Overview

U.S Sales Tax is a state-level tax on the sale of goods and services. Unlike federal taxes, sales tax laws and rates differ for each state in the USA, and can directly impact a business’s success, regardless of size, industry, or stage.

Sales taxes are typically calculated as a percentage of the sale price, and are collected at point of sale.

The responsibility of collecting and remitting sales taxes falls on the business owner. This is a vital step in the tax compliance process for founders.

Sales Tax = Purchase Price/Invoice Value * Sales Tax Rate

Example:

Scenario: “Company A” sells a product to college students that enhances their productivity and workflows using AI.

Customer: Your first customer is based in New York City, and purchases the product from New York State.

Revenue Model: Company A charges a simple $100 for their product.

Sales Tax Calculations:

• New York State charges a 8.875% sales tax.
• If Company A charges $100/month – the total charge would be $108.88 for your customer’s monthly fee.
• Sales Tax charged: $8.88.

Collecting and remitting sales taxes on time is required.

If sales taxes go unpaid, state regulators have the power to audit customers, gather information from various third parties, and charge business owners hefty fees with interest, sometimes leading to lawsuits and penalties.

Why does sales tax exist?

Governments utilize sales taxes to fund various important services across many sectors – including infrastructure, education, healthcare, and urban planning.

As a founder of a business, sales taxes can naturally affect many aspects of your decision making process – things like pricing strategy, cash flow management, competitive positioning and of course, compliance.

It is important to always consider sales tax as a factor in effective revenue management practices.

Origin Based vs Destination Based

Understanding sales tax rates can be tricky. But there’s one quick way to help you begin to understand what you should be charging your customers in your home state.

The first thing you need to do is find out if you run your business out of an origin-based state or a destination-based state.

In origin-based states, sales tax should be collected based on where you, the seller, are located.

In destination-based states, sales tax should be collected based on where the buyer is located, meaning the sales tax rate is determined by the buyer’s shipping address or location.

Important Note: Use this information to find the sales tax rate you should be charging in your home-base state only. States have different rules for out-of-state sellers who are selling into their states.

Origin Based States

• Arizona
• California
• Illinois
• Mississippi
• Missouri
• New Mexico
• Ohio
• Pennsylvania
• Tennessee
• Texas
• Utah and
• Virginia

California is unique. It’s a modified origin state where state, county and city taxes are based on the origin, but district taxes are based on the destination (the buyer).

If you live in one of the above states, you should be charging everyone in your state the rate for where your business is located. That rate could include a combination of state, county, city, and district tax rates.

Example: Texas

If you operate your business out of Houston, Texas, and sell to customers anywhere in Texas, you must charge the sales tax rate applicable at your business location.

For instance, Houston has a combined sales tax rate of 8.25% (which includes the state rate of 6.25% plus local city/county taxes).

So, if a customer from Dallas (where the total rate might be different, say 8%) buys from your Houston-based location, you still charge them 8.25%, the rate at your business location, not theirs.

Destination Based States

• Alabama
• Arkansas
• Colorado
• Connecticut
• District of Columbia
• Florida
• Georgia
• Hawaii
• Idaho
• Indiana
• Iowa
• Kansas
• Kentucky
• Louisiana
• Maine
• Maryland
• Massachusetts
• Michigan
• Minnesota
• Nebraska
• Nevada
• New Jersey
• New York
• North Carolina
• North Dakota
• Oklahoma
• Rhode Island
• South Carolina
• South Dakota
• Vermont
• Washington
• West Virginia
• Wisconsin
• Wyoming

If you live in one of the above states, you should be charging everyone in your state the rate where the item is being delivered. That could include a combination of state, county, city, and district tax rates.

Example: Florida

If you run your business out of Florida (a destination-based state), you charge Florida customers the sales tax rate for their delivery address.

The above is fairly simple to understand. Now let’s add some complication.

If you have sales coming in from across the US, this means you could have sales tax nexus in multiple states because you are not only selling in your state but across multiple states in the US, in which case you are a remote seller.

A state considers you a remote seller if you have sales tax nexus in that state but are not based out of that state. (In the state’s terminology, they call this “use tax.” But “use tax” is basically the same thing as sales tax, only as applied to remote-sellers).

Confusing? Let’s break it down.

A state calls you a remote seller if you have sales tax nexus there but don’t actually live or run your business from that state.

Some states use the term “use tax” instead of sales tax for remote sellers. But don’t worry, use tax is basically the same as sales tax, just for sellers who aren’t based in that state.

Think of it like this: If you live in Florida but store inventory in Texas, Texas considers you a remote seller

Let’s take an example of a seller based out of Florida:

You sell via Amazon FBA and live in Florida, but your products are shipped to a warehouse in Arizona. Arizona considers you a remote seller because your business and you are based in Florida.

If you were based in Arizona, you would normally collect sales tax based on the rate at your business’s location because Arizona is an origin-based sales tax state.

However, since you not based in Arizona and are based in Florida, you will follow the rules of your state, Florida, which is a destination based sales tax state and you will charge your customer’s sales tax, based on their location (destination).

So you will charge your customer in Arizona, the sales tax rate of his/her location.

How to Determine the Right Sales Tax Rate for Your Business?

Step 1: Is Your State Origin-Based or Destination-Based?

The first thing you need to do is check whether your state follows origin-based or destination-based sales tax rules.

• Origin-Based States → Charge sales tax based on where your business is located (not your customer).
• Destination-Based States → Charge sales tax based on your customer’s location (where the product is shipped).

Step 2: Find Out If You Are a Remote Seller in Another State

If you only sell in your home state, you simply follow its tax rules.

However, if you sell to other states and have nexus there, you are a remote seller in that state.

For remote sellers, destination based sales tax rules will apply and have to be followed.

Sales Tax On Different Product Types

Sales Tax on TPP (Tangible Personal Property)

Tangible personal property (TPP) is any personal property that can be seen, weighed, measured, felt, or touched.

TPP typically does not include real property, however, some states do have sales tax on real estate transactions.

States often interpret the definition of TPP in the broadest possible terms.

For example, some states consider ” telecommunication ” as tangible personal property, even though most people would not consider this tangible in the strict sense of the word.

This issue has become even more present with the rise of digital technologies, which can blur the line between tangible and intangible.

Sales Tax on Services

Services for sales tax purposes are roughly organized into these four categories:

1. Business services: These include services for businesses such as advertising, computer services, human resources services, lobby and consulting and payroll services.
2. Personal services: These include services such as dry cleaning, hair care, and tanning salons.
3. Professional services: These include services provided by accountants, architects, attorneys, and doctors.
4. Maintenance and repair services: These include services that are provided to tangible personal property (i.e. cars, your house) or improvements to buildings and land (i.e. landscaping).

**With a few exceptions, state tax laws follow the below uniform approach:

Sales of TPP are subject to sales tax unless specifically exempted, and Services are not subject to sales tax unless explicitly included in its scope**

Sales Tax on Digital Products

The taxability of digital products under US sales tax laws is complex and constantly evolving. Since digital products were not in existence when most US sales tax frameworks were established, they do not always fit neatly into traditional sales tax definitions.

In many states, digital products are considered TPP and are treated similarly to physical goods. This is despite digital products such as music or video downloads are not what we commonly consider tangible at first glance.

However, the definition of tangible personal property in many states is broad enough and includes products that are “perceptible to the senses.”

In contrast, other states classify digital products as services, and their taxability may depend on which services the state has elected to tax. This adds another layer of complexity to the issue, as the taxability of services varies by state.

Sales Tax on Computer Software

Some states consider only the computer software delivered by a tangible medium, such as a pen drive, as tangible personal property subject to sales tax.

Some states consider electronically delivered software as taxable TPP, regardless of whether it is delivered electronically or by a tangible medium.

Certain states distinguish between prewritten and custom software.

