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sales tax laws by state

Your Ultimate Guide to Sales Tax Laws by State

Forty-five states and Washington D.C. have some type of sales tax. Some states might even have different sales tax rates or rules for local taxes or online sales. If your small business falls into the majority, you must know about sales tax laws by state to remain compliant.

Read on to get the inside scoop about the types of sales tax and sales tax laws by state.

Sales tax terminology

Before you dive into sales tax by state, you need to brush up on your sales tax lingo. Below is a brief recap of the different sales tax terms you should know.

Sales tax

Sales tax is a pass-through tax. This means customers, not businesses, pay sales tax. However, business owners must collect, deposit, and report the sales tax.

Businesses that need to collect sales tax must do so at the point of sale. Customers purchasing products are responsible for paying the sales tax.

States can also get specific about which products have sales tax. For example, some states charge taxes on groceries while others do not.

Sales tax nexus

Sales tax nexus determines whether or not your business has enough presence in a location (e.g., city) to collect sales tax. Certain business activities can determine if you have sales tax nexus in an area.

The following factors can affect sales tax nexus:

  • Your office, warehouse, store, or business location
  • Employees, contractors, salespeople, or other personnel
  • Amount of sales (e.g., $10,000)
  • Trade show sales

Economic nexus

Economic nexus is when a seller is required to collect sales tax in a state because they make a certain amount or have a certain number of sales in that state.

Although economic nexus thresholds vary, the most common threshold is when a seller reaches $100,000 in sales or 200 transactions in a year.

More states are jumping aboard the economic nexus train, especially as online sales become more prominent. Be sure to keep an eye out for new economic nexus laws for your state.

Use tax

Use tax is a sales tax that state governments impose on consumers who do not pay sales tax at the time of purchase. You do not collect use tax from customers. Instead, customers pay use tax directly to the applicable state.

Origin-based method

In an origin-based state, sales tax is collected based on the seller’s location. As a business owner, you must collect sales tax based on your state and local tax rates.

For example, say you operate your business from Ohio. Because your state is origin-based, you need to collect sales tax using Ohio rates.

Destination-based method

In a destination-based state, you must collect sales tax based on the buyer’s location. Collect sales tax based on your customer’s state and local taxes.

Say your business operates in New York and you sell a product to a customer in Brooklyn. Because New York uses the destination-based method, you must collect sales tax based on the customer’s location (Brooklyn).

Breaking down states with sales tax

Now that you have a little background on sales tax, let’s take a look at which states have it. Again, 45 states and Washington D.C. have sales tax and different laws in place for sales tax.

Because there are so many states with sales tax laws in place, it may be easier to remember the states that don’t. The five states that do not have sales tax are:

  • New Hampshire
  • Oregon
  • Montana
  • Alaska
  • Delaware

If you ever have trouble remembering which states do not have sales tax, think of the acronym NOMAD.

Hawaii also does not have sales tax. However, the state does impose a general excise tax (GET) on every transaction.

New Mexico also has a gross receipts tax (GRT) that you impose on customers in the state.

sales tax laws by state

Local sales tax

Many states also require businesses to collect local sales tax, too. The following states don’t have local sales tax:

  • Connecticut
  • Delaware
  • Hawaii
  • Indiana
  • Kentucky
  • Maine
  • Maryland
  • Massachusetts
  • Michigan
  • Montana
  • New Hampshire
  • New Jersey
  • Oregon
  • Rhode Island

All other states not listed above have some form of local sales taxes.

Check out the handy map below to find out if your state has local sales tax. Keep in mind that local sales taxes vary from city to city. So, even if you’re located in a state with local sales tax, you might not be responsible for collecting.

sales tax laws by state

Sales tax laws by state

Below is a state-by-state breakdown of sales tax laws and rules. Keep in mind that New Hampshire, Oregon, Montana, Alaska, and Delaware do not have sales tax and therefore do not have any sales tax laws. And, remember that sales tax rates vary depending on your location.

Alabama

Alabama considers a business to have sales tax nexus if you have one of the following in the state:

  • An office or place of business
  • Warehouse or inventory storage
  • A regular presence of traveling salespeople or agents
  • Economic nexus

According to Alabama state law, some sellers (especially out-of-state vendors) might have economic sales tax nexus. As of 2016, Alabama law considers sellers who make more than $250,000 in sales annually to have economic sales tax nexus.

If you have economic sales tax nexus in Alabama, you must collect sales tax from buyers in Alabama.

If you are based in Alabama and sell to a customer in Alabama, collect sales tax based on the customer’s shipping location.

