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Shipping charges in Pennsylvania: When should you collect sales tax?

  • Sales Tax
  • February 20, 2017 | Suzanne Kearns

In the world of sales tax compliance, things can get pretty confusing when it comes to keeping up with all the rules and regulations. That’s because each state creates its own sales and use tax policies, and they vary greatly among states.

But when it comes to collecting sales tax for shipping and handling charges, we’d like to give a shout out to Pennsylvania: The state has some of the most straightforward rules we’ve seen on the subject.

Here’s what you need to know about whether or not you should collect sales tax on shipping charges in Pennsylvania.

The rules for taxable products

If the product you’re shipping is subject to sales tax, you should also collect the tax on the shipping charges. For example, if you sell taxable steel parts for $100 and charge $25 for shipping and handling, the total sale of $125 is taxable.

The rules for non-taxable products

On the other hand, if you’re in the chocolate business and need to ship products to customers, you should not collect sales tax on the shipping charges because chocolate is not taxable in Pennsylvania. That means if you sell $25 worth of chocolate and charge $10 for shipping,  you should not collect tax on any part of the sale, including the shipping charges.

The rules for combined shipping

So what happens if you sell a customer several products and some of them are taxable and some aren’t? The Pennsylvania DOR says that even if only some of the products in the shipment are taxable, you should collect sales tax on the entire shipping charge. For instance, if you ship chocolate and a coffee cup together and charge $15 for shipping, you should collect sales tax on the entire shipping charge.

Isn’t it nice to know that Pennsylvania has made it so easy for sellers to determine when to collect sales on shipping charges? For more information on the state’s sales tax rules, check out our Pennsylvania Sales Tax Guide.


Avalara Author
Suzanne Kearns
Avalara Author Suzanne Kearns