Prewritten software is off-the-shelf software not designed and developed for a specific customer and is usually taxable as TPP.

On the other hand, custom software is tailor-made to the customer’s needs and is often seen as a non-taxable service.

Sales Tax on SaaS

SaaS is a cloud-based software delivery model where software applications are hosted by a third-party provider and remotely accessed over the Internet by customers.

Some states charge sales tax on Saas offerings and some don’t so it’s a mix again.

Understanding Nexus

Nexus is the foundation of sales tax registration and compliance, determining whether, when and where a business must collect and remit sales tax.

Nexus refers to the connection or presence that a business has in a particular state that gives that state the authority to require the business to collect and remit sales tax on its taxable sales in that state.

In the context of U.S. sales tax, nexus is established when a business has a physical presence in a state (physical nexus), such as a store, warehouse, or employees, or when it engages in certain types of economic activity in that state (economic nexus).

If a business has no nexus in a particular state, then that state cannot require the business to register for and charge sales tax.

Type of Nexus & Key Triggers

Physical Nexus

Physical nexus is when a business has a tangible connection to a state.

This could be through owning or leasing property, having employees, storing inventory, or maintaining physical operations within the state.

• Physical Location: renting or owning an office, store, warehouse, trade house or other facility.
• Employees: Having employees who work in or visit a state regularly, including remote workers.
• Inventory: Storing goods or inventories in a warehouse or fulfilment center within the state.
• Representatives: Full time sales or contractors who operate in the state.

Economic Nexus: 

When a business exceeds a certain threshold of sales or transactions within a state, even if it has no physical presence.

Sales Thresholds: Most states set a specific dollar amount of sales (most common: $100,000) or a number of transactions (most common: 200) which if you cross, only then you have met economic nexus in that state and you are required to register for sales tax in that state.

No physical presence needed: Businesses can establish economic nexus in a state purely based on sales activity, without having any physical operations, employees, or inventory in that state.

Economic Nexus Rules

Each U.S. state has its own rules on what constitutes economic nexus, which can vary considerably.

Sales threshold: Economic nexus can be triggered by making a certain value of sales in a state during a given time period. Some states also have a trigger based on the number of transactions. A few states require that both triggers are met before the nexus is created.

Reference period: Most states look at the calendar year when determining whether the economic nexus threshold has been reached (e.g. January 1, 2025 to December 31, 2025). However, some states have different reference periods for determining nexus.

Transactions made through a registered marketplace facilitator excluded: To calculate nexus, some states allow sellers to exclude any sales made through a registered marketplace facilitator (e.g. Amazon, Ebay, a marketplace facilitator registered for sales tax who calculates, collects, and remits sales tax on the seller’s behalf).

Most states however require that sellers include both sales made directly to customers and sales made to customers through a marketplace facilitator when performing a nexus calculation.

Transactions made to a reseller excluded: Some states allow sellers to exclude sales made to resellers when performing a nexus calculation. As a general rule, sales made to resellers holding a valid exemption certificate are not subject to sales tax.

Limited to certain transaction types: Some states allow sellers to exclude certain types of sales when performing a nexus calculation, for example, non-taxable sales or sales of anything other than tangible personal property (TPP).

This means other types of transactions, such as services, digital products, or intangible goods (like software downloads, subscriptions, etc.), do not count toward the threshold calculation, unless specifically mentioned by the state’s tax laws.

Sales Tax on SaaS

Software as a service (SaaS) is a model where software is hosted in one place but licensed by subscription for use by customers. For example, some states consider SaaS a service. So, if services are generally taxable in the state – such as in Arizona – then SaaS is considered taxable. In most states, where services aren’t taxable, SaaS also isn’t taxable. Other states, like Washington, consider SaaS to be an example of tangible software and thus taxable. Just like with anything tax-related, each state has made its own rules and laws. This list compiles all SaaS-related state sales tax laws at the time of this writing.

Sales Tax Applicability State Wise

Alabama – Taxable

Alaska – Taxable

Arizona – Taxable

Arkansas – Non Taxable

California – Non Taxable

Colorado – Non Taxable

Connecticut – Taxable

Florida – Non Taxable

Georgia – Non Taxable

Hawaii – Taxable

Idaho – Non Taxable

Illinois – Non Taxable

Indiana – Non Taxable

Iowa – Taxable

Kansas – Non Taxable

Kentucky – Non Taxable

Louisiana – Taxable

Maine – Non Taxable

Maryland – Non Taxable (when used for business from 1st July 2022)

Massachusetts – Taxable

Michigan – Non Taxable

Minnesota – Non Taxable

Mississippi – Non Taxable

Missouri – Non Taxable

Nebraska – Non Taxable

Nevada – Non Taxable

New Jersey – Non Taxable

New Mexcio – Taxable

New York – Taxable

North Carolina – Not Applicable

North Dakota – Not Applicable

Ohio – Taxable – For Business Use Non Taxable – For Personal Use

Oklahoma – Non Taxable

Pennsylvania – Taxable

Rhode Island – Taxable

South Carolina – Taxable

South Dakota – Taxable

Tennessee – Taxable

Texas – 80% Taxable, 20% Non Taxable

Utah – Taxable

Vermont – Non Taxable

Virginia – Non Taxable

Washington – Taxable

Washington D.C – Taxable

West Virginia – Taxable

Wisconsin – Non Taxable

Wyoming – Non Taxable

Sales Tax on Digital Products

Digital products mean movies, books and eBooks, music, ringtones, photographs and magazine and newspaper subscriptions. SaaS is different as compared to Digital products.

Downloads vs. Digital Products Accessed Online

Some states differentiate between digital products that you download to your own device and digital products that you access online but don’t download. (Expect to see states using language like “transferred electronically” to mean something downloaded or otherwise electronically accessed.)

Example: Some states consider you buying a movie and having it transferred electronically to your possession to be taxable, while “renting” that movie for a limited period of time is not taxable. So in this logic, you could buy and download a movie on a site like Amazon and pay tax on it, or “rent” it for a limited period of time on Amazon Prime Video and not pay tax on it.

Physical Property v. Digital Downloads

Another distinction is the difference in taxability between software, music, movies etc. bought in physical format (i.e. on a DVD) vs. software bought or accessed online. Software, movies, music and the like bought in a physical format were considered “tangible personal property” and subject to sales tax in essentially every state. But some states considered the equivalent product purchased and accessed electronically to be taxable, while others did not (presumably since it wasn’t purchased in a physical format.) For the states who consider digital products “tangible personal property” many of them state that the product is tangible because it can be “perceived by the senses.”

Products that are Normally Tax Exempt in Non-Digital Format

Some states specify that digital products are taxable in the state, but only if their physical equivalent is also taxable. For example, in Colorado physical newspapers that qualify as a “legal publication” are not taxable. And since a digital copy of that type of newspaper is considered another form of the newspaper, then a digital newspaper wouldn’t be taxable. On the other hand, non-“legal publication” newspapers, books, music, movies, etc. in digital form are taxable in Colorado in both physical and digital format. The law is similar in Minnesota. Digital products are taxable in Minnesota, but textbooks are not. By their logic, digital books would be taxable, but digital textbooks are tax exempt.

