U.S. Sales Tax Guide
The United States has no federal VAT or national sales tax. Instead, states (and many localities) impose their own sales, use, or gross-receipts–style taxes, each with distinct rules, sourcing, exemptions, and rates. :contentReference[oaicite:0]{index=0}
This concise guide explains the framework, how interstate transactions work (especially for services), and summarizes the tax design and headline state rates in a full, state-by-state table.
No Federal VAT/Sales Tax
The U.S. does not levy a national VAT or federal general sales tax. Sales and use taxes are set and administered by the states (and, frequently, cities/counties). :contentReference[oaicite:1]{index=1}
Interstate Services: Nexus, Sourcing & Marketplaces
Economic nexus after Wayfair
Since South Dakota v. Wayfair, Inc. (2018), states may require remote sellers to collect sales/use tax when they exceed economic nexus thresholds (e.g., sales dollars and/or transaction counts), even without physical presence. Today, every sales-taxing state has some form of economic-nexus rule. :contentReference[oaicite:2]{index=2}
Sourcing rules for services
Services are commonly sourced to the customer’s location (destination-based), but definitions and special rules vary by state (e.g., where the benefit is received, “benefit-of-service” tests, or special industry rules). Confirm each state’s sourcing rules before invoicing and filing. :contentReference[oaicite:3]{index=3}
Marketplace facilitator rules
Most states require marketplace facilitators (e.g., large platforms) to collect and remit tax on third-party sales once thresholds are met—significantly shifting compliance from small sellers to platforms. :contentReference[oaicite:4]{index=4}
How State Sales/Use (and Similar) Taxes Work
States set a statewide rate (or a functional equivalent, like Hawaii’s general excise tax or New Mexico’s gross receipts tax) and may permit local add-ons. Five states—Alaska, Delaware, Montana, New Hampshire, Oregon—have no general state-level sales tax (Alaska allows local sales taxes). Rate snapshots and combined averages are updated periodically by the Tax Foundation and other sources. :contentReference[oaicite:5]{index=5}
State-by-State Table of Sales/Use Tax Designs & Rates (2025)
Quick reference of state designs and headline state rates (local rates may apply). Always verify current rates on state DOR sites. Data points referenced from the Tax Foundation’s mid-2025 report and state sources (examples cited inline). :contentReference[oaicite:6]{index=6}
State | Design & notes | State rate (headline) |
---|---|---|
Alabama | State sales tax; broad local add-ons permitted. | 4.00% |
Alaska | No state sales tax; many localities levy sales tax. | — |
Arizona | Transaction privilege tax (TPT) functions like sales tax; local add-ons. | 5.60% |
Arkansas | State sales tax; local add-ons common. | 6.50% |
California | State sales & use tax; mandatory 1.25% statewide local add-on included in 7.25% minimum; many district add-ons. :contentReference[oaicite:7]{index=7} | 7.25% |
Colorado | State sales tax; many “home-rule” cities self-administer local taxes. | 2.90% |
Connecticut | State sales & use tax; specific higher/lower rates for certain items. | 6.35% |
Delaware | No state sales tax; state imposes a business gross receipts tax. | — |
Florida | State sales tax; discretionary surtaxes at county level. | 6.00% |
Georgia | State sales & use tax; local add-ons (SPLOST, etc.). | 4.00% |
Hawaiʻi | General Excise Tax (GET) imposed on vendors; county surcharges may apply. | 4.00% |
Idaho | State sales & use tax; local option in limited areas. | 6.00% |
Illinois | State sales tax layered with local “home rule” and special district taxes. | 6.25% |
Indiana | State sales & use tax; no general local add-on. | 7.00% |
Iowa | State sales tax; local option sales tax common. | 6.00% |
Kansas | State sales tax; grocery tax reforms separate; local add-ons common. | 6.50% |
Kentucky | State sales & use tax; limited local add-ons. | 6.00% |
Louisiana | State sales tax; extensive parish (local) administration/add-ons. | 4.45% |
Maine | State sales tax; special rates for select categories. | 5.50% |
Maryland | State sales & use tax; few local add-ons. | 6.00% |
Massachusetts | State sales/use tax; no general local add-on. | 6.25% |
Michigan | State sales/use tax; no general local add-on. | 6.00% |
Minnesota | State sales tax; local option city/county taxes. | 6.875% |
Mississippi | State sales tax; special lower/higher rates by category. | 7.00% |
Missouri | State sales tax; robust local sales taxes. | 4.225% |
Montana | No state sales tax; resort-area taxes possible. | — |
Nebraska | State sales tax; local option city/county taxes. | 5.50% |
Nevada | State sales tax; local add-ons by county. | 6.85% |
New Hampshire | No state general sales tax; meals & rentals tax applies. | — |
New Jersey | State sales tax; Urban Enterprise Zone reduced rates in limited areas. | 6.625% |
New Mexico | Gross Receipts Tax (GRT) on vendors; statewide base recently reduced. State base ~4.875% (locals vary). :contentReference[oaicite:8]{index=8} | ~4.875% |
New York | State sales tax plus county/city add-ons (e.g., NYC). | 4.00% |
North Carolina | State sales tax plus county add-on; groceries largely exempt from state portion. | 4.75% |
North Dakota | State sales tax; local city/county add-ons. | 5.00% |
Ohio | State sales/use tax; county add-ons common. | 5.75% |
Oklahoma | State sales tax; strong city/county add-on framework. | 4.50% |
Oregon | No state sales tax. | — |
Pennsylvania | State sales tax; Philadelphia & Allegheny local add-ons. | 6.00% |
Rhode Island | State sales tax; limited local add-ons. | 7.00% |
