What is a max tax or single article sales tax?

There’s a local sales tax cap on certain single transactions in Arkansas. The cap used to apply to single transactions across the board, but as of January 1, 2008, the local tax cap on single transactions applies only to sales of:

• Aircraft
• Manufactured housing
• Motor vehicles licensed for highway use
• Watercraft

For qualifying transactions, the maximum taxable value for city and county sales taxes is $2,500. The state sales tax applies to the total invoice value.

North Dakota allows localities to cap the amount of local sales tax due.

The maximum tax (max tax) or local tax cap in North Dakota is the maximum amount of local tax that can apply to a single transaction. Not all cities and counties have a maximum local tax. In those that do, it ranges from $12.50 to $250 per sale.

The taxable purchase amount needed to reach the maximum tax also varies by jurisdiction. It’s $1,250 in Carrington, for example, and $12,500 in Linton. There’s a list of local maximum tax amounts at the North Dakota Office of the State Tax Commissioner.

Purchasers who pay more than the max tax may apply to the Tax Commissioner for a refund of the additional local sales tax paid.

Tennessee provides special tax treatment for certain single articles of tangible personal property above a specified price. A single article of tangible personal property is defined as one item, excluding accessories, that can be sold as an independent unit. 

Amusements, custom computer software, taxable services, and warranty or maintenance contracts aren’t eligible for the single article cap — the full local option tax applies to these sales.

In most jurisdictions, the single article local tax applies only to the first $1,600 of the sales price of any single article of qualifying tangible personal property. In a few jurisdictions, the single local sales and use tax limit can be as low as $300. Local taxes (city and/or county) don’t apply to any portion of the price of a single article of qualifying tangible personal property that exceeds the local tax base limitation. 

Tennessee also has an additional state single article tax rate of 2.75% for the lease, rental, or sale of a single article of tangible personal property priced from $1,600 to (and including) $3,200. This 2.75% tax is on top of the general state sales tax. Any amount under $1,600 or over $3,200 is not subject to the additional state single article tax.

“Questions about how Tennessee’s single article taxes work come up again and again,” says Conan Royce, Senior Director of Laws and Rates at Avalara. “Tennessee’s complex single article tax structure poses challenges even for seasoned tax professionals. For retailers lacking dedicated tax departments, it can be difficult to navigate and comply with these intricate rules.”

Fortunately, the Tennessee Department of Revenue spells out how the local single article tax and state single article tax would apply to a few different transactions.

Businesses are required to account for all applicable single article taxes when reporting and remitting sales tax. It’s not enough to simply report and remit the tax due — you must properly attribute the portion of each transaction subject to the various rates. So, the sales tax for a $5,000 sofa would be taxed and reported as follows:

• The general state sales tax rate (7%) would apply to the full sales price. 
• The state single article rate (2.75%) would apply to the amount between $1,600 and $3,200.
• The county sales tax rate would apply to the first $1,600 of the single article’s purchase price. 
• The city tax rate would apply to the first $1,600 of the single article’s purchase price.

If you sell multiple single items that qualify for the single article tax on one invoice, you need to account for each single article.

Local single article sales must first be reported on Schedule B of the sales tax return because the amount of sales that exceed the tax base must be subtracted from all single article sales.

State single article sales must first be reported on Schedule C of the sales tax return because the amount of single article sales that are between $1,600 and $3,200 must be listed.

See chapter nine of the Tennessee Department of Revenue Sales and Use Tax Manual for more detailed instructions.

Arkansas, North Dakota, and Tennessee aren’t the only states that have maximum tax caps. Other states with max taxes or single article tax caps include the following.

Alaska

Although there’s no statewide sales tax in Alaska, there are local sales and use taxes in many local jurisdictions. Some areas have maximum tax caps.

The City of Cordova instituted a tax cap on single items as of January 1, 2025. On February 19, 2025, after hearing from several sellers, the Cordova City Council determined it would be best for the city to apply the tax cap to single invoices rather than to single items and single transactions of services.

Only the first $5,000 of a single integrated sale is subject to Cordova sales tax. A “single integrated sale” means “the sale of goods or services that are itemized on a single invoice from and by the same seller with the itemized services completed by the date the goods itemized on the same invoice are delivered.”

Bundled transactions generally don’t qualify for the tax cap.

Florida

Localities in Florida can limit the amount of local tax (the discretionary sales surtax) that applies to a single sale of tangible personal property. In those that do, local tax applies only to the first $5,000 of the lease, rental, sale, or use of a single item of tangible personal property. The cap doesn’t apply to the rental of real property, transient rentals, or services.

Fun fact: The maximum tax on the sale of a boat or vessel in Florida (including the discretionary sales surtax) is $18,000; the maximum tax on the repair of a boat or vessel is $60,000.

New Jersey

New Jersey provides a 50% sales and use tax exemption on new and used boats and other vessels. Additionally, the sales and use tax on those purchases is capped at $20,000.

North Carolina

In North Carolina, the retail sale of an aircraft (including all attached accessories) is subject to the general state rate of 4.75%, with a maximum tax of $2,500. Local sales and use tax doesn’t apply to these sales at all.

South Carolina

South Carolina provides a max (maximum) tax for the following items:

• Aircraft
• Boats
• Motorcycles and motor vehicles
• Recreational vehicles (e.g., tent campers, travel trailers, etc.)
• Self-propelled light construction equipment (restrictions apply)
• Trailers or semitrailers pulled by a truck tractor, and horse trailers

This max tax is capped at 5% for a maximum of $500 per eligible item.

South Carolina also provides a maximum tax of $300 on the sale of musical instruments and office equipment sold to religious organizations, and a max tax of $300 for certain energy-efficient manufactured homes.

For new or used mobile homes, the first 35% of the selling price is exempt, after which the maximum tax of $300 applies, plus 2% of the remaining sales price exceeding $6,000 (unless certain energy-efficient levels are met).

Texas

The maximum amount of local sales and use tax due on a sale in the Lone Star State is 2%. According to the Texas Comptroller, “If a local use tax cannot be collected or accrued at its full rate without going over 2%, you cannot collect it.”

Virginia

There is a maximum tax of $2,000 on watercraft sold in Virginia. Furthermore, sales of aircraft and watercraft are subject to a reduced rate of tax.

Such maximum taxes are undoubtedly appreciated by consumers. For businesses, however, they add a layer of complexity. If you sell a variety of products into multiple states, you’re likely to encounter a maximum sales tax cap at some point. Automating sales tax management can make dealing with them much easier.