Sales taxes are a state-imposed fee that is collected on most retail purchases. Individual states determine what percentage of a retail sale is to be collected, and what types of sales can be exempted. While the buyer is responsible for paying the tax, it is the seller who is normally tasked with collecting the tax from the buyer and remitting it to the state in a timely fashion.
Tax rates and tax codes vary considerably from state to state across the United States, the District of Columbia and the various possessions. Most states don't levy a state-wide flat tax rate, but rather, allow each county, city, and special district to add on an additional tax of their own. To see detailed information about the general sales tax rates and laws for any given state, click on the map below or use this pull down menu.
To see a full breakout of sales tax rates for the entire country by state, county, city and special district, use our easy United States sales tax calculator. After putting in any ZIP code, you can enter a retail price to calculate sales tax totals.
Taxes in the U.S. are either destination-based, meaning the sales tax rate is based, or determined from, the destination an item is shipped to, or origin-based, meaning the rate is determined by the location the sale took place. It is critical for a retailer to know if the states they are selling product in and/or too are destination or origin based. This makes it complicated for retailers who need to have the exact and up-to-date sales tax rate for a "moving target".
In most states, use tax is due on every retail purchase that was not charged sales tax, excluding tax-exempt sales. Many, but not all, states charge use tax at the same percentage as sales tax. In some states, use tax rates differ from sales tax rates at the state, county, city and/or special district levels.
Many U.S. tax payers do not realize that use tax is due to the state you reside in on ALL transactions where sales tax has not been paid, even out-of-state internet sales.
In general, a business must collect and remit all applicable sales taxes if that business has nexus, a physical presence such as a brick-and-mortar location, within a given state. The presence of an employee or salesperson, delivery by the seller's vehicle, and storage of materials usually establishes nexus.
Nexus definitions vary from state to state. Many states say that an out-of-state seller is required to collect tax if they can be defined as "doing substantial business" in a given state. "Substantial business" can sometimes include: out-of-state businesses using in-state affiliates, advertisers or vendors, or businesses that make internet sales or mail catalogs.
If you are not sure if you have established nexus in a given state, you can usually get free help by contacting the state's Department of Revenue. You could also contact a qualified certified public accountant or lawyer who specializes in sales tax.
Sales taxes are but one of a mixture of different types of taxes that are used to maintain government, infrastructure, and state-run programs. Other types of taxes include income, corporate, payroll, excise, and more.
Since state legislators can vote to change sales and use tax rates at any time, it is very difficult for individuals to keep track of the changes. The population of most states is also rapidly changing, which can cause frequent updates to the ZIP codes as well as local municipality names, which complicates the job of keeping track of sales tax jurisdictions.The Tax Foundation
As I am just starting my business, I was worried about the cost. I looked into doing the work myself but very quickly realized that Zip2Tax was doing a great deal more than I could ever do on my own. I figured that for the cost of the service, it was roughly 5 of my billing hours per month. There was no way I could do the same thing in a cost effective manner.
By subscribing ... I freed up a lot of time ... That is a huge benefit, and the database has filing information as well which saves a lot of time having to look up codes when paying the taxes... (Read More)- Robert, R&L Software
Cost was a real issue for our company, but this subscription has a great price point! We are impressed with the uptime and the implementation ease. After we bought a subscription to Zip2Tax, we received great service. The service is virtually worry free.- Zach, Fleapay.com
We are a small online retailer and we only need sales tax for one state. It doesn't make sense for us to spend a lot on sales and use tax services. We use Volusion as our store vendor and they don't have support for all the county and city tax, so we needed to do that manually. Without your service, this would be very difficult. The way your tables break out all the specific taxes is the feature I find the most useful. And, your support has been superb!- Doug, Focused Sales, Inc.
Thank you very much for the detailed info! Everyone has issues, how honestly they deal with them is the difference between the rookies and world class organizations. Your willingness to share this info gives us great confidence in our choice to work with Zip2Tax!- Steve
Your product is so easy to use and quick. We were surfing the internet which took lots of time and did not always provide the detail we needed and get from your product. I would definitely recommend this product to anyone who is fumbling on the internet for answers. We also benefit from the emails with new tax information and issues arising in that arena.- Kimberlee,
We are a reseller, so our taxable sales are a small percentage of our business. Your subscription saves lots of time calculating the CORRECT amount of tax to charge, and breakdown by state, local, etc., plus the tax on shipping charges has been very useful to us. Zip2Tax is a GREAT DEAL FOR THE PRICE especially when you factor what you would pay in penalties under a state tax audit!- Sandy
The biggest obstacle for our company, prior to buying the sales and use Tax Tables, was that we needed to replace another system that we were using. We had integrated address verification and sales tax calculation with our Intech ERP system.
After purchasing from Zip2Tax, we found you had a quality product and we liked that we could enter just the ZIP Code without city and state. We find benefit in the user-friendly screens, the rapid response time, and the accurate results. I recommend Zip2Tax for all of the features just mentioned plus less data entry for the users.- Jeanne, Duralee Fabrics, Inc.
We were worried about the cost and complication of buying sales tax data services, but Zip2Tax's Online Lookup took care of that for us. We use it standalone for invoicing and tax returns and we really like that it only takes 10 seconds to do a lookup.- Graham, Evandtec Inc.
Get the "Essential to Sales and Use Tax for Small Business"