US taxes reference

The United States does not charge a federal sales tax. Instead, sales tax is calculated according to state, county, and municipality. This page is a general guide to US taxes and doesn't replace any official government information or regulations. If you're not sure about anything related to your taxes, then contact US state tax authorities or a tax professional.

If you determine that you need to charge sales tax in one or more states, then you need to contact each of the relevant agencies and register with them. The process varies depending on where your business is based, where you sell, and individual government requirements.

Nexus

If there is a nexus, or connection, between your business and a state, then you probably need to charge sales taxes there.

Traditionally, a nexus occurs when you have a physical presence in a state, such as a store or warehouse. Some states have a broader definition of nexus, and can include any of the following:

  • Solicitation of sales
  • Fulfillment services
  • Presence of inventory
  • Presence of employees

In June 2018, the United States Supreme Court ruled that states can also require online sellers to collect sales tax based on the volume or value of transactions into a state, also known as economic nexus. For information about how this ruling might affect your business, refer to the Shopify blog post Online Sales Tax: A Guide to Economic Nexus & Ecommerce.

If you're not sure where you have a nexus, then consult with US state tax authorities or a local tax professional.

Tax sourcing

The tax rates that you charge are affected by whether your state is an origin state or a destination state.

Destination states

In a destination state, the sales tax you charge is based on the address of your customer.

  • If you have no nexus in the state of the shipping address, then no tax is charged.

  • If you have nexus in the state of the shipping address, then the customer's location is used to determine taxes.

Origin states

In an origin state, the sales tax you charge is based on your location's nexus.

  • If you have no nexus in the state of the shipping address, then no tax is charged.

  • If you have physical nexus in the state of the shipping address, then the location of your nexus is used to determine taxes. If you have nexus but no physical location, then the customer's location is used to determine taxes.

Remote seller rules

A remote seller is a merchant that isn't physically located in a particular state, but has economic nexus there. Most states have rules determining what defines a remote seller. If you're not sure whether selling in a particular state creates economic nexus for you, then you should consult with US state tax authorities or a local tax professional.

Notice and report states

Notice and report tax laws exist in some states to ensure that customers pay a use tax. If you do not have nexus in these states but sell to customers there, then those customers are responsible for paying a use tax to the state, rather than paying sales tax to the seller.

Each state that uses notice and report tax laws has different rules, but in general, if your sales into a state pass a certain threshold then you might be required to do the following:

  • Create a notice in your store that indicates customers might need to pay use tax.
  • Create a notice in your checkout process that indicates customers might need to pay use tax.
  • Send an annual notice to customers spending over a certain amount in your store, reminding them that they owe use tax.
  • Send an annual notice to the state, reporting information about customers that owe use tax.

The following states use notice and report tax laws:

List of notice and report states
Alabama Colorado Kentucky Louisiana Oklahoma
Pennsylvania Rhode Island South Dakota Tennessee Vermont
Washington

Because requirements and thresholds vary by state, you should check with US state tax authorities or a local tax professional to ensure you're following notice and report laws correctly.

State tax reference

There are five states that don't have a state-wide sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon. Although there aren't any taxes levied at the state level, you still might need to collect municipal taxes.

You don't need to register with all of these agencies, only those that apply to you. You can refer to this guide for more information on individual states.

List of states
Alabama Alaska Arizona Arkansas California
Colorado Connecticut Delaware Washington DC Florida
Georgia Hawaii Idaho Illinois Indiana
Iowa Kansas Kentucky Louisiana Maine
Maryland Massachusetts Michigan Minnesota Mississippi
Missouri Montana Nebraska Nevada New Hampshire
New Jersey New Mexico New York North Carolina North Dakota
Ohio Oklahoma Oregon Pennsylvania Rhode Island
South Carolina South Dakota Tennessee Texas Utah
Vermont Virginia Washington West Virginia Wisconsin
Wyoming

Alabama

Tax information for Alabama.
State tax website Sourcing Taxable shipping Local taxes
Alabama Department of Revenue Destination No Yes

Special tax rules

Alabama uses notice and report laws.

