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Guide · United States · Published 2026-10-11

Sales tax in the United States: how it works and who must register

How Sales tax works in the United States: how rates are set, who must register, what to show on invoices and how filing works.

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The rate

There is no single national rate in the United States. The rate depends on the place of sale and the type of product, and can combine national, regional and local components. Check the rate for your location before you quote a price.

No national sales tax; state and local rates range from 0% to about 10%. Enter your combined rate.

Who must register

There is no federal VAT or sales tax. Each state sets its own, and there is no single national threshold: South Dakota and Indiana use $100,000 of sales, California, Texas and New York use $500,000, and New York also requires more than 100 separate sales. The old "$100,000 or 200 transactions" shorthand is out of date, since South Dakota dropped the transaction test in 2023 and Indiana in 2024. Five states levy no sales tax at all.

How to register

There is no federal registration for sales tax. A seller registers with each state in which it must collect, using that state's revenue department site, and the state issues a sales tax permit or licence number.

Texas is one example. The Texas Comptroller takes applications for a sales and use tax permit through its eSystems portal. The applicant provides a Social Security number for a sole owner, the federal employer ID or the partners' numbers, the Secretary of State file number for a corporation, officer or director details and the NAICS business code. The Comptroller advises allowing 2 to 3 weeks to receive the permit, and a permit covers sales and use tax and 911 surcharges and fees. Applicants must be 18 or older.

In California the statewide base rate is 7.25% and district taxes of 0.10% to 2.00% are added, so the rate depends on the location (CDTFA, rates effective 1 October 2026).

Filing and paying

Registered and filed with Internal Revenue Service (IRS) and state departments of revenue.

Sales tax returns are filed with the state, monthly, quarterly or annually depending on volume.

Sources

How this guide was made

Written from published tax-authority guidance and reviewed on 2026-10-11. Everything here is indicative rather than a ruling on your circumstances, and rules change. Confirm anything you rely on with Internal Revenue Service (IRS) and state departments of revenue before acting on it, and tell us if you find something out of date so we can correct it.

This guide explains the rules in general terms and is not tax advice for your circumstances. Confirm your position with a qualified adviser or with Internal Revenue Service (IRS) and state departments of revenue.