Alaska

Alaska does not have state sales tax. Therefore, Alaska does not have any sales tax laws.

Alaska does have some local areas that might levy sales tax. Check with the state directly to find out whether or not your locality has local tax.

Arizona

Sales tax in Arizona is a little different than other states. Some sales taxes might be referred to as transaction privilege tax.

In some cases, out-of-state vendors who have sales tax nexus in Arizona might be required to collect and remit use taxes from buyers in Arizona.

Transaction privilege tax (TPT) is a tax on the privilege of doing business in Arizona. TPT is also collected by businesses and remitted to the state.

You have sales tax nexus if your business has one of the following in Arizona:

  • An office or place of business
  • An employee, independent contractor, or representative present in the state for more than two days per year
  • Goods in a warehouse
  • Ownership of property
  • Delivery of merchandise in vehicles owned by the taxpayer

As of 2019, Arizona does not have any economic sales nexus laws.

If you have more than one location in Arizona, base the sales tax rate you charge on the sale’s point of origin.

Collect sales tax at the tax rate where your business is located. No matter where your customers are located, you must charge them the sales tax based on where your business’s sales tax nexus is.

Arkansas

If you own a business in Arkansas, you have sales tax nexus if you have:

  • An office or place of business in the state
  • A warehouse or agency in Arkansas
  • Real or personal property

Under Arkansas law, you have economic sales tax nexus if your business makes more than $100,000 in sales or has 200 or more transactions in the state annually.

Arkansas has a destination-based sales tax. This means that no matter if you live and run your business in Arkansas or live outside the state, you charge sales tax at the rate of your buyer’s ship-to location.

If you live outside of Arkansas but have sales tax nexus in Arkansas, you must charge sales tax at the local sales tax rate of the buyer’s ship-to address.

California

The California Board of Equalization determines what is considered sales tax nexus in California.

According to California law, every retailer engaged in business in the state has sales tax nexus. “Engaged in business” includes:

  • Physical location
  • A person working for you (e.g., sales rep, agent, contractor, employee)
  • An affiliate (e.g., person who refers potential buyers to your business)
  • Presence at a trade show

Nexus occurs when sales from affiliates exceed $10,000 and total in-state sales exceed $1 million in one year.

If a retailer had a physical presence at a convention or trade show for 15 or fewer days and did not earn more than $100,000, sales tax nexus was not established. However, sellers must still collect sales tax from buyers at trade shows.

For more information about sales tax nexus in California, refer to the California Sales and Use Tax Law.

Effective in 2019, California law considers businesses that make more than $100,000 in taxable annual sales or 200 transactions annually to have economic nexus.

Services in California are typically not taxable, while tangible products are taxable. Some customers, such as nonprofits, do not have to pay sales tax in California if they show a valid certificate.

California is a “hybrid-origin” state when it comes to sales tax collection. This means that they use a mixture of different methods for sales tax collection. With the hybrid method, you collect at least two sales tax rates in California. Collect one for buyers in the area where your business is located and one for buyers outside the area.

Colorado

In 2017, Colorado established a Notice and Report law. The law states that any online seller who grosses more than $100,000 in sales from buyers is required to do the following:

  • Provide a notice that use tax is due on the sale with every transaction to a Colorado buyer
  • Provide customers who purchased more than $500 in products with an annual summary of their purchases to help them pay use tax. You must also send a summary to the Colorado Department of Revenue

In Colorado, you have sales tax nexus if either of the following is true:

  • You have an office, distributing house, sales room, warehouse, or another place of business
  • You have independent contractors or other representatives in Colorado

Colorado also considers vendors who make more than $100,000 annually to have economic nexus.

When collecting taxes in Colorado, you must collect the full combined sales tax rate at your buyer’s ship-to address.

If you’re not based in Colorado but have sales tax nexus, you are considered a remote seller. If you’re a remote seller, you must collect the retailer’s sales tax from Colorado buyers.

Connecticut

You have sales tax nexus in the state of Connecticut if you have one of the following:

  • An office or place of business
  • An employee, independent contractor, or another representative present in the state for more than two days per year
  • Goods in a warehouse
  • Ownership of real or personal property
  • Economic nexus

As of 2018, Connecticut also considers vendors who make more than $250,000 in sales or 200 transactions annually to have economic nexus in the state.

Connecticut is one of the few states that only has a statewide sales tax. There are no local tax rates, making the tax collection process easier for vendors.

No matter where you’re located (in or out of Connecticut), charge customers in Connecticut a flat 6.35% for sales tax.

