Do I Tax Shipping Costs in Ohio?
- Sales Tax
- April 16, 2016 | Laura McCamy
If you are an ecommerce seller with sales tax nexus in Ohio, you are required to charge sales tax on orders you ship to customers in the Buckeye State. You are also required to charge them sales tax on your shipping costs.
In Ohio, if a consumer ships a package by FedEx, UPS, USPS, or another carrier, there is no sales tax added to the shipping charge. When a retailer charges a customer for the cost of shipping an order, however, it’s a different situation. Ohio is one of the states that considers shipping an integral part of the retail sale and therefore always subject to sales tax. This is true whether the charge is for delivery in your own vehicle or for the cost of a third-party carrier.
There is an exception to this rule: If you ship an order that is tax-exempt, then the shipping is not taxable either. If the order is mixed, you should charge sales tax on the shipping in proportion to the taxable and non-taxable parts of the order. For example, let’s say you are shipping a customer $40 of your homemade jams (food is not subject to sales tax in Ohio) and $60 worth of jam-themed plates and cups (which are taxable). In this case, you should charge OH sales tax on $6 of the shipping costs.
You can also calculate the portions of the shipping that are taxable and non taxable by the weight of each portion of the package. If you’re shipping a load of taxable feathers along with some tax-exempt lead weights, you should definitely use this method. (And if you’re in the business of selling feathers and lead weights, you are either in a Bugs Bunny cartoon or you have a really intriguing business.)
The bottom line is that sales tax on shipping for sellers with Ohio nexus is pretty simple: If you’re shipping or delivering taxable goods, apply the sales tax to the shipping as well.