How to save on sales tax in all states

Costs add up this late in the holiday season, whether you’re picking up last-last-last-minute Christmas gifts or shopping for Hanukkah. Not having to pay sales tax can help stretch dollars. Yet because most states tax most sales of goods and require consumers to remit use tax if sales tax isn’t collected at checkout, the only way to avoid sales tax is to purchase items that are tax exempt.

There’s no statewide sales tax in Alaska, Delaware, Montana, New Hampshire, or Oregon, though more than 100 local governments levy local sales tax in The Last Frontier. Consumers living in those states expect to pay little or no taxes. Residents of other states can eliminate or reduce sales tax by keeping the following tax tips in mind.

  • Alabama: Shopping from remote sellers that collect the 8% Simplified Sellers Use Tax may reduce sales tax a bit
  • Alaska: No state sales tax; seniors are eligible for an exemption from local sales tax in several municipalities, including Juneau, Ketchikan, and Sitka
  • Arizona: Chocolate (tax exempt); one-of-a-kind custom artwork (tax exempt)
  • Arkansas: Aircraft priced less than $2,000 (tax exempt)
  • California: Chocolate (tax exempt); digital products (tax exempt); lodging (no state sales tax or lodging tax)
  • Colorado: Electric or hybrid vehicles (tax credits); spirits (low rate)
  • Connecticut: Diapers—a great gift for new parents (tax exempt)
  • Delaware: No sales tax
  • Florida: Boats (sales tax capped at $18,000); digital products (tax exempt)
  • Georgia: Digital products (tax exempt); tanning services (tax exempt)
  • Hawaii: Not much is tax exempt in The Aloha State — the price of living in paradise
  • Idaho: Membership in a nonprofit hunting or shooting sports organization (tax exempt)
  • Illinois: Digital products (tax exempt)
  • Indiana: Beer (low excise tax rate)
  • Iowa: Spirits (low rate); transportation services like airline, bus, and railroad tickets (tax exempt)
  • Kansas: Digital products (tax exempt); untethered hot-air balloon rides (tax exempt)
  • Kentucky: Bottled water and most food and food ingredients (tax exempt)
  • Louisiana: Most food not prepared by the seller, including candy, chips, and packaged pastries (tax exempt)
  • Maine: Ski lift tickets (tax exempt)
  • Maryland: Digital products (tax exempt)
  • Massachusetts: Admissions charges (tax exempt); chocolate (tax exempt); digital products (tax free)
  • Michigan: Chocolate (tax exempt); digital products
  • Minnesota: Beer (low excise tax rate)
  • Mississippi: Livestock (tax exempt)
  • Missouri: Beer and spirits (low rate); clothing (generally tax exempt); digital products (tax free)
  • Montana: No sales tax
  • Nebraska: Bullion and coins (tax exempt); newspaper subscriptions (tax exempt)
  • Nevada: Digital products (tax free); lodging (no state sales tax or lodging tax)
  • New Hampshire: No sales tax; wine (no excise tax or sales tax)
  • New Jersey: Clothing (generally tax exempt)
  • New Mexico: Goods sold by someone not regularly in the business of selling them (aka, isolated or occasional sales) (tax exempt)
  • New York: Clothing and footwear sold for less than $110 (exempt from state sales tax and some local sales taxes)
  • North Carolina: Park-model RVs (tax exempt)
  • North Dakota: Digital products (tax exempt)
  • Ohio: Chocolate (tax exempt); cats or dogs purchased from a nonprofit animal shelter (tax free)
  • Oklahoma: Digital products (tax exempt)
  • Oregon: No sales tax; beer and spirits (low excise tax rate)
  • Pennsylvania: Chocolate (tax free); clothing (generally tax exempt); wine (no excise tax); beer (low excise tax rate)
  • Rhode Island: Some artwork, at the discretion of the tax department (tax exempt); clothing (generally tax exempt); paddleboards (tax exempt)
  • South Carolina: Digital products (tax exempt)
  • South Dakota: Lottery tickets (tax exempt)
  • Tennessee: Textbooks and workbooks (tax exempt)
  • Texas: Spirits (low rate)
  • Utah: Spirits (low rate); wine (no excise tax)
  • Vermont: Chocolate (tax exempt); clothing (generally tax exempt)
  • Virginia: Digital products (tax exempt)
  • Washington: Chocolate (tax exempt)
  • Washington, D.C.: Candy (tax exempt); beer (low excise tax rate)
  • West Virginia: Digital products (tax exempt)
  • Wisconsin: Bottled still water (tax exempt); beer (low excise tax rate)
  • Wyoming: Beer (low excise tax rate)

While consumers may appreciate the above exemptions and reduced rates, they complicate sales tax compliance for businesses. Retailers required to collect and remit sales tax in multiple states have to know what’s taxable and what’s exempt in each state where they sell.

Automating sales tax compliance can help.

Happy holidays.

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