Alaska

Tax information for Alaska.
State tax website Sourcing Taxable shipping Local taxes
Alaska Department of Revenue Destination Yes Yes

Special tax rules

While Alaska has no state sales tax, it's defined as a home rule state. This means that some local jurisdictions might charge a destination-based rate if the seller has nexus in that state. If you need to collect sales tax in one of these jurisdictions, then you need to register with them to collect and remit taxes.

You don't need to register in all of these jurisdictions, only with those that apply to you. If you're not sure whether you need to register in a particular jurisdiction, then contact US state tax authorities or a local tax professional.

Arizona

Tax information for Arizona.
State tax website Sourcing Taxable shipping Local taxes
State of Arizona Department of Revenue Origin No Yes

Special tax rules

If you're out-of-state, selling into Arizona, and have nexus there, then you need to register with the local jurisdictions you're selling into and charge destination taxes.

Arkansas

Tax information for Arkansas.
State tax website Sourcing Taxable shipping Local taxes
Arkansas Department of Finance and Administration Destination Yes Yes

California

Tax information for California.
State tax website Sourcing Taxable shipping Local taxes
California Department of Tax and Fee Administration Hybrid No Yes

Special tax rules

California uses a mixture of origin and destination sourcing rules. State, county and city taxes are based on the origin of the purchase (the seller), but district taxes are based on the destination (the buyer).

When you enter your tax registration information for California, you can choose whether to charge taxes according to destination rules or hybrid origin rules. The default setting is Destination.

Colorado

Tax information for Colorado.
State tax website Sourcing Taxable shipping Local taxes
Colorado Department of Revenue Destination Yes Yes

Special tax rules

Colorado is separated into districts. If you're a seller in Colorado, then you need to charge state tax as well as any district taxes in your buyer's location.

Colorado uses notice and report laws.

Connecticut

Tax information for Connecticut.
State tax website Sourcing Taxable shipping Local taxes
Connecticut State Department of Revenue Services Destination Yes No

Delaware

Tax information for Delaware.
State tax website Sourcing Taxable shipping Local taxes
Delaware Tax Center Not applicable No No

Special tax rules

Delaware does not charge sales tax.

Washington DC

Tax information for Delaware.
State tax website Sourcing Taxable shipping Local taxes
DC Office of Tax and Revenue Destination Yes No

Florida

Tax information for Florida.
State tax website Sourcing Taxable shipping Local taxes
Florida Department of Revenue Destination Yes Yes

Georgia

Tax information for Georgia.
State tax website Sourcing Taxable shipping Local taxes
Georgia Tax Center Destination Yes Yes

Hawaii

Tax information for Hawaii.
State tax website Sourcing Taxable shipping Local taxes
State of Hawaii Department of Taxation Destination Yes Yes

Idaho

Tax information for Idaho.
State tax website Sourcing Taxable shipping Local taxes
Idaho State Tax Commission Destination No Yes

Special tax rules

If you don't have a location in Idaho, but have economic nexus there, then you only charge the state tax at the destination.

Illinois

Tax information for Illinois.
State tax website Sourcing Taxable shipping Local taxes
Illinois Department of Revenue Origin Yes Yes

Special tax rules

Illinois follows origin sourcing rules for sales within the state. For out-of-state sales, destination sourcing applies.

Indiana

Tax information for Indiana.
State tax website Sourcing Taxable shipping Local taxes
Indiana Department of Revenue Destination Yes No

Iowa

Tax information for Iowa.
State tax website Sourcing Taxable shipping Local taxes
Iowa Department of Revenue Destination No Yes

Special tax rules

Taxes in Iowa are calculated on a destination basis. If you're located in the state and have nexus there, then you need to charge taxes based on the destination of the buyer. If you're an out-of-state seller, then only the state tax rate applies.

Kansas

Tax information for Kansas.
State tax website Sourcing Taxable shipping Local taxes
Kansas Department of Revenue Destination Yes Yes

Kentucky

Tax information for Kentucky.
State tax website Sourcing Taxable shipping Local taxes
Kansas Department of Revenue Destination Yes No

Special tax rules

Kentucky uses notice and report laws.

