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

The rate

There is no single national rate in 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

Registration becomes compulsory once taxable turnover passes the threshold Internal Revenue Service (IRS) and state departments of revenue sets, measured over a rolling period. Below it, registration is usually voluntary, which makes sense if your customers are registered businesses that can reclaim what you charge.

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 The old "$100,000 or 200 transactions" shorthand is out of date, since South Dakota dropped the transaction test in 2023 and Indiana in 2024.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

Register with Internal Revenue Service (IRS) and state departments of revenue on IRS.gov (EIN online and IRS Online Account) using your EIN. Once registered you receive a Sales tax registration number or certificate, and from that date you must charge Sales tax on taxable sales, issue compliant invoices and file returns even when nothing is due.

Charging Sales tax on an invoice

Show the net amount, the Sales tax rate, the Sales tax amount and the gross total, with your registration number in the header. Prices quoted to consumers should include Sales tax; prices quoted to businesses usually exclude it and say so. The United States calculator adds or removes Sales tax and shows the arithmetic.

• No federal invoice content rules. Show the sales tax amount and rate separately where you collect it, and your business name as registered.

Filing and paying

Returns are periodic, most often monthly or quarterly, and report the Sales tax you charged less the Sales tax you paid on purchases. The difference is paid to Internal Revenue Service (IRS) and state departments of revenue by the return deadline; a repayment is claimed when purchases exceed sales.

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

Penalties for getting it wrong

Late registration, late returns and late payment each attract penalties and interest with Internal Revenue Service (IRS) and state departments of revenue. Charging Sales tax while unregistered is an offence in most countries. If you missed the threshold, register now and declare the back period.