Delaware

Because Delaware does not have any sales tax, the state does not have sales tax laws for business owners.

Florida

You have sales tax nexus if you have any of the following in the state of Florida:

  • Ownership of property
  • Sales of taxable items (e.g., retail)
  • An employee
  • Repairs or alterations of tangible personal property
  • Rentals, leases, or licenses to use real property
  • Rentals of short-term living accommodations
  • Rental or lease of personal property
  • Manufacturing or producing goods for sale at retail
  • Importing goods from any state or country for retail sale
  • Providing taxable services (e.g., cleaning services)

Currently, Florida does not have any economic nexus laws.

Florida uses a destination-based sales tax. If you have sales tax nexus in Florida, collect sales tax based off the shipping address.

If you are not based in Florida, you must still charge sales tax based on the buyer’s shipping location.

Georgia

Georgia considers sellers to have sales tax nexus if they have one of the following in the state:

  • An office or place of business
  • An employee, independent contractor, or representative
  • Goods in a warehouse
  • Ownership of real or personal property
  • Delivery of merchandise in Georgia
  • Economic nexus

Effective 2019, Georgia vendors who make more than $250,000 in sales or 200 transactions annually have economic nexus.

Georgia is destination-based. If you live in Georgia, collect sales tax based on your buyer’s address.

If you live in or operate outside of Georgia, charge sales tax based on the destination of the buyer.

Hawaii

Again, Hawaii does not have a general sales tax. However, the state does have a GET.

Most businesses with any kind of presence in Hawaii, including providing services, will be subject to the general excise tax.

The state discusses their GET regulations in their General Excise Tax Law.

In 2018, Hawaii also started an economic nexus law. Under Hawaii law, a business must collect GET if they meet the threshold of $100,000 in sales or 200 transactions annually.

The GET rate for Hawaii is 4%. Local taxes are lower than other states, only getting up to 0.5%.

Idaho

If you have one of the following in Idaho, you have sales tax nexus:

  • Office, warehouse, sales room, or storage place
  • Stock of goods
  • A property that you rent or lease
  • A salesman, agent, employee, or another representative

Currently, Idaho does not have any economic nexus laws.

Idaho is destination-based for in-state sellers. If you live or run your business in Idaho, you must charge sales tax based on your buyer’s location.

If you’re not based in Idaho, you must charge Idaho buyers the 6% sales tax.

Illinois

You have sales tax nexus in Illinois if you have one of the following:

  • An office, warehouse, or place of business
  • An employee, contractor, salesperson, agent, or representative in Illinois
  • A third-party affiliate in the state

Under Illinois law, vendors who make more than $100,000 in sales or have more than 200 transactions annually have economic nexus.

Illinois has origin-based sales tax. If you live in Illinois, collect sales tax at the rate where your business is located. If you have more than one location, base the rate on your sale’s point of origin.

If you make a sale in Illinois but your business is located outside the state, charge a flat sales tax of 6.25% to Illinois buyers.

Indiana

You have sales tax nexus in Indiana if you have:

  • Tangible property (owned or leased)
  • An employee or independent sales representative in the state
  • Inventory in the state
  • Third parties that install, repair, or service property that is sold to Indiana customers
  • Economic nexus

If you make more than $100,000 in sales or have more than 200 transactions annually in Indiana, you have economic nexus.

Indiana has a statewide sales tax rate of 7% and no local sales tax.

Iowa

You have sales tax nexus in Iowa if you have or do one of the following:

  • An office, warehouse, distribution house, or place of business
  • An employee, contractor, or another representative in the state
  • Regularly engage in the delivery of products to Iowa
  • Economic nexus

Iowa considers vendors who make more than $100,000 in sales or have more than 200 transactions in the state annually to be subject to economic nexus.

Iowa’s sales tax is destination-based. If your business is located in Iowa, charge sales tax based on the buyer’s location.

If you’re not based in Iowa but have sales tax nexus there, you are considered a remote seller. Remote sellers need to collect the same sales tax as in-state sellers (plus local taxes, if applicable).

Kansas

If you have one of the following, you have sales tax nexus in Kansas:

  • An office or place of business
  • An employee present in Kansas
  • Goods in a warehouse
  • Retailers selling goods at trade shows, craft shows, or festivals
  • Non-resident contractors performing services in the state

Kansas currently has no economic nexus laws.

Sellers in Kansas should charge sales tax based on the buyer’s location. Out-of-state sellers should also charge sales tax based on the customer’s destination.