Sales Tax Applicability State Wise:

Alabama – Taxable

Alaska

Arizona – Taxable

Arkansas – Taxable

California – Non Taxable

Colorado – Taxable

Connecticut – Taxable

Florida – Non Taxable

Georgia – Non Taxable

Hawaii – Taxable

Idaho – Taxable – Permanent right to use the product. Non Taxable – Leasing or Renting

Illinois – Non Taxable

Indiana – Taxable

Iowa – Taxable

Kansas – Non Taxable

Kentucky – Taxable

Louisiana – Taxable

Maine – Taxable

Maryland – Taxable

Massachusetts – Non Taxable

Michigan – Non Taxable

Minnesota – Taxable

Mississippi – Taxable

Missouri – Non Taxable

Nebraska – Taxable

Nevada – Non Taxable

New Jersey – Taxable

New Mexcio – Taxable

New York – Non Taxable

North Carolina – Taxable

North Dakota – Non Taxable

Ohio – Taxable

Oklahoma – Non Taxable

Pennsylvania – Taxable

Rhode Island – Taxable

South Carolina – Non Taxable

South Dakota – Taxable

Tennessee – Taxable

Texas – Taxable

Utah – Taxable

Vermont – Taxable

Virginia – Non Taxable

Washington – Taxable

Washington D.C – Taxable

West Virginia – Non Taxable

Wisconsin – Taxable

Wyoming – Taxable

Sales Tax on Services

Services are roughly organized into 4 categories:

• Business services – These include services for businesses such as advertising, computer services, human resources services, lobby and consulting and payroll services.
• Personal services – These include services such as dry cleaning, hair care, and tanning salons.
• Professional services – These include services provided by accountants, architects, attorneys, and doctors.
• Maintenance and repair services – These include services that are provided to tangible personal property (i.e. cars, your house) or improvements to buildings and land (i.e. landscaping).

While services are not subject to sales tax in all states, It’s important to note that exclusions are not absolute. It all depends on the state.

• 5 U.S. states (New Hampshire, Oregon, Montana, Alaska, Delaware) don’t impose any general, statewide sales tax on goods and services.
• 4 U.S. states (Hawaii, South Dakota, New Mexico, West Virginia) tax services by default, with exceptions only for services specifically exempted in the law.
• In the rest of the 41 states and the District of Columbia, services are not taxed by default, but services specified by the state may be taxed.

If you do business in more than one state, that means that you need to understand how each state treats each of your particular products or services.

Streamlined Sales Tax

How many states have passed legislation conforming to the SSUTA

To date, twenty-four of the forty-five states with a general sales and use tax have passed the conforming legislation.

The following states have passed legislation to conform to the Streamlined Sales and Use Tax Agreement: Arkansas, Georgia, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Nebraska, Nevada, New Jersey, North Carolina, North Dakota, Ohio, Oklahoma, Rhode Island, South Dakota, Tennessee, Utah, Vermont, Washington, West Virginia, Wisconsin, and Wyoming.

Other states have recently contacted Streamlined personnel regarding conforming their laws to the requirements of the Streamlined Sales and Use Tax Agreement, but have not yet enacted the necessary legislation.

What is a Full Member State?

A Full Member State is a state that has been determined by the Streamlined Sales Tax Governing Board to have changed its sales tax laws so that they meet all of the requirements set forth in the SSUTA. The member states are Arkansas, Georgia, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Nebraska, Nevada, New Jersey, North Carolina, North Dakota, Ohio, Oklahoma, Rhode Island, South Dakota, Utah, Vermont, Washington, West Virginia, Wisconsin, and Wyoming. Sellers that register through the Streamlined Registration system will be registered in each Streamlined state they select and will be required to collect and remit sales tax in each of those states.

What is an Associate Member State?

An Associate Member State is a state that the Streamlined Sales Tax Governing Board has determined to: (a) either be in compliance with the SSUTA, except that changes to their statutes and rules are not all in effect at this time; or (b) in compliance with nearly all parts of the SSUTA. Tennessee is the only Associate Member State at this time.

What does the SD v Wayfair U.S. Supreme Court Decision mean?

The United States Supreme Court ruled in South Dakota v. Wayfair on June 21, 2018, that states may require sellers to collect and remit sales or use tax on sales delivered to locations within their state regardless of physical presence if economic nexus exists with the state. We are continuing to review the decision and its implications and are working with the Streamlined Member States to make the implementation of this decision as smooth as possible.

Who is a Remote Seller?

A remote seller is generally a seller that sells products or services for delivery into a state in which that seller does not have a physical presence or another legal requirement to register other than because they exceed the state’s remote seller threshold.  You will need to check with each state to determine if you are required to register in that state.

State Wise Sales Tax Rules

Alabama

Summary:

• Destination Based Sales Tax.
• General Sales Tax Rate: 4%.
• $250,000 in sales during the prior calendar year.
• Transactions made through a registered marketplace facilitator excluded: Yes.
• Transactions made to a reseller excluded: Yes.
• Limited to certain transaction types: TPP only.
• Services: Not taxable, with a few exceptions. Digital products (movies, eBooks, music, photographs, magazine subscriptions etc) are taxable.
• SaaS Products: Taxable
• When To Register: By January 1 of the year after you reach the threshold.
• Alabama State Sales Tax Website

Alaska

Summary:

• Destination Based Sales Tax.
• No state-wide General Sales Tax Rate but some areas levy local taxes.
• Over $100,000 in sales OR 200 transactions during the current or prior calendar year.
• Transactions made through a registered marketplace facilitator excluded: No.
• Transactions made to a reseller excluded: No.
• Limited to certain transaction types: No.
• Services: Not taxable.
• Digital products are generally taxable in local jurisdictions that have instituted a sales tax.
• SaaS Products: Taxable
• When To Register: The first day of the month after 30 days of being adopted by a city or borough. This refers to when a business must start collecting and remitting sales tax in municipalities (cities or boroughs) that have chosen to adopt local sales tax laws.

Here’s what it means step by step:

1. Adoption by City or Borough: In Alaska, there is no state-wide sales tax, but certain cities or boroughs may choose to implement their own local sales taxes. When a municipality adopts or updates sales tax rules, they set a timeline for when these rules apply to businesses.
2. 30 Days After Adoption: After a city or borough adopts a sales tax ordinance or law, there is typically a 30-day waiting period for businesses to prepare for compliance. During this period, businesses may need to register for the local sales tax, adjust their systems to collect the tax, and become familiar with reporting requirements.
3. First Day of the Month: Once the 30-day waiting period has passed, businesses are required to start collecting sales tax on the first day of the following month.

Example:

• A borough adopts a sales tax on March 15th.
• The 30-day period ends on April 14th.
• The business must start collecting and remitting sales tax from May 1st onward.

Arkansas

Summary:

• Destination Based Sales Tax.
• General Sales Tax Rate: 6.5%.
• Over $100,000 in sales OR 200 transactions during the current or prior calendar year.
• Transactions made through a registered marketplace facilitator excluded: Yes.
• Transactions made to a reseller excluded: No.
• Limited to certain transaction types: Taxable transactions only.
• Services: Many services are taxable in Arkansas.
• Digital products such as Streaming video, digital audio work, digital audio visual work, and digital books are taxable. Downloaded video games, digital newspapers / magazines, digital photographs / images, digital artwork, and digital greeting cards are not taxable.
• SaaS Products: Not Taxable.
• When To Register: The next transaction as soon as you meet physical or economic nexus (so as soon as possible).
• Arkansas Sales Tax Website

Arizona

Summary:

• Origin Based Sales Tax.
• General Sales Tax Rate: 5.6%.
• Over $100,000 in sales during the current or prior calendar year.
• Transactions made through a registered marketplace facilitator excluded: Yes.
• Transactions made to a reseller excluded: No.
• Limited to certain transaction types: No.
• Services: Not taxable, with a few exceptions.
• Digital products are taxable.
• SaaS Products: Taxable
• When To Register: When you meet the threshold you must obtain a TPT (Transaction Privilege Tax) license. The TPT is essentially a form of sales tax, but it is a tax on the privilege of doing business in Arizona, imposed on the seller (rather than directly on the consumer). Businesses must collect this tax from customers and remit it to the Arizona Department of Revenue.
• Arizona Sales Tax Website

California

Summary:

