Sales Tax

Use the free sales tax calculator below to figure out how much sales tax you'll potentially owe on a purchase.

If you'd like to calculate sales tax with sourcing logic, shipping taxability, or product exemptions, use one of the sales tax APIs listed below.

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Frequently Asked Questions

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  1. Specific sales tax laws vary from state to state, but this is a general overview of business factors that create sales tax nexus for retailers: 

    • Locations – This can include a store, office, home office, factory, warehouse, distribution center, or other physical presence
    • Employees – This can include employees, independent contractors, sales representatives, and other people working for your company in a state
    • Inventory – This includes simply storing inventory in a state, whether or not your business owns the warehouse or other location 
    • Click-through nexus – In many states, having a 3rd party affiliate making sales on your behalf triggers sales tax nexus once your affiliate exceeds a certain sales threshold
    • Temporarily doing business in a state – Selling taxable items at a limited event such as a trade show, concert or craft fair can trigger sales tax nexus 
    • Exceeding economic nexus thresholds – Nearly every state requires that e-commerce sellers collect sales tax from buyers in their state once the e-commerce business exceeds a certain in-state sales threshold. In most states, this threshold is $100,000 in sales and/or 200 sales transactions. 

    Four US states – New Hampshire, Oregon, Montana and Delaware – do not have a sales tax. 

    Read more on sales tax nexus

  2. One of the more complicated aspects of charging sales tax as an e-commerce seller comes from the concept of “sales tax sourcing.” 

    The term “sourcing” in sales tax refers to the location where the sale is taxed.

    The good news is that for nearly all interstate (i.e. between two states) online sales, the sale is taxed at the buyer’s ship-to address. This is called “destination-based sales tax sourcing.”

    The bad news is that some states mix this up when it comes to intrastate (i.e. within the same state) sales. 

    While the great majority of states simply want an e-commerce seller to charge sales tax at the buyer’s location on both interstate and intrastate sales. 

    But a handful of states have “origin-based sales tax sourcing” where they require that e-commerce sellers charge sales tax at the rate where the sale originates. Hence the name “origin-based.”

    List of Origin-Based Sales Tax States

    Important to note: This is a list of origin-based sales tax states when it comes to intrastate sales (i.e. sales where the buyer and seller are located in the same state). States marked with an * also have special rules when it comes to sales tax sourcing for  interstate sales.

    • Arizona*
    • California*
    • Illinois
    • Mississippi
    • Missouri
    • New Mexico
    • Ohio
    • Pennsylvania
    • Tennessee
    • Texas
    • Utah
    • Virginia

    Origin-based sales tax sourcing example

    You run your e-commerce business from a warehouse in Abingdon, Virginia. You make a sale to a buyer in Virginia Beach, Virginia. Since Virginia is an origin-based sourcing state for intrastate sales, you’d charge the sales tax rate based on your location to your customer. 

    But keep in mind this only applies to Virginia based customers. If you run your business out of a location in Virginia but also have sales tax nexus in neighboring North Carolina, you’d be required to collect sales tax 

    List of Destination-Based Sales Tax States

    Important to note: This is a list of destination-based states when it comes to intrastate sales (i.e. sales where the buyer and seller are located in the same state). In most, but not all, cases, e-commerce sellers should charge sales tax at the buyer’s destination when it comes to interstate (between two states) sales.

    • Alabama
    • Arkansas
    • Colorado
    • Connecticut
    • Florida
    • Georgia
    • Hawaii
    • Idaho
    • Indiana
    • Iowa
    • Kansas
    • Kentucky
    • Louisiana
    • Maine
    • Maryland
    • Massachusetts
    • Michigan
    • Minnesota
    • Nebraska
    • Nevada
    • New Jersey
    • New Mexico
    • New York
    • North Carolina
    • North Dakota
    • Oklahoma
    • Rhode Island
    • South Carolina 
    • South Dakota
    • Vermont
    • Washington
    • Washington DC
    • West Virginia
    • Wisconsin 
    • Wyoming 

    Destination-based sales tax sourcing example

    You operate your business in Abingdon, Virginia but also have sales tax nexus in North Carolina. You make a sale to a buyer in Elizabeth City, North Carolina. In this case, you would charge sales tax at the rate of your buyer’s address in Elizabeth City.

    Read more on origins vs. destination sourcing

  3. Subtopic A: “Clothing”

    ​​Clothing is, in general, not taxable in these states. 

    • Massachusetts
    • Minnesota 
    • New Jersey
    • New York
    • Pennsylvania
    • Rhode Island
    • Vermont

    However, the states that don’t generally have a tax on clothing and footwear make exceptions.

    For example, many of the above states that don’t tax clothing still consider accessories, fur or formalwear, athletic and recreational gear, and protective equipment to be taxable. 