Louisiana

Tax information for Louisiana.
State tax website Sourcing Taxable shipping Local taxes
Louisiana Department of Revenue Destination No Yes

Special tax rules

Louisiana is generally a destination state, but has some particular rules regarding the state's jurisdictions. Different jurisdictions might have different rules on what constitutes nexus based on physical or economic presence. If you're not sure whether you have nexus in a particular jurisdiction, then contact a local tax authority.

Louisiana uses notice and report laws.

Maine

Tax information for Maine.
State tax website Sourcing Taxable shipping Local taxes
Maine Revenue Services Destination No No

Maryland

Tax information for Maryland.
State tax website Sourcing Taxable shipping Local taxes
Comptroller of Maryland Destination Yes No

Massachusetts

Tax information for Massachusetts.
State tax website Sourcing Taxable shipping Local taxes
Massachusetts Department of Revenue Destination Yes No

Special tax rules

In Massachusetts, clothing products with a price under $175 are exempt from state sales tax, and clothing products with a price of over $175 will collect tax only on the amount that their price is over $175. For example, an item of clothing with a price of $200 will be taxed on $25, because the first $175 is not taxable.

To set up a tax override for clothing items, refer to Tax overrides and exemptions.

Michigan

Tax information for Michigan.
State tax website Sourcing Taxable shipping Local taxes
Michigan Department of Treasury Destination Yes No

Minnesota

Tax information for Minnesota.
State tax website Sourcing Taxable shipping Local taxes
Minnesota Department of Revenue Destination Yes Yes

Mississippi

Tax information for Mississippi.
State tax website Sourcing Taxable shipping Local taxes
Mississippi Department of Revenue Origin Yes Yes

Missouri

Tax information for Missouri.
State tax website Sourcing Taxable shipping Local taxes
Missouri Department of Revenue Origin No Yes

Special tax rules

Missouri is an origin state for sellers with nexus and a location within the state. If you're selling into the state and have economic nexus, but do not have a location in-state, you're required to charge use tax.

Montana

Tax information for Montana.
State tax website Sourcing Taxable shipping Local taxes
Montana Department of Revenue Not applicable No No

Special tax rules

Montana does not charge sales tax.

Nebraska

Tax information for Nebraska.
State tax website Sourcing Taxable shipping Local taxes
Nebraska Department of Revenue Destination Yes Yes

Nevada

Tax information for Nevada.
State tax website Sourcing Taxable shipping Local taxes
State of Nevada Department of Taxation Destination Yes Yes

New Hampshire

Tax information for New Hampshire.
State tax website Sourcing Taxable shipping Local taxes
New Hampshire Department of Revenue Administration Not applicable No No

Special tax rules

New Hampshire does not charge sales tax.

New Jersey

Tax information for New Jersey.
State tax website Sourcing Taxable shipping Local taxes
New Jersey Treasury Division of Taxation Destination Yes No

New Mexico

Tax information for New Mexico.
State tax website Sourcing Taxable shipping Local taxes
New Mexico Taxation and Revenue Origin Yes Yes

New York

Tax information for New York.
State tax website Sourcing Taxable shipping Local taxes
New York State Department of Taxation and Finance Destination Yes Yes

Special tax rules

In New York, clothing products, footwear products, and items used to repair clothing products with an individual price under $110 are exempt from state sales tax. For example, two items with a combined price of $200 will each be exempt from sales tax, but one item with an individual price of $110 will be subject to sales tax.

To set up a tax override for these items, refer to Tax overrides and exemptions.

North Carolina

Tax information for North Carolina.
State tax website Sourcing Taxable shipping Local taxes
North Carolina Department of Revenue Destination Yes Yes

North Dakota

Tax information for North Dakota.
State tax website Sourcing Taxable shipping Local taxes
websitename Destination Yes Yes

Ohio

Tax information for Ohio.
State tax website Sourcing Taxable shipping Local taxes
Ohio Department of Taxation Origin Yes Yes

Special tax rules

Ohio follows origin sourcing. However, if a seller is based outside of Ohio, sells into the state, and has economic nexus in Ohio, then they should charge destination sales tax based on the customer's location.

Oklahoma

Tax information for Oklahoma.
State tax website Sourcing Taxable shipping Local taxes
Oklahoma Tax Commission Destination No Yes

Special tax rules

Oklahoma uses notice and report laws.