• Origin Based Sales Tax. It’s a modified origin state where state, county and city taxes are based on the origin, but district taxes are based on the destination (the buyer).
• General Sales Tax Rate: 7.25%.
• Over $500,000 in sales during the current or prior calendar year.
• Transactions made through a registered marketplace facilitator excluded: No.
• Transactions made to a reseller excluded: No.
• Limited to certain transaction types: TPP only.
• Services: Not taxable.
• Digital products are tax exempt. The sale of electronic data products such as software, data, digital books (eBooks), mobile applications and digital images is generally not taxable (though if you provide some sort of physical copy or physical storage medium then the sale is taxable).
• SaaS Products: Not Taxable
• When To Register: The same day you exceed the threshold.
• California Sales Tax Website

Colorado

Summary:

• Destination Based Sales Tax.
• General Sales Tax Rate: 2.9%.
• Over $100,000 in sales during the current or prior calendar year.
• Transactions made through a registered marketplace facilitator excluded: No.
• Transactions made to a reseller excluded: Yes.
• Limited to certain transaction types: TPP only.
• Services: Not taxable.
• Digital products are taxable. Digital goods like music, movies, eBooks, magazines etc. are considered tangible personal property because they are “perceptible by the senses” and are therefore taxable. (Electronic delivery of “legal publication” newspapers are exempt, since physical copies of those same newspapers are exempt).
• SaaS Products: Not Taxable.
• When To Register: Within 90 days of meeting nexus.
• Colorado Sales Tax Website

Connecticut

Summary:

• Destination Based Sales Tax.
• General Sales Tax Rate: 6.35%.
• Over $100,000 in sales AND 200 transactions during the 12 month period ending 30 September (e.g. October 1 2021 to September 30 2022).
• Transactions made through a registered marketplace facilitator excluded: No.
• Transactions made to a reseller excluded: Yes.
• Limited to certain transaction types: No.
• Services: Many services are taxable in Connecticut.
• Digital products are taxable in Connecticut. Effective October 1, 2019, sales of “digital goods,” which includes audio works, visual works, audio-visual works, reading materials or ring tones, which are electronically accessed or transferred, will be subject to sales and use taxes at the 6.35% tax rate.
• SaaS Products: Taxable. SaaS for personal use is taxed at the full state rate, but SaaS for business use is only taxed at the rate of 1%.
• When To Register: By October 1 of the year you cross the threshold.
• Connecticut Sales Tax Website

Delaware

Summary:

Delaware does not have a state sales tax.

Florida

Summary:

• Destination Based Sales Tax.
• General Sales Tax Rate: 6%.
• Over $100,000 in sales during the prior calendar year.
• Transactions made through a registered marketplace facilitator excluded: No.
• Transactions made to a reseller excluded: Yes.
• Limited to certain transaction types: Taxable TPP only.
• Services: Not taxable, with a few exceptions.
• Digital products (movies, eBooks, music, photographs, magazine subscriptions etc) are tax exempt in Florida. Items sold in digital form are not considered “tangible personal property” and are therefore not taxable. Though, if the item is sold in conjunction with tangible personal property then the entire sale would most likely be subject to Florida sales tax.
• SaaS Products: Not Taxable.
• When To Register: Next transaction after you meet the nexus criteria.
• Florida Sales Tax Website

Georgia

Summary:

• Destination Based Sales Tax.
• General Sales Tax Rate: 4%.
• Over $100,000 in sales OR 200 transactions during the current or prior calendar year.
• Transactions made through a registered marketplace facilitator excluded: No.
• Transactions made to a reseller excluded: Yes.
• Limited to certain transaction types: TPP only.
• Services: Not taxable.
• Beginning January 1, 2024, in Georgia, if you buy a digital product like an e-book or a movie and get to keep it permanently without needing to make ongoing payments, you’ll have to pay sales tax on it.

1. For example, if you purchase an e-book for a one-time fee, that purchase will be taxed.
2. If you subscribe to a streaming service like Spotify or Netflix, where you make monthly payments to access digital content, that purchase would not be taxed under the new rule in Georgia. The tax only applies to digital products you buy and keep permanently without ongoing payments. In this case, since you’re paying regularly for continued access, the new tax wouldn’t apply.

• SaaS Products: Not Taxable.
• When To Register: Next transaction after you meet the nexus criteria.

Hawaii

Summary:

• Destination Based Sales Tax.
• General Sales Tax Rate: 4%.
• $100,000 in sales OR 200 transactions during the current or prior calendar year.
• Transactions made through a registered marketplace facilitator excluded: No.
• Transactions made to a reseller excluded: No.
• Limited to certain transaction types: No.
• Services: Taxable.
• Digital products (movies, eBooks, music, photographs, magazine subscriptions etc) are taxable. They are subject to Hawaii general excise tax, as are most transactions (products and services) in Hawaii.
• SaaS Products: Taxable.
• When To Register: The month following when you meet the threshold.
• Hawaii Sales Tax Website

Idaho

Summary:

• Destination Based Sales Tax.
• General Sales Tax Rate: 6%.
• Over $100,000 in sales during the current or prior calendar year.
• Transactions made through a registered marketplace facilitator excluded: No.
• Transactions made to a reseller excluded: No.
• Limited to certain transaction types: No.
• Services: Not taxable, unless the service you provide includes creating or manufacturing a product.
• Digital products (movies, eBooks, music, photographs, magazine subscriptions etc), regardless of the delivery or access method, are taxable when the purchaser has the permanent right to use the product. When the purchaser is leasing or renting the item, it is tax exempt. If the right to use digital music, digital books, digital videos or digital games is conditioned upon continued payment from the purchaser it is not a permanent right of use.
• SaaS Products: Not Taxable.
• When To Register: Next transaction after you meet the nexus criteria.
• Idoha Sales Tax Website

Illinois

Summary:

• Origin Based Sales Tax.
• General Sales Tax Rate: 6.25%.
• $100,000 in sales OR 200 transactions during a 12 month period ending any quarter (e.g. July 1, 2021 to June 30, 2022 or April 1, 2022 to March 31, 2023).

This isn’t limited to a calendar year. The 12-month period could be from July 1, 2021 to June 30, 2022 or April 1, 2022 to March 31, 2023, or any similar 12-month period that ends on the last day of a quarter (March 31, June 30, September 30, December 31).

• Transactions made through a registered marketplace facilitator excluded: Yes.
• Transactions made to a reseller excluded: Yes.
• Limited to certain transaction types: TPP only.
• Services: Not taxable.
• Digital products (movies, eBooks, music, photographs, magazine subscriptions etc) are not taxable. Information or data that is downloaded electronically, such as downloaded books, musical recordings, newspapers or magazines, does not constitute the transfer of tangible personal property. These types of transactions represent the transfer of intangibles and are thus not subject to Tax.
• SaaS Products: Not Taxable.
• When To Register: When you believe you meet the criteria for the past 12 months.
• Illinois Sales Tax Website

Indiana

Summary:

• Destination Based Sales Tax.
• General Sales Tax Rate: 7%.
• Over $100,000 in sales OR 200 transactions during the current or prior calendar year.
• Transactions made through a registered marketplace facilitator excluded: No.
• Transactions made to a reseller excluded: No.
• Limited to certain transaction types: No.
• Services: Not taxable.
• Digital products (movies, eBooks, music, photographs, magazine subscriptions etc) are taxable. The definition of digital products includes audio works, audio visual works and books.
• SaaS Products: Not Taxable.
• When To Register: Next transaction after you meet the nexus criteria.
• Indiana Sales Tax Website

Iowa

Summary:

• Destination Based Sales Tax.
• General Sales Tax Rate: 6%.
• $100,000 in sales during the current or prior calendar year.
• Transactions made through a registered marketplace facilitator excluded: No.
• Transactions made to a reseller excluded: No.
• Limited to certain transaction types: No.
• Services: Many services are taxable in Iowa.
• Digital products (movies, eBooks, music, photographs, magazine subscriptions etc) are taxable at 6%.
• SaaS: Taxable, except when being used for business purposes, then it is exempt.
• When To Register: Within 30 days of meeting the nexus criteria.
• Iowa Sales Tax Website

