Avalara > Blog > Sales and Use Tax > Vendor discounts for filing sales tax on time in 2019

Vendor discounts for filing sales tax on time in 2019


stack of coins, clock

All states penalize businesses for filing and/or remitting sales tax late, but fewer than 30 incentivize vendors for timely filing and remittance. Fewer still — only two that we know of — reward businesses for filing sales tax early.

Rewards for filing and paying sales tax on time (and correctly) vary by state and generally range from 0.25% to a whopping 5% of the tax due. Yet the overall rewards may not differ as greatly as it first seems: Though New York offers a generous 5% discount, it allows a maximum discount of $200 per quarter; on the other hand, Nevada doesn’t cap its 0.25% discount. 

Perhaps the greatest savings available are in Colorado, where the vendor discount for state sales tax is 3.33%, there’s no cap, and many local tax jurisdictions offer a local discount. There’s no gain without pain, however, because sales tax compliance in Colorado is notoriously complex.

Even the smallest discounts can add up over time, so it’s good to know which states offer them. Read on for a list of state discounts for filing and remitting sales tax on time in 2019.

State 2019 Sales Tax Timely Filing Discounts
Alabama

5% on the first $100, 2% of all tax over $100; monthly discount may not exceed $400

Alaska Varies by jurisdiction; for example, the Kenai Peninsula Borough offers a 5% on-time credit limited to $1,000 per quarter 
Arizona Accounting credit of 1% to a maximum of $10,000 per calendar year for returns filed on paper; accounting credit of 1.2% to a maximum of $12,000 per calendar year for returns filed electronically; only applies to state transaction privilege tax (not local TPT)
Arkansas 2%; maximum of $1,000 per month; for the 2019 tax year, local jurisdictions may allow a 2% discount (up to $4,000) per city and county for prompt filing of local gross receipts tax  
Colorado 3.33% on state sales tax; 0%–3.33% on local option tax
Florida 2.5% of the first $1,200 due; maximum of $30 per report; only available to taxpayers who file and pay electronically
Georgia 3% on the first $3,000, 0.5% on the remainder
Illinois 1.75% of the tax paid
Indiana 0.73% of the tax paid if total sales tax collected is less than $60,000; 0.53% if total is between $60,000 and $600,000; 0.26% if total is more than $600,000
Kentucky 1.75% on the first $1,000, 1.5% on the remainder; maximum of $50 per month
Louisiana 0.84%, limited to $1,500 per calendar month per dealer*
Maryland 1.2% on annual collections of up to $6,000, 0.9% on the remainder; maximum of $500 for all returns for any one period
Michigan 0.5% on the first 4% of the tax (0.75% if paid by the 12th of the month); minimum of $6; maximum of $15,000 per month if paying by the 20th; maximum of $20,000 per month if paying by the 12th 
Mississippi

2%; maximum of $50 per location per month

Missouri 2%
Nebraska 2.5%; maximum of $75 per month
Nevada 0.25%
New York 5%; maximum of $200 per quarter
North Dakota 1.5%; maximum of $110 per month
Ohio 0.75%
Pennsylvania The lesser of $25 or 1% of the tax collected for monthly filers; the lesser of $75 or 1% for quarterly filers; the lesser of $150 or 1% for semi-annual filers
South Carolina  When the total tax due is less than $100, the discount is 3% of the tax due; when the total tax due is $100 or more, the discount is 2% of the tax due; for in-state taxpayers filing paper returns, the maximum discount is $3,000 per fiscal year; for in-state taxpayers filing electronically, the maximum discount is $3,100 per fiscal year; for out-of-state retailers who voluntarily collect, the maximum discount is $10,000 per fiscal year
South Dakota 1.5%; maximum of $70 per month; applies to electronic filers only
Texas 0.5%; an additional discount of 1.25% applies to early payments
Utah 1.31%
Virginia 1.116% (1.6% for food) if monthly taxable sales are less than $62,500; 0.837% (1.2% for food) if monthly sales are $62,501 to $208,000; 0.558% (0.8% for food) if monthly taxable sales equal or exceed $208,001; no compensation is allowed on the remainder of the state sales tax; no discount on local tax; no discount allowed if average monthly sales tax liability exceeds $20,000
Wisconsin If the total sales tax due is $0 to $10, the discount is equal to the total sales tax; if the total sales tax due is $10 to $2,000, the discount is $10; if the total sales tax due is greater than $2,000, the discount is 0.5% but cannot exceed $1,000 per reporting period
Wyoming 1.95% on the first $6,250, 1% on the remainder; maximum of $500 per filing period, per vendor

*The vendor’s compensation in Louisiana is 0.935%, but a portion of the state sales tax isn’t eligible for the discount. To simplify calculation, the Louisiana Department of Revenue recommends using the 0.84% rate, which is the equivalent of 4 cents out of 4.45 cents.

Although there’s no set discount in Idaho or Vermont, vendors are allowed to keep any excess collections prescribed under the bracket system. This used to be the case in Maine, but the state no longer uses the bracket system so there are no excess collections for vendors to keep. 

Alaska, Delaware, Montana, New Hampshire, and Oregon have no general sales tax. However, New Hampshire provides a discount of 3% for timely filing of its meals and room tax. And certain localities in Alaska do discount the timely filing of local sales tax.

It can be difficult to learn how to determine the allowable vendor compensation — many state tax authorities don’t put this information front and center. Furthermore, while the discount is fairly straightforward in some states, in others (such as Virginia), additional constraints may apply.

Remember that sales tax filing discounts are subject to change in all states and should always be confirmed before being claimed.

Avalara Returns Services helps you to file on time, every time. Learn more.


Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Avalara Author
Gail Cole
Avalara Author Gail Cole
Gail Cole began researching and writing about sales tax for Avalara in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.