Kentucky

Kentucky law considers a seller to have sales tax nexus if you have any of the following:

  • Owned or leased property that is utilized or located in the state
  • An employee or contractor
  • Goods in a warehouse
  • Services completed in the state
  • Computer software used by a third party in the state
  • Participate in craft or trade shows or festivals for 15 or more days per year
  • Economic nexus

You have economic nexus in Kentucky if you’re a vendor who makes more than $100,000 in sales or has more than 200 transactions in the state annually.

Kentucky does not have local tax rates. If your business has sales tax nexus in Kentucky, you must charge a 6% sales tax to Kentucky buyers. Out-of-state business with sales tax nexus in Kentucky must also charge 6%.

Louisiana

Louisiana’s general sales tax and use tax is levied on the following types of transactions:

  • Sale of tangible personal property
  • The use, consumption, distribution, or storage of tangible property
  • The lease or rental of any item of tangible property
  • Sale of services

Louisiana law considers vendors who make more than $100,000 in sales or have more than 200 transactions in the state annually to have economic nexus.

Maine

You have sales tax nexus in the state of Maine if you have:

  • A store, office, warehouse, repair facility, or another place of business in the state
  • An employee, salesperson, contractor, or another representative
  • Economic nexus

Maine vendors who make more than $100,000 in sales and have more than 200 transactions in the state annually have economic nexus.

The state sales tax rate in Maine is 5.5%. Maine does not have local sales tax rates. Therefore, you would charge your customer 5.5%, regardless of whether your business is based and operates in Maine.

Maryland

In Maryland, you have sales tax nexus if you have one of the following in the state:

  • An office or place of business
  • An employee present in the state
  • Goods in a warehouse
  • Ownership of real (e.g., land) or personal property

Maryland law states that vendors who make more than $100,000 in sales or have more than 200 transactions annually in the state have economic nexus.

How you collect sales tax for Maryland depends on whether you’re in- or out-of-state.

If you live in Maryland, collect sales tax based on where your customer lives. Sellers who make a sale in Maryland but live or work outside of the state must charge sales tax based on the destination of the buyer.

Regardless of if you’re in- or out-of-state, you must collect 6% sales tax from Maryland customers. Maryland does not have local sales tax.

Massachusetts

A business or vendor has sales tax nexus in the state of Massachusetts if they have or do one of the following:

  • An office, place of business, or any owned property
  • An employee present for more than two days per year
  • Goods in a warehouse
  • Ownership of real or personal property
  • A sample or display area (e.g., trade show exhibit)
  • Deliver property or performance of service
  • Economic nexus

As of 2017, vendors who make more than $500,000 in sales or have more than 100 transactions in the state annually have economic nexus.

Massachusetts only has a statewide sales tax of 6.25%. Use this same percentage regardless of whether you or your business is located in Massachusetts. Charge 6.25% of sales tax to buyers in Massachusetts.

Michigan

Under state law, Michigan considers you to have sales tax nexus if you sell tangible personal property to a consumer.

Like many other states, Michigan considers vendors who make more than $100,000 in sales or have more than 200 transactions in the state annually to have economic nexus.

Because there are no local tax rates in Michigan, you only need to worry about the statewide sales tax rate of 6%. Both Michigan-based and remote sellers (e.g., out-of-state) must use the 6% rate when charging customers sales tax.

Minnesota

The state of Minnesota considers you to have sales tax nexus if you:

  • Have an office, distribution center, sales room, warehouse, or another place of business in the state
  • Have a representative, agent, salesperson, or solicitor (both permanent and temporary)
  • Deliver items into Minnesota in your own vehicle
  • Provide taxable services
  • Have an agreement with a solicitor for the referral of Minnesota customers for a commission and your gross receipts are at least $10,000 over the course of 12 months

Minnesota sellers who make more than $100,000 in sales or have more than 100 transactions in the state have economic nexus, according to Minnesota law.

Minnesota has destination-based sales tax. Collect sales tax at the rate of your customer’s ship-to address.

If you or your business is based in another state, you can determine sales tax by looking at the buyer’s shipping address.

Mississippi

In Mississippi, state law says you have sales tax nexus in the state if you:

  • Own an office or business in the state
  • Have employees or agents of the business provide services in Mississippi

Mississippi considers vendors who make more than $250,000 in the prior 12 months in the state to have sales tax nexus.

The sales tax you collect depends on whether you’re based in Mississippi or out-of-state. Mississippi has origin-based sales tax. If you live in Mississippi, collect sales tax at the tax rate where your business is located.

If you have more than one location in Mississippi, charge sales tax based on your sale’s point of origin.

