2026 Legislative Session Dates
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Key Takeaways:

  • Seven states and one territory currently impose a sales tax on lobbying services, including Connecticut, Hawaii, Kentucky, New Mexico, Pennsylvania, South Dakota, West Virginia, and Puerto Rico, with rates and rules varying widely by jurisdiction.
  • In some states, the sales tax on lobbying services gets more complicated at the local level. In New Mexico, Pennsylvania, and South Dakota, local jurisdictions can layer on their own rates, meaning the total tax owed depends on where the lobbying activity takes place.
  • West Virginia takes a different approach than most: lobbying is generally taxed at 7%, but licensed attorneys providing services like legislative drafting or written legal analysis are exempt.
  • Efforts to expand lobbying compliance obligations through broader sales tax bases have come up in states like Louisiana, Nebraska, Maryland, and Indiana in recent years, but none have succeeded so far.
  • Missouri voters will have a say on a constitutional amendment to expand the state's sales tax base, and Michigan has active legislation that would broadly impose an excise tax on currently untaxed services, which could sweep in lobbying.


The sales tax is a tax on transactions based on the value of the good or service that was purchased. All but five states impose a sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon. Due to the varying statutes, rules, and guidance provided by each state, staying in compliance with tax laws may be difficult.

Which States Tax Lobbying Services

As of now, seven states and one territory impose a sales tax on lobbying services: Connecticut, Hawaii, Kentucky, New Mexico, Pennsylvania, South Dakota, West Virginia, and Puerto Rico. The specifics of the tax on lobbying services differ from state to state.

US map of states imposing sales tax on lobbying services - dark blue states include South Dakota, New Mexico, Hawaii, Kentucky, West Virginia, Pennsyl

States with State-Only Sales Tax on Lobbying

For instance, in Hawaii, Kentucky, and Connecticut, which impose a tax on lobbying services at a rate of 4%, 6%, and 6.35%, respectively, the sales tax is imposed by the state only.

States with Combined State and Local Sales Tax on Lobbying

New Mexico, South Dakota, and Pennsylvania include an added layer of complexity by authorizing local jurisdictions to impose a sales tax of their own on lobbying services. Rates imposed by local jurisdictions can differ from one city or county to another within the same state. Including the local sales tax rate, New Mexico imposes a sales tax rate between 5.125% to 8.9% depending on the jurisdiction. Pennsylvania imposes a sales tax rate between 6.0% to 8.0%. South Dakota imposes a sales tax rate between 4.5% to 6%.

West Virginia's Exemption for Legal Services

West Virginia takes a nuanced approach to taxing lobbying services. While lobbying is generally subject to a 7% tax, a licensed attorney that provides professional legal services to a specific client, such as legislative drafting, or written analysis of legislation, is exempt from the sales tax.

While Tennessee does not impose a sales tax on lobbying services, the state imposes a $400 professional privilege tax annually on registered lobbyists. And while certainly not a U.S. state or territory, Canada imposes a 13% tax on lobbying services.

Recent Legislative Efforts to Tax Lobbying Services

While only a handful of states tax lobbying services, in recent years states such as Louisiana, Nebraska, and Maryland have sought to expand their sales tax base to include lobbying services. So far those attempts have failed, but will likely pop up again. Likewise, efforts to broadly expand the sales tax base, which would sweep in lobbying services as a taxable service, have also fallen short. For instance, IN HB 1288 was introduced in Indiana this past session but did not make it out of committee.

Current Proposals and Future Outlook

With about half of state legislatures adjourning their regular session, there are no active bills that specifically target lobbying services for taxation. However, Missouri has passed a constitutional amendment, which requires voters' approval, to expand the sales tax base (MO HJR 173). Likewise, legislation in Michigan (MI HB 5880) would broadly impose an excise tax on goods and services that are not currently taxed.

State tax codes can change at a dizzying pace. With changes in law, the status of lobbying as a taxable service can change along with it, leading to increased costs for those looking to hire lobbyists.

Track and Influence State Tax Policy

Tax policy can be one of the most challenging areas for government affairs executives. MultiState’s team understands the issues, knows the key players, and helps you effectively navigate and engage. We offer a customized, strategic solution to help you develop and execute a proactive multistate tax legislative agenda. Learn more about our Tax Policy Practice.