US Sales Tax

TL;DR

US sales tax is charged at the state and local level, not federally, and applies to many goods and some services. Businesses are required to collect and remit it in any state where they have sales tax nexus, which can be created through physical presence or economic activity. Because rates, rules, and filing schedules differ widely from state to state, most multi-state sellers rely on software or specialist providers to stay compliant without slowing down their operations.

Key takeaways

• The United States does not use VAT or GST; it relies on sales tax instead.
• Sales tax rates are set at the state, county, and city level, which is why the final rate can differ widely from one address to another.
• Online sellers can be required to collect sales tax even if they have no physical presence in a state.
• Economic nexus laws now apply to ecommerce, SaaS, and many digital businesses that sell across state lines.
• Using automation software or fully managed tax services helps reduce compliance risk and administrative workload.

What is sales tax in the US?

Sales tax in the United States is a consumption-based tax applied at the time of purchase on physical products and some services. Unlike VAT systems used in many other countries, sales tax is not built into the sticker price. It is calculated and added at checkout based on where the buyer is located.

There is also no nationwide sales tax. Each state sets its own sales tax laws, and local governments can add their own layers on top. That means every state, county, and city can have different tax rates, exemptions, and reporting rules, which is why sales tax compliance becomes more complex as a business sells across multiple locations.

If you’re scaling into new states or already selling nationwide, get a custom fulfillment and compliance setup from Bezos.ai and see exactly how your tax exposure changes before it becomes a problem.

How does sales tax work in the USA?

Sales tax in the United States is collected by the seller at the point of purchase and then sent to the relevant state or local tax authority. Even though the buyer pays the tax, the legal responsibility for charging, reporting, and paying it sits with the business.

Key characteristics

Sales tax is only applied to the final sale to the end customer, not at each step of the supply chain.

Businesses cannot reclaim sales tax the way VAT-registered companies can reclaim input VAT.

In most states, the tax rate is determined by the delivery address of the customer, not where the seller is based.

This means two customers ordering the same product can pay different tax amounts depending on where they live.

Who pays sales tax in the US?

From a financial point of view, the consumer pays the sales tax as part of their order total. From a legal point of view, the seller is the party responsible for collecting it correctly and sending it to the tax authority.

If a business fails to charge the right amount or does not remit it on time, the tax office will pursue the seller, not the customer. That is why sales tax compliance is an operational risk for any company selling across multiple states.

How much is sales tax in the US?

There is no single US sales tax rate.

Typical ranges

Rates depend on the buyer’s location, not the seller’s.

How do I calculate sales tax by state?

Sales tax in the US is not just one number per state. The final rate is built from several layers that depend on the buyer’s exact delivery address. In most states, sales tax is calculated using a combination of:

• State sales tax rate
• County sales tax rate
• City or special district sales tax rate

These layers are added together to produce the final percentage charged at checkout.

Example calculation

A customer ordering a $100 product in an area with an 8.25% combined tax rate would pay $8.25 in sales tax, bringing the total order to $108.25.

Because there are more than 11,000 tax jurisdictions across the United States, the correct rate can change not just by state, but by ZIP code, street, or even building. That is why manual sales tax calculation does not scale for ecommerce or SaaS businesses operating in multiple states.

Bezos.ai helps you route orders through the right US fulfillment locations so sales tax is calculated accurately by destination and nexus. 

What states have no sales tax?

Five states do not impose statewide sales tax:

Businesses selling into these states generally do not collect sales tax unless special local rules apply.

Do I need to collect sales tax for online sales?

Yes. If your business has a sales tax nexus in a state, you are required to collect and remit sales tax on taxable sales made to customers in that state.

Nexus is no longer limited to having a warehouse, office, or employees in a location. Most US states now enforce economic nexus rules, which means online sellers can create tax obligations simply by reaching a certain level of sales or number of transactions in a state.

This affects ecommerce brands, Amazon FBA sellers, Shopify stores, and SaaS companies alike. Even if you operate entirely online and ship from a single location, selling into enough states can trigger multiple sales tax registration and filing requirements at the same time.

What is the economic nexus?

Economic nexus means a business is required to collect sales tax in a state based on how much it sells there, even if it has no physical presence in that state. 

You do not need a warehouse, staff, or office in a state to create a tax obligation anymore. High enough sales volume alone can be enough.

Most US states introduced economic nexus rules after the 2018 Supreme Court ruling in South Dakota v. Wayfair, which allowed states to tax remote sellers based on economic activity rather than physical footprint.

Common thresholds

These numbers are common reference points, but they are not universal. Some states only use revenue thresholds, some use transaction counts, and some apply higher or lower limits. Because of this, a seller may have sales tax obligations in one state but not in another, even with the same sales volume.

That is why growing online businesses need ongoing monitoring of where their customers are located and how much they are selling in each state.