Oregon

Tax information for Oregon.
State tax website Sourcing Taxable shipping Local taxes
Oregon Department of Revenue Not applicable No No

Special tax rules

Oregon does not charge sales tax.

Pennsylvania

Tax information for Pennsylvania.
State tax website Sourcing Taxable shipping Local taxes
Pennsylvania Department of Revenue Origin Yes Yes

Special tax rules

Pennsylvania uses notice and report laws.

Rhode Island

Tax information for Rhode Island.
State tax website Sourcing Taxable shipping Local taxes
State of Rhode Island Division of Taxation Destination Yes No

Special tax rules

In Rhode Island, clothing and footwear products with an individual price of $250 or less are exempt from state sales tax, and only the incremental amount above $250 is subject to sales tax. For example, if a suit costs $275, then the tax applies only to $25.

To set up a tax override for these items, refer to Tax overrides and exemptions.

Rhode Island uses notice and report laws.

South Carolina

Tax information for South Carolina.
State tax website Sourcing Taxable shipping Local taxes
South Carolina Department of Revenue Destination Yes Yes

South Dakota

Tax information for South Dakota.
State tax website Sourcing Taxable shipping Local taxes
South Dakota Department of Revenue Destination Yes Yes

Special tax rules

South Dakota uses notice and report laws.

Tennessee

Tax information for Tennessee.
State tax website Sourcing Taxable shipping Local taxes
Tennessee Department of Revenue Origin Yes Yes

Special tax rules

In Tennessee, whether or not shipping is taxable is dependent on whether or not the product itself is taxable. If your product is taxable, then you need to charge tax on shipping. If the product isn't taxable, then you don't need to charge tax on shipping.

Tennessee uses notice and report laws.

Texas

Tax information for Texas.
State tax website Sourcing Taxable shipping Local taxes
Texas Comptroller of Public Accounts Origin Yes Yes

Special tax rules

Texas is an origin state for sellers that have both a physical presence and economic nexus in the state. If you have nexus in Texas but do not have a physical location there, then Texas is considered a destination state.

Utah

Tax information for Utah.
State tax website Sourcing Taxable shipping Local taxes
Utah State Tax Commission Origin No Yes

Special tax rules

If you do not have nexus in Utah, your customers in that state are responsible for filing their purchases as a use tax on their income tax. If you want, you can resgister with the state of Utah to collect this tax.

Vermont

Tax information for Vermont.
State tax website Sourcing Taxable shipping Local taxes
Vermont Department of Taxes Destination Yes Yes

Special tax rules

Vermont uses notice and report laws.

Virginia

Tax information for Virginia.
State tax website Sourcing Taxable shipping Local taxes
Virginia Tax Origin No Yes

Special tax rules

Shipping is not taxable in Virginia if it's stated as a separate line item. If the prices of your products include shipping, then taxes need to be charged.

Virginia is considered an origin state, but out-of-state sellers should apply destination rules for determining tax.

Washington

Tax information for Washington.
State tax website Sourcing Taxable shipping Local taxes
Washington State Department of Revenue Destination Yes Yes

Special tax rules

Washington uses notice and report laws.

West Virginia

Tax information for West Virginia.
State tax website Sourcing Taxable shipping Local taxes
West Virginia State Tax Department Destination Yes Yes

Wisconsin

Tax information for Wisconsin.
State tax website Sourcing Taxable shipping Local taxes
State of Wisconsin Department of Revenue Destination Yes Yes

Special tax rules

In Wisconsin, whether or not shipping is taxable is dependent on whether or not the product itself is taxable. If your product is taxable, then you need to charge tax on shipping. If the product isn't taxable, then you don't need to charge tax on shipping. If the products in an order are a mix of taxable and non-taxable items, then the portion of shipping that applies to the taxable items is taxable.

Wyoming

Tax information for Wyoming.
State tax website Sourcing Taxable shipping Local taxes
Wyoming Department of Revenue Destination No No

Special tax rules

Wyoming is a destination state, but doesn't have local taxes. For that reason, buyers always pay the same state level tax rate.

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