Kansas

Summary:

• Destination Based Sales Tax.
• General Sales Tax Rate: 6.5%.
• Over $100,000 in sales during the current or prior calendar year.
• Transactions made through a registered marketplace facilitator excluded: No.
• Transactions made to a reseller excluded: No.
• Limited to certain transaction types: No.
• Services: Many services are taxable in Kansas.
• Digital products (movies, eBooks, music, photographs, magazine subscriptions etc) are not taxable.
• SaaS Products: Not Taxable.
• When To Register: Next transaction after you meet the nexus criteria.
• Kansas Sales Tax Website

Kentucky

Summary:

• Destination Based Sales Tax.
• General Sales Tax Rate: 6%.
• Over $100,000 in sales OR 200 transactions during the current or prior calendar year.
• Transactions made through a registered marketplace facilitator excluded: No.
• Transactions made to a reseller excluded: No.
• Limited to certain transaction types: TPP and digital property only.
• Services: Not taxable, with a few exceptions.
• Digital products (movies, eBooks, music, photographs, magazine subscriptions etc) are taxable in Kentucky. They are considered tangible personal property. Audio visual works and e-books are taxable.
• SaaS Products: Taxable.
• When To Register: Within 60 days of meeting the nexus criteria.
• Kentucky Sales Tax Website

Louisiana

Summary:

• Destination Based Sales Tax.
• General Sales Tax Rate: 4.45%.
• Over $100,000 in sales OR 200 transactions during the current or prior calendar year.
• Transactions made through a registered marketplace facilitator excluded: No.
• Transactions made to a reseller excluded: No.
• Limited to certain transaction types: No.
• Services: Not taxable, with a few exceptions.
• Digital products (movies, eBooks, music, photographs, magazine subscriptions etc) are taxable in Louisiana.
• SaaS Products: Taxable.
• When To Register: Within 30 days of meeting the nexus criteria.
• Louisiana Sales Tax Website

Maine

Summary:

• Destination Based Sales Tax.
• General Sales Tax Rate: 5.5%.
• Over $100,000 in sales during the current or prior calendar year.
• Transactions made through a registered marketplace facilitator excluded: No.
• Transactions made to a reseller excluded: No.
• Limited to certain transaction types: TPP, taxable services, and products transferred electronically only.
• Services: Not taxable, with a few exceptions.
• Digital products are taxable. The sale of a digital product is subject to the general rate of tax if the non-digital or physical form would be subject to sales tax.

For example, the sale of digital music, books, magazines, newspapers, and movies are taxable since the sale of a CD, paper-bound book, DVD, and printed magazines and newspapers are taxable. The sale of a digital publication copy is taxable provided the publication is downloadable to the subscriber’s electronic device. If the subscriber is allowed only to access and view an online version of the publication and the digital copy may not be downloaded, the subscription is not taxable.

• SaaS Products: Not Taxable.
• When To Register: Next transaction after you meet the nexus criteria.
• Maine Sales Tax Website

Maryland

Summary:

• Destination Based Sales Tax.
• General Sales Tax Rate: 6%.
• Over $100,000 in sales during the current or prior calendar year.
• Transactions made through a registered marketplace facilitator excluded: No.
• Transactions made to a reseller excluded: No.
• Limited to certain transaction types: TPP + taxable services only.
• Services: Not taxable, with a few exceptions.
• Most digital goods (movies, eBooks, music, photographs, magazine subscriptions etc) are taxable in Maryland as of March 14, 2021.
• SaaS: Taxable, except when it is being used for business purposes, in which case it is exempt.
• When To Register: First day of the next month after you meet the nexus criteria.
• Maryland Sales Tax Website

Massachusetts

Summary:

• Destination Based Sales Tax.
• General Sales Tax Rate: 6.25%.
• Over $100,000 in sales during the current or prior calendar year.
• Transactions made through a registered marketplace facilitator excluded: No.
• Transactions made to a reseller excluded: No.
• Limited to certain transaction types: No.
• Services: Not taxable.
• Digital products (movies, eBooks, music, photographs, magazine subscriptions etc) are not taxable. This includes “Digital products delivered electronically, including but not limited to music, video, reading materials or ring tones”.
• SaaS: Taxable
• When To Register: By 1 January of the following year, though you have an additional 2 months if you exceed it between November and December.

1. If your business exceeds the $100,000 sales threshold during the year (January–October), you must register by January 1st of the following year.
2. If your business exceeds the threshold between November and December, you have an extra 2 months to register, so you must register by March 1st of the following year.

• Massachusetts Sales Tax Website

Michigan

Summary:

• Destination Based Sales Tax.
• General Sales Tax Rate: 6%.
• Over $100,000 in sales during the prior calendar year.
• Transactions made through a registered marketplace facilitator excluded: No.
• Transactions made to a reseller excluded: No.
• Limited to certain transaction types: No.
• Services: Not taxable.
• Digital products (movies, eBooks, music, photographs, magazine subscriptions etc) are not taxable.
• SaaS: Not Taxable.
• When To Register: Next transaction after you meet the nexus criteria.
• Michigan Sales Tax Website

Minnesota

Summary:

• Destination Based Sales Tax.
• General Sales Tax Rate: 6.875%.
• Over $100,000 in sales OR 200 transactions during any 12 calendar month period.
• Transactions made through a registered marketplace facilitator excluded: No.
• Transactions made to a reseller excluded: Yes.
• Limited to certain transaction types: No.
• Services: Not taxable, with a few exceptions.
• Digital products (movies, eBooks, music, photographs, magazine subscriptions etc) are taxable. Digital products are considered tangible personal property (TPP) in the state, though students’ digital textbooks and instructional materials are exempt.
• SaaS: Not Taxable.
• When To Register: Within 60 days of meeting the nexus criteria.
• Minnesota Sales Tax Website(https://www.revisor.mn.gov/statutes/cite/297A.66)(https://www.house.mn.gov/hrd/pubs/ss/ssmstb.pdf)

Mississippi

Summary:

• Origin Based Sales Tax.
• General Sales Tax Rate: 7%.
• Over $250,000 in sales during any 12 calendar month period.
• Transactions made through a registered marketplace facilitator excluded: No.
• Transactions made to a reseller excluded: No.
• Limited to certain transaction types: No.
• Services: Many services are taxable in Mississippi.
• Digital products (movies, eBooks, music, photographs, magazine subscriptions etc) are taxable. This applies whether sold permanently or less-than-permanently and whether or not the seller requires continued payment for access to the products are taxable in Mississippi. School textbooks are not taxable.
• SaaS: Not Taxable.
• When To Register: Next transaction after you meet the nexus criteria.
• Mississippi Sales Tax Website

Missouri

Summary:

• Origin Based Sales Tax.
• General Sales Tax Rate: 4.225%.
• Over $100,000 in sales during a 12 month period ending any quarter (e.g. July 1, 2021 to June 30, 2022 or April 1, 2022 to March 31, 2023).

This isn’t limited to a calendar year. The 12-month period could be from July 1, 2021 to June 30, 2022 or April 1, 2022 to March 31, 2023, or any similar 12-month period that ends on the last day of a quarter (March 31, June 30, September 30, December 31).

• Transactions made through a registered marketplace facilitator excluded: No.
• Transactions made to a reseller excluded: Yes.
• Limited to certain transaction types: TPP only.
• Services: Not taxable, with a few exceptions.
• Digital products (movies, eBooks, music, photographs, magazine subscriptions etc) are not taxable. Entertainment such as music or videos, pictures, newspapers, subscriptions and other electronic products are not considered tangible personal property in Missouri.
• SaaS: Not Taxable.
• When To Register: Within 90 days of the preceding quarter ending.

