🇺🇸 Tax and country rules

Sales tax on invoices in the US: a practical guide

The US has no national sales tax. Each state (and many cities and counties) sets its own rules, so whether you charge tax, and how much, depends on what you sell and where your customer is.

By the InvoiceDesk editorial team · Published 21 October 2026 · Updated 28 October 2026 · How we write

The basics

Sales tax is levied on the sale to the end user, collected by the seller and remitted to the state.
Five states have no statewide sales tax: Alaska, Delaware, Montana, New Hampshire and Oregon. Alaska allows local sales taxes.
Rates combine state, county, city and special districts. A state base rate is only part of the story. The sales tax calculator lets you add a local rate.
What is taxable varies. Most states tax tangible goods. Services, digital products, shipping and food are treated differently from state to state.

When you must collect: nexus

You generally have to collect tax in a state where you have nexus, a sufficient connection. Physical nexus comes from an office, employees, inventory or a similar presence. Since the 2018 Supreme Court decision in South Dakota v. Wayfair, states can also require out-of-state sellers to collect tax once they pass an economic threshold, often around $100,000 in sales or 200 transactions a year, though the numbers differ by state.

If you operate through a marketplace, the marketplace often collects the tax for you. Rules vary, so check each state’s revenue department.

Are services taxable?

Often not, but there are many exceptions. Some states tax particular services such as repairs, installation, certain digital services or software. Freelance design and writing are exempt in many states, while others tax some of them. Check the state department of revenue for your service and your customer’s location.

How to show sales tax on an invoice

List taxable and non-taxable lines separately, or mark which lines are taxable.
Show the tax rate and the tax amount as its own line, for example “Sales tax (7.25%)”.
Show the subtotal before tax and the grand total after tax.
Include your sales tax permit number if the state expects it or the customer asks.
If the sale is exempt, state why (for example “Exempt: resale, certificate on file”).

Exemption and resale certificates

Resellers, non-profits and government bodies may be exempt. Ask for a signed certificate and keep it on file. Without it, you may be liable for the tax. The Streamlined Sales Tax organisation and each state publish forms and rules.

Register before you collect

You normally need a seller’s permit or tax registration with the state before you charge tax. Collecting tax without registration can create legal problems. Apply through the state tax portal, then file returns on the schedule it sets.

Check official guidance. We could not fully confirm these points against an official page when we last reviewed, so please verify them before relying on them:

Economic nexus thresholds and taxable-service lists change often and differ by state. Check the state revenue department.

Frequently asked questions

Do freelancers charge sales tax?

It depends on the state and the service. Many states do not tax professional services, but some do. Check your state’s revenue department.

Should shipping be taxed?

In some states shipping is taxable when the goods are taxable. In others it is exempt if shown separately. Check the state rules.

Do I charge the rate of my state or my customer’s?

Most states use destination-based rates for remote sales, so the customer’s location. A few are origin-based. Look up the specific state rules.

What is the sales tax rate?

It varies by location. The calculator uses approximate state base rates that you can adjust with a local rate.

Is sales tax the same as VAT?

No. Sales tax is charged once, at the final sale. VAT is charged at each stage of the supply chain with credits for tax paid.