Sales tax

Questions about sales tax? You’re in the right place. We cover the basics here.

What is sales tax?

Consumers pay sales tax on top of, and at a certain percentage of, the sales price of the taxable goods and services they buy.

Sellers calculate sales tax, collect it from consumers, and file and remit it to state and local authorities, according to where they have nexus.

States and other localities use sales tax revenue to fund government operations, schools, parks, roads, special projects, and more. View our map of active remote seller laws at the state level.


Sales tax basics

What’s taxed?

Tangible personal property (TPP) — items that can be moved, touched, or felt — is generally subject to sales tax in the United States, unless excluded by law or by a valid reseller or exemption certificate. Services, such as hairstyling or lawn care, are sometimes taxable, depending on the state and the service.

Where’s it taxed?

45 states, the District of Columbia, and Puerto Rico impose some form of general sales tax. Alaska, Delaware, Montana, New Hampshire, and Oregon do not. They do, however, often allow local taxes on specific services, such as telecommunications and lodging. There is no federal or national sales tax in the U.S.

How much is sales tax?

It varies — widely. There are 12,000+ sales tax jurisdictions in the U.S., encompassing states, counties, cities, and other localities and special districts. Each jurisdiction has the ability to impact sales tax rates and regulations, to varying degrees. And those rates and regulations change frequently.

Get sales tax rates by state

What goes into a sales tax calculation? It’s all about location.
Sourcing

First, know how to source the sale. Most states use destination-based sourcing, which means the applicable sales tax rates and rules are the ones tied to the delivery address. However, some states use origin-based sourcing (i.e., the location of the seller or shipper). Others use a hybrid approach.

Exact address

Next, use the exact address of the sourcing location, not just the ZIP code. Multiple sales tax jurisdictions can be located within a single ZIP code. Even next-door neighbors could pay different sales tax rates if their homes are located within different sales tax jurisdictions.

Combined rate

Then, calculate sales tax by starting with the statewide rate, if applicable. Add any county, city, local, and/or special district taxes on top to get the total combined rate that applies to a taxable transaction. Remember, certain buyers and products are exempt, according to sales tax laws.

Sales tax calculator


Free sales tax guides

Learn about the biggest changes to sales and use tax

The end-to-end guide on how to manage sales and use tax

A state-by-state-guide for filing sales tax returns

Get the tools to do sales tax right

Calculate sales tax

Real-time sales tax calculations flow directly from a powerful tax engine to your shopping cart or invoicing system, all in a flash.

File sales tax

You'll barely lift a finger as Avalara tallies what you owe in the jurisdictions you designate, prepares and files your returns, and remits payments for you.

Manage tax compliance documents

Collect, store, and renew tax documents in the cloud. Syncs with other tax software to apply exemptions at checkout.