By adding cssMinify to my vite build configuration and setting it to 'lightningcss' it seems to get it working again.

import tailwindcss from "@tailwindcss/vite";

export default defineNuxtConfig({
  vite: {
    plugins: [
      tailwindcss()
    ],
    build: {
      cssMinify: 'lightningcss'
    }
  },
})