1. If your business exceeds $100,000 in sales by June 30, 2023 (end of Q2), you need to register for sales tax collection by September 30, 2023 (90 days after June 30).
2. If your business exceeds $100,000 in sales by September 30, 2023 (end of Q3), you need to register for sales tax collection by December 31, 2023.

• Missouri Sales Tax Website(https://dor.mo.gov/faq/taxation/business/remote-seller-and-marketplace-facilitator.html)

Montana

Summary:

No sales tax but some areas levy local taxes.

Nebraska

Summary:

• Destination Based Sales Tax.
• General Sales Tax Rate: 5.5%.
• Over $100,000 in sales OR 200 transactions during the current or prior calendar year.
• Transactions made through a registered marketplace facilitator excluded: No.
• Transactions made to a reseller excluded: Yes.
• Limited to certain transaction types: No.
• Services: Not taxable, with a few exceptions.
• Digital products (movies, eBooks, music, photographs, magazine subscriptions etc) are taxable. This includes the sale of digital music, movies, TV shows, and digital books. Digital codes sold to access digital products are also taxable in Nebraska.
• SaaS: Not Taxable.
• When To Register: By the end of the calendar month once you meet the nexus criteria.
• Nebraska Sales Tax Website

Nevada

Summary:

• Destination Based Sales Tax.
• General Sales Tax Rate: 6.85%.
• Over $100,000 in sales OR 200 transactions during the current or prior calendar year.
• Transactions made through a registered marketplace facilitator excluded: No.
• Transactions made to a reseller excluded: Yes.
• Limited to certain transaction types: No.
• Services: Not taxable.
• Digital products (movies, eBooks, music, photographs, magazine subscriptions etc) are not taxable. This includes audio-visual works, whether sold to the end user permanently or for a limited amount of time.
• SaaS: Not Taxable.
• When To Register: Within 30 days of meeting the nexus criteria.
• Nevada Sales Tax Website

New Hampshire

Summary:

No sales tax

New Jersey

Summary:

• Destination Based Sales Tax.
• General Sales Tax Rate: 6.625%.
• Over $100,000 in sales OR 200 transactions during the current or prior calendar year.
• Transactions made through a registered marketplace facilitator excluded: No.
• Transactions made to a reseller excluded: No.
• Limited to certain transaction types: TPP, specified digital products, and taxable services only.
• Services: Many services are taxable in New Jersey.
• Digital products (movies, eBooks, music, photographs, magazine subscriptions etc) are taxable in New Jersey. This includes digital audio-visual works like movies, audio works like music and ringtones and digital books. Streaming services are non-taxable in New Jersey.
• SaaS: Not Taxable.
• When To Register: Next transaction after you meet the nexus criteria.
• New Jersey Sales Tax Website

New Mexico

Summary:

• Destination Based Sales Tax.
• General Sales Tax Rate: 5.125%.
• $100,000 in sales during the prior calendar year.
• Transactions made through a registered marketplace facilitator excluded: No.
• Transactions made to a reseller excluded: No.
• Limited to certain transaction types: No.
• Services: Taxable, they are subject to gross receipts tax.
• Digital products (movies, eBooks, music, photographs, magazine subscriptions etc) are taxable. Most transactions are subject to New Mexico’s gross receipts tax (the state’s version of sales tax).
• SaaS: Taxable.
• When To Register: By 1 January of following year.
• New Mexico Sales Tax Website

New York

Summary:

• Destination Based Sales Tax.
• General Sales Tax Rate: 4%.
• Over $500,000 in sales AND 200 transactions during any 12 month period ending any quarter (e.g. July 1, 2021 to June 30, 2022 or April 1, 2022 to March 31, 2023).
• Transactions made through a registered marketplace facilitator excluded: No.
• Transactions made to a reseller excluded: No.
• Limited to certain transaction types: TPP only.
• Services: Many services are taxable in New York.
• Digital products (movies, eBooks, music, photographs, magazine subscriptions etc) are not taxable. This includes products transferred electronically such as music, ringtones, movies and books. There are some exceptions when it comes to eBooks.
• SaaS: Taxable.
• When To Register: Register within 30 days, start collecting tax within 20 days thereafter.
• New York Sales Tax Website

North Carolina

Summary:

• Destination Based Sales Tax.
• General Sales Tax Rate: 4.75%.
• Over $100,000 in sales OR 200 transactions during the current or prior calendar year.
• Transactions made through a registered marketplace facilitator excluded: No.
• Transactions made to a reseller excluded: No.
• Limited to certain transaction types: No.
• Services: Not taxable, with a few exceptions.
• Digital products (movies, eBooks, music, photographs, magazine subscriptions etc) are taxable. Digital audio works, audio visual works, books, magazines, newspapers, newsletters, reports or other publications, photographs or greeting cards delivered electronically are all considered tangible personal property in North Carolina.
• SaaS: Not Taxable.
• When To Register: Within 60 days of meeting nexus criteria.
• North Carolina Sales Tax Website

North Dakota

Summary:

• Destination Based Sales Tax.
• General Sales Tax Rate: 5%.
• Over $100,000 in sales during the current or prior calendar year.
• Transactions made through a registered marketplace facilitator excluded: No.
• Transactions made to a reseller excluded: No.
• Limited to certain transaction types: Taxable transactions only.
• Services: Not taxable, with a few exceptions.
• Digital products (movies, eBooks, music, photographs, magazine subscriptions etc) are not taxable. Specified digital products including digital audio-visual works, digital audio works, and digital books transferred electronically are considered non-taxable in North Dakota.
• SaaS: Not Taxable.
• When To Register: Within 60 days or the end of the calendar year.

1. 60 Days: If your business exceeds the $100,000 in sales threshold at any point during the year (for either the current or prior year), you must register for sales tax collection within 60 days from the date you surpass this threshold.
2. End of the Calendar Year: If you exceed the sales threshold later in the year (e.g., November or December), the state gives you until the end of the calendar year to register, even if that period is slightly shorter than 60 days. This ensures you’re compliant by the end of the year.
3. Example 1: If your business hits $100,000 in sales on June 1, 2023, you would need to register by July 31, 2023 (60 days after June 1).
4. Example 2: If your business hits $100,000 in sales on November 15, 2023, the 60-day rule would extend your registration deadline to mid-January 2024. However, since this is beyond the end of the calendar year, you are required to register by December 31, 2023.

• North Dakota Sales Tax Website

Ohio

Summary:

• Origin Based Sales Tax.
• General Sales Tax Rate: 5.75%.
• Over $100,000 in sales OR 200 transactions during the current or prior calendar year.
• Transactions made through a registered marketplace facilitator excluded: No.
• Transactions made to a reseller excluded: Yes.
• Limited to certain transaction types: No.
• Services: Many services are taxable in Ohio.
• Some digital products (movies, eBooks, music, photographs, magazine subscriptions etc) are taxable in Ohio. These include digital audio visual works, digital audio work (including music and ringtones), and digital books and it doesn’t matter if they’re sold for permanent or “less than permanent” use.
• SaaS: Taxable – For Business Use. Non Taxable – For Personal Use
• When To Register: Next transaction after you meet the nexus criteria.
• Ohio Sales Tax Website

Oklahoma

Summary:

• Destination Based Sales Tax.
• General Sales Tax Rate: 4.5%.
• $100,000 in sales during the current or prior calendar year.
• Transactions made through a registered marketplace facilitator excluded: No.
• Transactions made to a reseller excluded: No.
• Limited to certain transaction types: Taxable transactions only.
• Services: Many services are taxable in Oklahoma.
• Digital products (movies, eBooks, music, photographs, magazine subscriptions etc) are not taxable. This includes digital music, movies, ringtones and books.
• SaaS: Not Taxable.
• When To Register: By the first of the following month.
• Oklahoma Sales Tax Website

Oregon

Summary:

No sales tax

Pennsylvania

Summary:

• Origin Based Sales Tax.
• General Sales Tax Rate: 6%.
• Over $100,000 in sales during the current or prior calendar year.
• Transactions made through a registered marketplace facilitator excluded: No.
• Transactions made to a reseller excluded: No.
• Limited to certain transaction types: Taxable transactions only.
• Services: Many services are taxable in Pennsylvania.
• Photos, books, games and other digital downloads are taxable as of August 1, 2016.
• SaaS: Taxable.
• When To Register: By April 1 of following year.
• Pennsylvania Sales Tax Website

Puerto Rico

Summary:

• Over $100,000 in sales OR 200 transactions during the seller’s accounting period.
• Transactions made through a registered marketplace facilitator excluded: No.
• Transactions made to a reseller excluded: No.
• Limited to certain transaction types: No.
• Services: Not taxable.
• Digital products: Taxable.
• SaaS: Not taxable.
• When To Register: Next transaction after you meet the nexus criteria.
• Puerto Rico Sales Tax Website

Rhode Island

Summary:

• Destination Based Sales Tax.
• General Sales Tax Rate: 7%.
• $100,000 in sales OR 200 transactions during the prior calendar year.
• Transactions made through a registered marketplace facilitator excluded: No.
• Transactions made to a reseller excluded: No.
• Limited to certain transaction types: Non-taxable services excluded.
• Services: Not taxable.
• Digital goods (movies, eBooks, music, photographs, magazine subscriptions etc) are taxable. A 7% sales and use tax will apply to specified digital products starting October 1, 2019. The term “specified digital products” means digital movies, digital TV shows, digital books, digital music, and related items that are streamed or downloaded to computers, phones, or other devices.
• SaaS: Taxable.
• When To Register: By January 1 of following year.
• Rhode Island Sales Tax Website

South Carolina

Summary:

• Destination Based Sales Tax.
• General Sales Tax Rate: 6%.
• Over $100,000 in sales during the current or prior calendar year.
• Transactions made through a registered marketplace facilitator excluded: No.
• Transactions made to a reseller excluded: No.
• Limited to certain transaction types: No.
• Services: Not taxable, with a few exceptions.
• Digital products (movies, eBooks, music, photographs, magazine subscriptions etc) are not taxable. Digital products are not specifically included in the definition of tangible personal property.
• SaaS: Taxable.
• When To Register: Within 30 days of meeting nexus criteria.
• South Carolina Sales Tax Website

South Dakota

Summary:

• Destination Based Sales Tax.
• General Sales Tax Rate: 4.5%.
• Over $100,000 in sales during the current or prior calendar year.
• Transactions made through a registered marketplace facilitator excluded: No.
• Transactions made to a reseller excluded: No.
• Limited to certain transaction types: No.
• Services: Taxable, with a few exceptions.
• Digital products (movies, eBooks, music, photographs, magazine subscriptions etc) are taxable, whether transferred electronically, for temporary or permanent use.
• SaaS: Taxable.
• When To Register: Next transaction after you meet the nexus criteria.
• South Dakota Sales Tax Website

Tennessee

Summary:

• Origin Based Sales Tax.
• General Sales Tax Rate: 7%.
• $100,000 in sales during any 12 calendar month period.
• Transactions made through a registered marketplace facilitator excluded: No.
• Transactions made to a reseller excluded: Yes.
• Limited to certain transaction types: No.
• Services: Not taxable, with a few exceptions.
• Digital products (movies, eBooks, music, photographs, magazine subscriptions etc) are taxable. This includes digital audio visual works, audio works and books.
• SaaS: Taxable.
• When To Register: Within 90 days of meeting nexus criteria.
• Tennessee Sales Tax Website (https://revenue.support.tn.gov/hc/en-us/articles/360057677332-RS-1-Sales-Threshold-for-Out-of-State-Dealers-)

Texas

Summary:

• Origin Based Sales Tax.
• General Sales Tax Rate: 6.25%.
• $500,000 in sales during any 12 calendar month period.
• Transactions made through a registered marketplace facilitator excluded: No.
• Transactions made to a reseller excluded: No.
• Limited to certain transaction types: No.
• Services: Many services are taxable in Texas.
• Digital products (movies, eBooks, music, photographs, magazine subscriptions etc) are taxable, as long as the item would also be taxable if sold in physical format.
• SaaS: It is considered part of a data processing service in Texas and is 80% taxable and 20% exempt from sales tax.
• When To Register: Within 120 days of meeting nexus criteria.
• Texas Sales Tax Website

Utah

Summary:

• Origin Based Sales Tax.
• General Sales Tax Rate: 6.1% (Includes a state wide 1.25% levied by local governments in Utah).
• Over $100,000 in sales OR 200 transactions during the current or prior calendar year.
• Transactions made through a registered marketplace facilitator excluded: No.
• Transactions made to a reseller excluded: No.
• Limited to certain transaction types: No.
• Services: Many services are taxable in Utah.
• Digital products (movies, eBooks, music, photographs, magazine subscriptions etc) are taxable. A “product transferred electronically” is considered the same as tangible personal property and taxable if the physical form is also taxable.
• SaaS: Taxable.
• When To Register: Next transaction after you meet the nexus criteria.
• Utah Sales Tax Website

Virginia

Summary:

• Origin Based Sales Tax.
• General Sales Tax Rate: 5.3% (Includes a state wide 1.% levied by local governments in Virginia).
• Over $100,000 in sales OR 200 transactions during the current or prior calendar year.
• Transactions made through a registered marketplace facilitator excluded: Yes.
• Transactions made to a reseller excluded: Yes.
• Limited to certain transaction types: No.
• Services: Not taxable, with a few exceptions.
• Digital products (movies, eBooks, music, photographs, magazine subscriptions etc) are tax exempt. This includes digital products delivered electronically, such as software, downloaded music, ringtones and reading materials which are tax exempt in Virginia.
• SaaS: Not Taxable.
• When To Register: Next transaction after you meet the nexus criteria.
• Virginia Sales Tax Website

Vermont

Summary:

• Destination Based Sales Tax.
• General Sales Tax Rate: 6%.
• $100,000 in sales OR 200 transactions during any 12 calendar month period.
• Transactions made through a registered marketplace facilitator excluded: No.
• Transactions made to a reseller excluded: No.
• Limited to certain transaction types: No.
• Services: Not taxable, with a few exceptions.
• Digital products (movies, eBooks, music, photographs, magazine subscriptions etc) are taxable, whether transferred electronically for permanent or temporary use.
• SaaS: Taxable.
• When To Register: Within 30 days of the end of the quarter you exceed the threshold.
• Vermont Sales Tax Website

Washington

Summary:

• Destination Based Sales Tax.
• General Sales Tax Rate: 6.5%.
• Over $100,000 in sales during the current or prior calendar year.
• Transactions made through a registered marketplace facilitator excluded: No.
• Transactions made to a reseller excluded: No.
• Limited to certain transaction types: No.
• Services: Many services are taxable in Washington.
• Digital products (movies, eBooks, music, photographs, magazine subscriptions etc) are taxable. Sales or use tax apply to all digital products, regardless of how they are accessed (downloaded, streamed, subscription service, networking, etc.). This includes downloaded digital goods like music and movies, streamed and accessed digital goods, and digital automated services.
• SaaS: Taxable.
• When To Register: Within 30 days of meeting nexus criteria.
• Washington Sales Tax Website

Washington DC (District of Columbia)

Summary:

• Destination Based Sales Tax.
• General Sales Tax Rate: 6%.
• Over $100,000 in sales OR 200 transactions during the current or prior calendar year.
• Transactions made through a registered marketplace facilitator excluded: Yes.
• Transactions made to a reseller excluded: No.
• Limited to certain transaction types: No.
• Services: Not taxable.
• As of January 1, 2019, digital goods (movies, eBooks, music, photographs, magazine subscriptions etc) are taxable. For purposes of the sales and use tax, D.C. Code § 47-2001(d-1) defines the term “digital goods” to mean digital audio visual works, digital audio works, digital books, digital codes, digital applications and games, and any other otherwise taxable tangible personal property electronically or digitally delivered, whether electronically or digitally delivered, streamed or accessed and whether purchased singly, by subscription or in any other manner, including maintenance, updates and support.
• SaaS: Taxable.
• When To Register: Next transaction after you meet the nexus criteria.
• Washington DC (District of Columbia) Sales Tax Website