    Other states’ tax laws set a dollar threshold on taxability. For example, in New York state items of clothing are exempt from state sales tax (and sometimes local tax) if they sell for less than $110 per item or pair. 

    Also, some states where clothing is generally taxable may make exceptions for clothing bought or sold by nonprofits or provided to the needy.

    Some states also make exceptions when it comes to “who” wears the clothes. For example, dog clothing (and clothing worn by other pets) is generally considered taxable even in states where clothes worn by humans are non-taxable. 

    Be sure to read what each state has to say about clothing taxability before you set up your sales tax collection engine to collect (or not collect) sales tax on clothing.

    Read more on sales tax on clothing

    Subtopic B: “Digital Goods”

    Each US state makes its own rules when it comes to taxing digital products. 

    In most cases, sales tax experts and states agree that the default should be “digital goods are taxable unless otherwise stated.” 

    Simple, right? Just charge sales tax on e-books, ringtones, and downloaded entertainment.

    Not so fast. Some states have made a determination when it comes to digital goods on sales tax and have decided that no, these items are not taxable. 

    For example, many states tax digital products depending on how they are accessed. For example, a digital product might be taxed differently if it’s:

    • Accessed online but not stored on your computer (example: movies, TV shows, music and other audiovisuals that you stream online)
    • Accessed online and potentially downloaded, but that are no longer accessible if you stop paying a subscription fee
    • Accessed online but only kept temporarily, such as a movie rented for three days through a video-on-demand service like Amazon Prime Video

    Let’s look at two opposing digital goods taxability examples:

    California – Digital goods are not subject to sales tax

    California has ruled that digital goods such as e-books, movies, and songs transmitted over the internet are taxable. This is as long as you don’t also receive a tangible item, like a print copy of an e-book, along with the purchase.  Read more about digital goods taxability in California here.

    New Jersey – Digital goods are taxable

    New Jersey has ruled that digital goods like movies, songs and e-books are taxable. However, digital goods accessed electronically but not delivered to the buyer’s device, such as a movie watched on a streaming service, are non-taxable. Further, digital subscriptions to magazines or access to digital images are also non-taxable. Read more about digital goods taxability in New Jersey here.

    As you can see, the states that have given consideration to the taxation of digital goods at all tax them in different ways. Some states have passed or interpreted their existing sales tax laws as meaning that digital goods are taxable. Other states have passed new or interpreted their existing laws as meaning digital goods are non-taxable.

    It’s also vitally important to understand that sales tax rules and laws on digital goods are subject to change. Even regulations that look settled now can change later down the line as the market and economy changes. 

    If you sell digital goods, it’s vital to ensure you’re applying sales tax correctly in all of the states where you have sales tax nexus.

    Read more on sales tax on digital goods

    Subtopic C: “Groceries”

    Currently 15 US states have some form of sales tax on groceries. 

    Several of these states have no statewide sales tax on groceries, but allow local areas to still require a sales tax on grocery sales. For example, in Georgia, groceries are not taxable at the state level. But individual counties and other jurisdictions are still allowed to require sales tax on grocery purchases. 

    Example: When buying a loaf of bread in Cherokee County, Georgia, you would not be required to pay Georgia’s 4% sales tax rate. But you’d still be required to pay the 2% Cherokee County special local option tax.

    Some other states tax groceries, but at a reduced rate. Missouri, for example, taxes groceries at a reduced state sales tax rate of 1.225%. But again, local areas in Missouri are also allowed to tax groceries. 

    Some states, like Oklahoma, tax all grocery items but allow for exceptions for nonprofits purchasing and selling grocery items. 

    Not everything sold at a grocery store qualifies for a sales tax exemption. As with all things sales tax, each state gets to make their own rules and laws, and that includes which items are considered grocery items and thus tax exempt.

    Many states’ laws say that anything that can be bought with either state or federal Supplemental Nutritional Assistance Program (SNAP) benefits (AKA food stamps) qualifies as groceries and are tax exempt. 

    But generally food seen as unhealthy or without nutritional value, such as candy and soft drinks are still taxed, even in states where groceries are generally tax exempt. Alcoholic beverages are generally always taxable and may also be subject to an additional excise tax.

    Prepared food (sometimes also called “food ready to eat”) is generally always subject to sales tax. But states can get so granular that sometimes they consider food items “ready to eat” if they are sold with utensils, but “grocery food” (and therefore non-taxable) if they are sold without utensils. 

    The key takeaway is, if you sell foods and beverages and have sales tax nexus in a state where groceries are non-taxable, always double check to be sure that the actual items you sell qualify for the state’s sales tax exemption.

    Read more on sales tax on groceries