South Carolina | State sales/use tax; multiple local option taxes. | 6.00% |
South Dakota | State sales/use tax reduced to 4.2% (through 2027); municipal add-ons apply. :contentReference[oaicite:9]{index=9} | 4.20% |
Tennessee | State sales tax; local option up to 2.75% (state groceries at reduced rate). | 7.00% |
Texas | State sales/use tax; local city/county/transport add-ons. | 6.25% |
Utah | State rate 4.85% plus mandatory statewide local add-on (1.25%) for a 6.10% state-level minimum; additional local options possible. :contentReference[oaicite:10]{index=10} | 4.85% (6.10% incl. mandatory add-on) |
Vermont | State sales tax; local option in select cities/towns. | 6.00% |
Virginia | State 4.3% plus mandatory 1% local add-on (5.3% minimum); regional surtaxes apply in some areas. :contentReference[oaicite:11]{index=11} | 4.30% (5.30% incl. mandatory add-on) |
Washington | State sales tax; significant local add-ons by city/county. :contentReference[oaicite:12]{index=12} | 6.50% |
West Virginia | State sales tax; municipalities may add local sales tax. | 6.00% |
Wisconsin | State sales/use tax; optional county/city add-ons. :contentReference[oaicite:13]{index=13} | 5.00% |
Wyoming | State sales tax; county add-ons common. | 4.00% |
Sources & notes: State rate snapshots and combined averages: Tax Foundation (mid-2025) and state DORs (examples: CA 7.25% minimum; WA quarterly local updates; SD 4.2%; NM base 4.875%). Always confirm current rules/rates before filing. :contentReference[oaicite:14]{index=14}
FAQ (U.S. Sales & Use Tax)
ℹ️ Click a question to reveal the answer:
➕ Is there a federal VAT or sales tax in the U.S.?
No. Sales and use taxes are imposed at the state (and often local) level—there is no general federal VAT/sales tax. :contentReference[oaicite:15]{index=15}
➕ Which states have no state-level sales tax?
Alaska (locals may tax), Delaware, Montana, New Hampshire, and Oregon. :contentReference[oaicite:16]{index=16}
➕ What changed with the Wayfair decision?
Wayfair (2018) let states require remote sellers to collect tax based on economic nexus, not just physical presence. :contentReference[oaicite:17]{index=17}
➕ Do all sales-taxing states now have economic nexus rules?
Yes. Every state with a sales tax has adopted an economic nexus standard post-Wayfair (thresholds vary). :contentReference[oaicite:18]{index=18}
➕ How are services taxed across state lines?
Many states source services to the customer’s location (destination/benefit-of-service), but tests differ. Always confirm the state’s sourcing rule. :contentReference[oaicite:19]{index=19}
➕ What are marketplace facilitator laws?
Rules that require platforms (e.g., Amazon, eBay) to collect and remit tax on third-party sales once thresholds are met. :contentReference[oaicite:20]{index=20}
➕ Do local sales taxes matter for remote sellers?
Yes. Many states require collecting combined state + local rates based on destination, including self-administered localities in places like Colorado. :contentReference[oaicite:21]{index=21}
➕ Where can I find current state rates in one place?
The Tax Foundation publishes mid-year snapshots; vendors like Avalara provide up-to-date state pages and maps. :contentReference[oaicite:22]{index=22}
➕ What is Washington’s state rate (before local add-ons)?
6.5% state rate; local rates vary by jurisdiction and change quarterly. :contentReference[oaicite:23]{index=23}
➕ What is California’s statewide minimum rate?
7.25% (includes a mandatory 1.25% statewide local add-on); many districts add more. :contentReference[oaicite:24]{index=24}
➕ How did South Dakota’s rate change recently?
The state rate was cut from 4.5% to 4.2% (currently scheduled to sunset in 2027). :contentReference[oaicite:25]{index=25}
➕ Is New Mexico’s tax a sales tax?
Technically it’s a Gross Receipts Tax on vendors; the statewide base is currently about 4.875%, plus locals. :contentReference[oaicite:26]{index=26}
➕ Is Hawaiʻi’s GET the same as a sales tax?
It functions similarly but is imposed on the seller’s gross receipts (not directly on the buyer), with common pass-through. Rate is 4% plus county surcharges.
➕ Are remote services generally taxable like goods?
Often yes, but service taxability varies widely by state and by service type (digital, professional, SaaS, etc.). Check each state’s rules. :contentReference[oaicite:27]{index=27}
➕ Do marketplace rules eliminate my filing duties as a seller?
They may for marketplace-facilitated sales, but you might still have registration/filing for your direct sales. Review each state’s facilitator statute. :contentReference[oaicite:28]{index=28}
➕ Where can I see combined state+local averages and maxes?
See the Tax Foundation’s mid-year tables for averages, ranks, and maximum local rates. :contentReference[oaicite:29]{index=29}
➕ Which states typically have the highest combined rates?
Recent snapshots often show Louisiana and Tennessee at or near the top, with others like Arkansas and Washington also high. :contentReference[oaicite:30]{index=30}
➕ Do sales tax holidays affect remote sellers?
Yes—if you’re registered or required to collect in that state, holiday rules (dates/items) apply to your sales too. :contentReference[oaicite:31]{index=31}
➕ How quickly do local rate changes occur?
Frequently (often quarterly). Large states like California and Washington publish frequent updates to district/local rates. :contentReference[oaicite:32]{index=32}
➕ What’s the safest way to stay compliant across states?
Track nexus, register where required, apply correct destination rates, and monitor marketplace/facilitator and local-rate changes. Use state DOR tools and reputable aggregators for rates and rules. :contentReference[oaicite:33]{index=33}