If you are out-of-state but have sales tax nexus for Mississippi, you are only required to charge a 7% sales tax because you’re a remote seller.

Missouri

Under Missouri law, you have sales tax nexus if you:

  • Have an office or place of business
  • Have an employee, contractor, or another representative present in the state for more than two days per year
  • Have goods in a warehouse
  • Own real or personal property
  • Deliver merchandise in Missouri in vehicles you own

Missouri currently does not have any economic nexus laws.

Missouri is origin-based. If you live in Missouri, you must collect sales tax at the tax rate where your business is located.

If you are not based in Missouri, the state considers you a remote seller. As a remote seller, you must collect sales tax, which is at a rate of 4.225%.

Montana

Montana does not have any sales tax. So, the state does not have any sales tax laws.

Although Montana does not have any local taxes, some areas in the state may levy a sales tax on tourism-related transactions. Check with Montana for more information about tourism-related sales tax.

Nebraska

You have sales tax nexus in Nebraska if you have any of the following in the state:

  • An office or place of business
  • Employee, agent, salesperson, or contractor present in the state
  • Ownership of or goods in a warehouse or storage facility
  • Receipts from rental or lease of property

Under Nebraska law, vendors who make more than $100,000 in sales or more than 200 transactions annually have economic nexus.

Nebraska uses the destination-based sales tax method. No matter if you live or run your business in or outside of Nebraska, charge sales tax based on the buyer’s ship-to location.

Nevada

Nevada considers a business to have sales tax nexus if you have any of the following in the state:

  • An office or place of business
  • An employee, independent contractor, or representative in the state
  • Goods in a warehouse
  • Ownership or real or personal property
  • Delivery of merchandise in Nevada using company vehicles

If you make more than $100,000 in sales or have more than 200 transactions in Nevada per year, you have economic nexus.

If you live in Nevada, you must collect sales tax based on where your customer lives. If your business is based outside of Nevada, charge sales tax based on the buyer’s destination.

New Hampshire

New Hampshire does not have sales tax or any sales tax laws. The state also does not have any local sales tax.

New Jersey

In New Jersey, you have sales tax nexus if you have or do one of the following in the state:

  • An office or place of business
  • An employee, independent contractor, or representative in the state
  • Goods in a warehouse
  • Ownership or real or personal property
  • Delivery of merchandise in New Jersey
  • Provide any maintenance program

New Jersey law states that any vendor who makes more than $100,000 in sales or more than 200 transactions in the state has economic nexus.

New Jersey does not have any local sales tax rates. If you have sales tax nexus in New Jersey, charge customers 6.625% for sales tax.

New Mexico

New Mexico’s sales tax may also be referred to as gross receipts tax. You impose this tax on customers in New Mexico.

New Mexico’s GRT is sometimes already included as a part of the selling price.

In most cases, sales and leases of goods and property (tangible and intangible) are taxable. Unlike many other states, sales and performances are taxable in New Mexico.

New Mexico does not currently have any economic nexus laws.

For sellers in New Mexico, GRT is based on the business location of the seller.

If your business location is outside of New Mexico, you must only collect a flat GRT tax of 5.125%.

New York

You have sales tax nexus in New York if you have one of the following in the state:

  • An office or place of business
  • An employee, independent contractor, or representative in the state
  • Goods in a warehouse
  • Ownership or real or personal property
  • Delivery of merchandise in New York in a taxpayer-owned vehicle

As of 2019, New York law states that vendors who make more than $300,000 in gross revenue and have more than 100 separate transactions in New York annually have economic nexus.

New York is a destination-based sales tax state. If your business is located in New York, charge customers sales tax based on where you’re delivering the item to. Depending on the delivery location, the sales tax rate might include a combination of state, county, city, and district tax rates.

If your business is located outside of New York state, charge sales tax based on the buyer’s destination.

North Carolina

A seller has sales tax nexus in North Carolina if they have any of the following in the state:

  • An office or place of business
  • Employees, independent contractors, agents, or other representatives
  • Any place of distribution, sales or sample room, warehouse, storage place that you manage, use, or occupy temporarily or permanently

If your business makes more than $100,000 in sales or has more than 200 transactions annually in North Carolina, you have economic nexus in the state.

North Carolina has destination-based sales tax. If you live in North Carolina, your buyer’s location dictates how much you collect for sales tax.

Regardless of if you’re based in North Carolina or not, you must charge sales tax based on the customer’s ship-to location if you have sales tax nexus.

