rate update and when it happens. The next batch arrives January 1.
Why does this keep landing on the controller?
Rate tables usually sit with IT, sales operations, or a software vendor. The liability sits on the balance sheet. That gap is where these errors go unnoticed. The team that owns the setting almost never sees the reconciliation, and the controller has no reason to open the billing system until something breaks.
A stale rate is easy to underestimate because it costs money quietly. Take a business invoicing $400,000 a month into Los Angeles County cities whose rates rose by half a point. If the old rate stays in the system, it under-collects $2,000 a month. Few companies will send customers a bill for tax they forgot to charge, so in practice that money comes out of margin. Over-collection runs the other way. The cash sits in your account, but it was never yours, and customers who notice usually ask for it back.
Where Unison Direct fits
Unison Direct’s finance and accounts outsourcing and controller support teams build these checks into month-end close for US businesses that sell across states and entities. That includes jurisdiction-level tie-outs of the sales tax liability, a quarterly review of the billing system’s rates against published changes, and AP review for use tax exposure, run by a named team that knows your books. Filing positions, nexus decisions, and conversations with tax authorities stay with your tax advisor.
Want to see what your October close would turn up?
Frequently Asked Questions
Kintsugi counted 223 local sales tax rate changes across 18 states, concentrated in St. Louis County, Missouri and Los Angeles County, California. Pennsylvania also began enforcing destination sourcing for its Philadelphia and Allegheny County local taxes. No state changed its statewide base rate.
No. An emergency act effective August 13, 2026 keeps D.C.’s general rate at 6% through September 30, 2027, with 7% now scheduled for October 1, 2027. Because emergency acts are temporary, confirm the current position with the D.C. Office of Tax and Revenue.
Yes. D.C. taxes SaaS and hosted software delivered to District customers at the general sales tax rate, currently 6%
Since October 1, 2026, Pennsylvania enforces the 2% Philadelphia and 1% Allegheny County local taxes based on where goods or services are delivered, not where the seller is located. The law, Act 21 of 2026, is retroactive to January 1, 2026
Rules vary by state, but over-collected tax generally has to be remitted to the state or refunded to the customer. It does not become the seller’s revenue. North Carolina, for example, requires excess tax to be remitted and only refunds the seller after the customer has been credited.
Income-related documents: W-2s, 1099s, K-1s, and investment statements