Are digital products taxable in the US?

Yes in some states, no in others. The United States does not have a single rule for taxing digital products, which means software, subscriptions, and online content can be taxable in one state and exempt in another.

Each state decides how it treats digital goods and services, and those definitions are often written differently. Some states tax digital items as if they were physical products, while others only tax specific categories such as software or streaming.

Common digital product tax treatment

Because of this patchwork of rules, digital-first businesses cannot rely on a single sales tax setting. SaaS platforms, content sellers, and software companies must evaluate taxability state by state to avoid under-collecting tax in one market or overcharging customers in another.

Bezos.ai tracks where your orders ship and where your customers are, so sales tax is applied only where you actually have nexus. Get a custom setup and stop guessing which states you need to register in.

How often do I need to remit sales tax?

Each US state assigns your filing schedule based on how much sales tax you collect there. The more you sell in a state, the more often you are required to file and remit.

Common filing frequencies

Once a state assigns you a filing frequency, you must submit a return even if you had no sales in that period. Missing a deadline or filing late can trigger penalties and interest, which is why businesses operating in multiple states usually automate reminders, filings, and payments instead of tracking everything manually.

How do I file US sales tax returns?

Here’s the standard step-by-step process:

• Register for a sales tax permit in each state where you have sales tax nexus
• Set up tax collection at checkout (so the correct rate is charged by destination)
• Track taxable vs. exempt sales and keep supporting records (resale certificates, exemption details, etc.)
• File your sales tax return on the schedule the state assigns (monthly, quarterly, or annually)
• Remit the sales tax you collected to the state tax authority by the deadline

Multi-state sellers must repeat this process separately for each state, including state-specific forms, due dates, and rules.

What tools help with sales tax compliance?

Sales tax compliance in the US is difficult to manage manually once you sell into multiple states. That is why most ecommerce, SaaS, and marketplace sellers rely on specialist software to calculate rates, prepare returns, and track obligations.

Popular US sales tax software

These platforms automatically apply the correct tax rate at checkout, generate reports for each state, and help prepare or file sales tax returns. For growing businesses, they reduce the risk of charging the wrong amount or missing a filing deadline as sales volumes increase across the country.

What is the most cost-effective way for small businesses to stay compliant?

For most small and mid-size businesses, the best balance of cost and safety comes from combining automation with professional support. Sales tax rules change often, and missing a filing or charging the wrong rate can quickly become more expensive than using the right tools from the start.

In practice, that usually means using software to calculate tax at checkout and relying on specialists to handle registrations and filings in each state.

Cost and risk comparison

Manual filing may look cheaper, but the risk of penalties, backdated tax, and compliance mistakes is high. Software reduces errors at checkout, while fully managed services offer the strongest protection for businesses selling across multiple states.

Bezos.ai gives you sales-tax-aware US fulfillment, so orders ship from the right locations and your tax exposure stays clean. Get a custom setup and see which states you actually need to register in.

Best practices for ecommerce, Amazon, and Shopify sellers

Selling across multiple states works best when sales tax is treated as an operational system, not an afterthought.

• Use marketplace facilitator rules correctly so you do not double-collect tax on orders that Amazon, Walmart, or other platforms already handle for you.
• Only register in states where you actually have sales tax nexus, rather than signing up everywhere and creating unnecessary filing work.
• Monitor your revenue and transaction thresholds every month so you know when a new state is approaching economic nexus.
• Keep resale and exemption certificates organized and accessible in case a state audits your business.

When these basics are followed, sales tax becomes predictable and manageable instead of a constant source of risk.

Schlussfolgerung

US sales tax is one of the most demanding compliance areas for modern businesses, particularly for ecommerce, SaaS, and digital sellers operating across state lines. With thousands of tax jurisdictions, different product taxability rules, and constantly shifting nexus laws, trying to manage everything manually rarely scales without errors.

The most reliable approach combines clear nexus tracking, automated tax calculation, and expert-led filing. This keeps businesses compliant while reducing financial risk, operational friction, and the time spent dealing with state tax authorities.

FAQ

Is US sales tax the same as VAT?

No. Sales tax is only charged on the final sale to the consumer and cannot be reclaimed by businesses the way VAT can.

Do tourists pay sales tax in the USA?

Yes. Sales tax applies to all buyers, regardless of where they live.

Can tourists claim sales tax back in the US?

Generally no. The United States does not have a nationwide sales tax refund system.

Why isn’t sales tax included in the listed price?

Because sales tax rates change by state, county, and city, so the final amount is calculated at checkout based on the buyer’s location.

Which state has the highest sales tax?

There is no single answer because the total rate depends on both state and local taxes combined.

Do Americans pay 20% sales tax?

No. Even in the highest-tax areas, sales tax is usually below 10%.

Do I need to register in every state?

No. You only need to register in states where your business has sales tax nexus.