North Dakota

You have sales tax nexus in North Dakota if you have one of the following in the state:

  • A temporary or permanent office or place of business
  • An employee or agent in the state
  • Tangible personal property (leased or rented)
  • Economic nexus

Under North Dakota state law, you have economic nexus if you make more than $100,000 in sales in the state in the previous or current calendar year.

Because North Dakota is a destination-based sales tax state, it does not matter if your business is inside or outside of North Dakota. Regardless of where you’re located, you must collect sales tax from your customers based on their ship-to location.

Ohio

Under Ohio law, you have sales tax nexus in Ohio if you:

  • Have a place of business that’s operated by employees or agents, a member of an affiliated group, or a franchisee
  • Have employees, agents, representatives, solicitors, installers, repair people, salespeople, or other individuals in Ohio
  • Have a person in the state for the purpose of receiving or processing orders
  • Make regular deliveries of tangible personal property into the state
  • Own tangible personal property that is rented or leased to a consumer in this state
  • Offer tangible personal property, on approval, to consumers in this state
  • Own, rent, lease, maintain, or use tangible personal or real property that is located in Ohio
  • Are registered with the secretary of state to do business
  • Are licensed by any state agency, board, or commission to do business in Ohio or to make sales to Ohio customers
  • Make more than $500,000 in sales in the state and use software or content delivery network

Currently, Ohio has no economic nexus laws.

Ohio uses the origin-based sales tax method. If your business is located in Ohio, collect sales tax depending on where your business is located. If you have more than one location in Ohio, base the sales tax on the sale’s point of origin.

If your business is located outside of Ohio, charge sales tax based on the buyer’s destination.

Oklahoma

You have sales tax nexus in Oklahoma if you:

  • Have an office or place of business in the state
  • Have a salesperson, contractor, installer, or other representative doing business in the state
  • Have goods in a warehouse, distribution center, or another place of business
  • Deliver merchandise in Oklahoma in taxpayer-owned vehicles

Vendors who make more than $10,000 in sales in Oklahoma annually have economic nexus. However, Oklahoma will be increasing the threshold to $100,000 in November 2019.

If you’re an Oklahoma-based business selling to an Oklahoma customer, charge sales tax based on the customer’s ship-to address.

If you have sales tax nexus but do not operate in Oklahoma, you must still collect sales tax from customers.

Oregon

Oregon does not have sales tax. Therefore, this state does not have sales tax laws to follow.

Pennsylvania

Pennsylvania state law considers businesses to have sales tax nexus if they have or do one of the following in the state:

  • An office or place of business
  • An employee, independent contractor, or another representative
  • Goods in a warehouse
  • Ownership of real or personal property
  • Lease property in the state
  • Deliver merchandise in Pennsylvania

A business has economic nexus in the state of Pennsylvania if they exceed $100,000 in sales annually.

Pennsylvania is an origin-based sales tax state. If your business is in Pennsylvania, collect sales tax based on your business’ location. Charge sales tax based on the sale’s point of origin if you have more than one location in the state.

If you have nexus in Pennsylvania but are located outside of the state, charge customers the 6% tax rate.

Currently, there are only two locations in Pennsylvania that have a local tax rate: Allegheny County and Philadelphia. Every other location only uses the statewide 6% sales tax rate.

Rhode Island

You have sales tax nexus in the state of Rhode Island if you have one of the following:

  • An office or place of business
  • An employee, representative, contractor, agent, or salesperson present in the state
  • Goods in a warehouse, sample room, or storage room
  • Delivery of merchandise to customers in the state using the business’s owned vehicle
  • Advertising in the state
  • A third-party affiliate
  • Attendance at a tradeshow or craft show

Under Rhode Island’s Notice and Report Law of 2017, businesses that make more than $100,000 in sales or have more than 200 transactions in the state annually have economic nexus.

Rhode Island is a destination-based sales tax state. Charge customers in Rhode Island sales tax based on their ship-to location regardless of whether or not your business is located in Rhode Island.

Rhode Island does not have any local sales taxes or laws. Because of this, you must only charge the statewide 7% sales tax to each buyer in Rhode Island.

South Carolina

You have sales tax nexus in South Carolina if you:

  • Have an office or place of business
  • Have an employee, independent contractor, or representative
  • Have goods in a warehouse
  • Own real or personal property
  • Deliver merchandise in South Carolina in taxpayer-owned vehicles

South Carolina vendors who make more than $100,000 in sales during the calendar year have economic nexus.

Because South Carolina uses the destination-based sales tax method, you must collect sales tax based on your customer’s location.