West Virginia

Summary:

• Destination Based Sales Tax.
• General Sales Tax Rate: 6%.
• $100,000 in sales OR 200 transactions during the current or prior calendar year.
• Transactions made through a registered marketplace facilitator excluded: No.
• Transactions made to a reseller excluded: No.
• Limited to certain transaction types: No.
• Services: Taxable, with some exceptions.
• Digital products (movies, eBooks, music, photographs, magazine subscriptions etc) are not taxable in West Virginia. This includes audio works, audio visual works and books.
• SaaS: Taxable.
• When To Register: Next transaction after you meet the nexus criteria.
• West Virginia Sales Tax Website

Wisconsin

Summary:

• Destination Based Sales Tax.
• General Sales Tax Rate: 5%.
• $100,000 in sales during the current or prior calendar year.
• Transactions made through a registered marketplace facilitator excluded: No.
• Transactions made to a reseller excluded: No.
• Limited to certain transaction types: No.
• Services: Many services are taxable in Wisconsin.
• Digital goods (movies, eBooks, music, photographs, magazine subscriptions etc) are taxable. This includes audio works, audio visual works, books and codes used to purchase works (digital or physical) by digital means.
• SaaS: Not Taxable.
• When To Register: Next transaction after you meet the nexus criteria.
• Wisconsin Sales Tax Website

Wyoming

Summary:

• Destination Based Sales Tax.
• General Sales Tax Rate: 4%.
• Over $100,000 in sales OR 200 transactions during the current or prior calendar year.
• Transactions made through a registered marketplace facilitator excluded: No.
• Transactions made to a reseller excluded: No.
• Limited to certain transaction types: No.
• Services: Not taxable, with a few exceptions.
• Digital products (movies, eBooks, music, photographs, magazine subscriptions etc) are taxable. This includes digital audio works, audio visual works and books. Specific digital products where the purchaser receives permanent use of the digital product are taxable. If it is less than permanent use, it is not taxable.
• SaaS: Not Taxable.
• When To Register: Next transaction after you meet the nexus criteria.
• Wyoming Sales Tax Website

Marketplace Nexus Rules

Alabama: Makes sales through the marketplace of $250,000 OR more in the preceding 12 months.

Alaska: Gross sales to buyers in Alaska meets or exceeds $100,000 or 200 transactions in the current OR previous calendar year.

Arizona: Aggregate sales within the state, or deliveries to locations within the state, exceeding $100,000 OR 200 transactions in the previous or current calendar year.

Arkansas: Aggregate sales within the state, or deliveries to locations within the state, exceeding $100,000 OR 200 transactions in the previous or current calendar year.

California: All marketplaces are considered to be marketplace facilitators if they both facilitate marketplace sales and are registered, OR are required to register, for a California sales tax permit.

Colorado: Retailers who sell more than $100,000 tangible personal property, services OR commodities in the previous year.

Connecticut: All marketplace retailers are considered marketplace facilitators.

Florida: Remote sales in the previous calendar year in which the sum of the sales prices exceeded $100,000.

Georgia: Any number of taxable sales in Georgia exceeding $100,000 in the previous calendar year.

Hawaii: Makes over $100,000 in retail sales OR seller makes 200 or more retail sales of sales into the state.

Idaho: Over $100,000 in Idaho sales in the previous OR current calendar year.

Illinois: Total revenues from sales by the marketplace facilitator and marketplace sellers are $100,000 or more AND the marketplace facilitator and marketplace sellers enter into 200 or more sales transactions.

Indiana: Most marketplaces (internet or physical) are considered marketplace facilitators. 

Iowa: Sells over $100,000 in products or services.

Kansas: A marketplace facilitator with annual gross receipts from sales sourced to Kansas in excess of $100,000, must collect and remit sales tax. Any marketplace facilitator who meets the $100,000 threshold for the first time in the current calendar year must collect tax on cumulative gross receipts from sales into the state in excess of $100,000 during the current calendar year.

Kentucky: Sales of at least $100,000 OR 200 or more separate sales into the state.

Louisiana: Remote sellers selling through a marketplace or similar arrangement may register and voluntarily collect.

Maine: Makes over $100,000 in retail sales OR seller makes 200 or more retail sales shipped to the state in the previous or current calendar year.

Maryland: Makes over $100,000 in retail sales OR seller makes 200 or more retail sales shipped to the state in the previous or current calendar year.

Massachusetts: Sales exceed $100,000 in the prior or current calendar year.

Michigan: Makes over $100,000 in retail sales OR seller makes 200 or more retail sales shipped to the state in the previous calendar year.

Minnesota: Makes over $100,000 in retail sales OR seller makes 200 or more retail sales shipped to the state.

Mississippi: Sales exceed $250,000 in any 12-month period. 

Missouri: (Effective Jan 1, 2023) Marketplace facilitators must collect sales tax on their own sales and sales made for a 3rd party seller.

Nebraska: Makes over 200 sales OR $100,000 in sales in the state annually.

Nevada: Makes cumulative gross receipts exceeding $100,000 from retail sales in Nevada, OR at least 200 separate retail sales transactions in Nevada in the previous or current calendar year.

New Jersey: All marketplace facilitators are required to collect sales tax on behalf of 3rd party marketplace sellers for transactions made into New Jersey.

New Mexico: All marketplace facilitators are required to collect sales tax on behalf of 3rd party marketplace sellers for transactions made into New Mexico.

New York: Makes or facilitates more than $500,000 in sales of tangible personal property delivered in New York AND makes or facilitates more than 100 sales of tangible personal property delivered in New York.

North Carolina: Makes more than $100,000 in sales OR more than 200 transactions sourced to North Carolina.

North Dakota: Makes more than $100,000 in gross sales to North Dakota in the previous or current calendar year.

Ohio: Has gross receipts exceeding $100,000 OR 200 or more separate transactions in Ohio.

Oklahoma: Makes $10,000 in aggregate Oklahoma sales in the preceding 12-calendar-month period; Marketplace facilitator can also choose to instead comply with notice and report requirements.

Pennsylvania: Makes more than $100,000 in sales to Pennsylvania.

Rhode Island: Makes more than $100,000 in sales to Rhode Island in 200 or more separate transactions.

South Carolina: Makes more than $100,000 in sales into South Carolina in the previous or current calendar year.

South Dakota: Makes $100,000 or more OR at least 200 separate retail sales transactions in the previous or current calendar year.

Tennessee: Made $100,000 during the previous 12-month period.

Texas: Makes $500,000 or more per year in gross revenue from sales into Texas.

Utah: Makes $100,000 in gross revenue into the state OR 200 separate transactions into the state in the previous or current calendar year.

Vermont: Makes $100,000 in gross revenue into the state OR 200 separate transactions into the state during any 12-month period preceding the monthly period with respect to which that person’s sales and use tax liability is determined.

Virginia: Makes $100,000 in gross revenue into the state OR 200 separate transactions into the state.

Washington: Vendors with more than $100,000 in gross receipts in the state in the current or prior calendar year.

Washington DC: Makes at least $100,000 in sales in the state OR 200 or more transactions in the previous or current calendar year.

West Virginia: Makes at least $100,000 in sales in the state OR 200 or more transactions in the immediately preceding or current calendar year.

Wisconsin: All marketplace facilitators are required to collect sales tax on behalf of 3rd party sellers.

Wyoming: Makes $100,000 in gross revenue into the state OR 200 separate transactions into the state in the previous or current calendar year.