South Dakota

Vendors who make more than $100,000 in sales or have more than 200 transactions in South Dakota annually have economic nexus.

If you have economic nexus in South Dakota, you must collect sales tax from buyers in the state.

Tennessee

You have sales tax nexus in the state of Tennessee if you have one of the following:

  • A corporate presence
  • An employee, independent contractor, or representative in the state
  • Tangible personal property (leased or rented)
  • Ownership of real or personal property
  • Economic nexus

Effective 2018, Tennessee vendors making $500,000 in sales in the state annually have economic nexus.

If you live in Tennessee, collect sales tax based on where your business is located.

As of June 2019, out-of-state businesses with no physical presence in Tennessee who reach the $500,000 sales threshold must begin collecting sales tax. Out-of-state businesses who have no physical presence in Tennessee and don’t meet the threshold are not required to register with the state or collect sales tax.

Texas

In Texas, you have sales tax nexus if you:

  • Have an office or place of business
  • Have an employee
  • Have a place of distribution, sales room, warehouse, or storage space

Texas economic law does not go into effect until October 1, 2019. However, business owners should begin prepping for the new law. Once the law takes effect, remote sellers with revenue exceeding $500,000 in Texas must:

  • Register for a sales tax permit
  • Collect sales tax on sales that ship to Texas
  • Remit sales tax to the state

If you live in Texas, you must collect sales tax depending on where your business is located.

If your business is located outside of Texas, charge sales tax based on the customer’s shipping address.

Utah

You may have nexus in Utah if you have:

  • A physical presence in the state (e.g., employees or property)
  • Ownership in a business with a presence in Utah
  • Economic nexus

You have economic nexus in the state of Utah if you make more than $100,000 in sales or have more than 200 transactions in Utah annually.

Vermont

According to Vermont, you must charge a state sales tax of 6% on the retail sales of tangible personal property.

Vendors have economic nexus in the state of Vermont if they:

  • Make more than $100,000 in sales annually in the state
  • Have more than 200 transactions in Vermont each year

Vermont use tax is imposed on the buyer at the same rate as regular sales tax.

Virginia

Your business has sales tax nexus in Virginia if you have any of the following in the state:

  • An office or place of business
  • An employee or independent contractor in the state
  • Goods in a warehouse
  • Ownership of real or personal property
  • Leased property
  • More than 12 deliveries or merchandise per year
  • Advertisements in newspapers, periodicals, billboards, or posters (not delivered by mail).

Virginia does not have any laws pertaining to economic nexus.

If your business is located in Virginia, collect sales tax at the rate where your business is located (origin-based sales tax).

If you make a sale to someone in Virginia and your business is out-of-state, charge sales tax according to the buyer’s destination.

Washington

A business has sales tax nexus in Washington state if you:

  • Solicit sales in Washington through employees or representatives
  • Install or assemble goods in the state
  • Maintain a stock of goods (e.g., inventory)
  • Rent or lease tangible personal property
  • Provide services in the state
  • Construct, install, repair, or maintain real or personal property
  • Make regular deliveries of goods into the state

According to Washington state law, vendors in the state are subject to economic nexus if they make more than $100,000 in sales in the state annually.

Washington D.C.

You have sales tax nexus in Washington D.C. if you:

  • Have an office, place of distribution, sales or sample room, warehouse, storage place, or another place of business
  • Have a representative, agent, salesperson, or solicitor to help make retail sales in Washington D.C.

You have economic nexus in Washington D.C. if your business’s sales exceed $100,000 or you have more than 200 transactions annually.

Washington D.C. does not charge local sales taxes. This makes it easier for businesses to charge, collect, and remit taxes.

If you have sales tax nexus in Washington D.C., charge the customer 6% sales tax.

West Virginia

West Virginia law states all sales of goods and services are subject to sales and use tax unless an exemption is clearly stated. You must impose sales tax on the sale of goods and services at the time of purchase.

Effective 2019, West Virginia considers vendors who make more than $100,000 in sales or have more than 200 transactions to have economic nexus.

Wisconsin

Your business has sales tax nexus in Wisconsin if you have one of the following:

  • An office or place of business
  • An employee present in the state
  • Goods in a warehouse
  • Ownership of real or personal property
  • Economic nexus

If you’re a vendor who makes more than $100,000 in sales or has 200 or more transactions in the state annually, you have economic nexus in Wisconsin.

If your business is in Wisconsin, collect sales tax based on where you’re delivering the item to. If your business is not in Wisconsin, you must still collect sales tax based on the customer’s ship-to location.

Wyoming

You typically have sales tax nexus in the state of Wyoming if you have:

  • An office, warehouse, plant, or other business location
  • Have employees or contractors in the state
  • Conduct marketing activities in the state (e.g., advertising)

You have economic nexus in the state of Wyoming if you are a vendor who:

  • Makes more than $100,000 in sales in the state annually
  • Has more than 200 transactions in the state per year

Determining if you have nexus

If you aren’t sure whether you have sales tax nexus, ask yourself the following questions:

  • Do I have a physical presence in the state? (e.g., warehouse, storefront)
  • Do I have someone working for me in the state? (e.g., employee, contractor, salesperson)
  • Do I have products stored in the state? (e.g., inventory)
  • Do my sales numbers or transactions exceed my state’s threshold? (if applicable)
  • Do I cross state lines to sell my product? (e.g., trade shows)

If you answered “yes” to any of the above questions, you likely have sales tax nexus. If you’re unsure about whether your business has sales tax nexus, contact your state for additional information.

Sales tax by state recap

Now that you know the ins and outs of each state’s sales tax laws, let’s briefly review sales tax basics for each state. Below is a handy chart to determine your local and state sales tax rates and whether your state uses origin vs. destination sales tax.

State 2019 Sales Tax Rate 2019 Local Tax Rates Sales Tax Method
Alabama 4% 0% – 9% Destination-based
Alaska N/A 0% – 7.85% N/A
Arizona 5.6% 0% – 7.3% Origin-based
Arkansas 6.5% 0% – 5.5% Destination-based
California 7.25% 0% – 3.25% Hybrid of both
Colorado 2.9% 0% – 8.3% Destination-based
Connecticut 6.35% N/A Destination-based
Delaware N/A N/A N/A
D.C. 6% N/A Destination-based
Florida 6% 0% – 2.5% Destination-based
Georgia 4% 1% – 5% Destination-based
Hawaii 4% N/A Destination-based
Idaho 6% 0% – 3% Destination-based
Illinois 6.25% 0% -4.75% Origin-based
Indiana 7% N/A Destination-based
Iowa 6% 0% – 2% Destination-based
Kansas 6.5% 0% – 5% Destination-based
Kentucky 6% N/A Destination-based
Louisiana 4.45% 0% – 7.75% Destination-based
Maine 5.5% N/A Destination-based
Maryland 6% N/A Destination-based
Massachusetts 6.25% N/A Destination-based
Michigan 6% N/A Destination-based
Minnesota 6.875% 0% – 2% Destination-based
Mississippi 7% 0% – 1% Origin-based
Missouri 4.225% 0.5% – 7.454% Origin-based
Montana N/A N/A N/A
Nebraska 5.5% 0% – 2% Destination-based
Nevada 6.85% 0% – 1.415% Destination-based
New Hampshire N/A N/A N/A
New Jersey 6.625% N/A Destination-based
New Mexico 5.125% 0.125% – 7.75% Origin-based
New York 4% 0% – 5% Destination-based
North Carolina 4.75% 2% -3% Destination-based
North Dakota 5% 0% – 3% Destination-based
Ohio 5.75% 0% – 2.25% Origin-based
Oklahoma 4.5% 0% – 7% Destination-based
Oregon N/A N/A N/A
Pennsylvania 6% 0% – 2% Origin-based
Rhode Island 7% N/A Destination-based
South Carolina 6% 0% – 3% Destination-based
South Dakota 4.5% 0% – 8% Destination-based
Tennessee 7% 1.5% – 2.75% Origin-based
Texas 6.25% 0% – 2% and 1.75% for remote sellers Origin-based
Utah 4.85% 1% – 7.5% Origin-based
Vermont 6% 0% – 1% Destination-based
Virginia 4.3% 1% – 2.7% Origin-based
Washington 6.5% 0.5% – 4% Destination-based
West Virginia 6% 0% – 1% Destination-based
Wisconsin 5% 0% – 1.75% Destination-based
Wyoming 4% 0% – 4% Destination-based

Remember that sales tax rates (both statewide and local rates) are ever changing. Be sure to check your rates at the beginning of each year to ensure they have not changed.

In addition to rates changing, sales tax laws are always evolving, too. Keep up with your sales tax laws each year to make sure you’re compliant with your state’s sales tax rules.

Looking for an easy way to track your state’s sales tax and business transactions? Patriot’s online accounting software lets you streamline the way you record your business’s income and expenses. Get started with your self-guided demo today!

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This is not intended as legal advice; for more information, please click here.

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