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United States Sales & Use Tax guidelines

FACTSHEET
Country codeUS
Tax nameState & local Sales and Use Tax — there is no federal VAT/GST.
Tax AuthorityState Departments of Revenue (sales tax is state-administered); Internal Revenue Service (IRS) for the federal EIN.

Overview​

The United States has no federal VAT or GST. Indirect tax takes the form of sales and use tax, levied and administered at the state and local level. As of June 2021, 45 states and the District of Columbia impose a statewide sales tax and all of them have adopted economic-nexus collection requirements for remote sellers. [1]

Five states — New Hampshire, Oregon, Montana, Alaska and Delaware (the "NOMAD" states) — levy no statewide sales tax. Alaska is a special case: the state itself levies no sales tax, but about 110 of its 162 municipal governments levy local sales taxes ranging from 1% to 7%. [2]

Sales tax is a single-stage tax charged on retail sales to the end consumer; there is no input-credit mechanism as in a VAT. Business purchases for resale are relieved via resale certificates rather than input tax credits.

Source snapshot — GAO: 45 states and D.C. adopted remote sales tax laws Source snapshot captured 19 July 2026 — original (U.S. Government Accountability Office)

Tax IDs & registration​

  • EIN (Employer Identification Number) — the nine-digit federal tax identifier (format XX-XXXXXXX) issued free of charge by the IRS. It is generally needed to hire employees, operate a partnership or corporation, and pay federal sales and excise taxes. The IRS warns: "You never have to pay a fee for an EIN." [1]
  • State sales tax permit — the EIN is not a sales tax registration. A business must register for a sales tax permit (seller's permit / sales tax license) with the Department of Revenue of each state where it has physical or economic nexus. There is no single nationwide registration, although the Streamlined Sales Tax Registration System (SSTRS) covers the 24 Streamlined member states in one application. [2]
  • Resale certificates — registered purchasers buying for resale give their supplier a resale/exemption certificate so tax is not charged on the wholesale transaction; requirements and forms are state-specific. [3]

Source snapshot — Streamlined Sales Tax: register in each state; the SSTRS registers you for all Streamlined member states in one application Source snapshot captured 19 July 2026 — original (Streamlined Sales Tax Governing Board)

Economic nexus​

In South Dakota v. Wayfair, Inc. (decided June 21, 2018), the U.S. Supreme Court held that states can require sellers to collect and remit sales or use tax on sales delivered into the state regardless of physical presence. [1] [2]

Most states adopted thresholds modelled on South Dakota's law — typically USD 100,000 in annual sales and/or 200 transactions — but the amount, the sales measure (gross vs. retail vs. taxable sales) and the measurement period vary by state, and several states have dropped the transaction count. South Dakota itself removed the 200-transaction test effective July 1, 2023, leaving only the USD 100,000 gross-sales threshold. [3] Kentucky followed suit: House Bill 757 (2026 RS, Acts Ch. 161) amends KRS 139.340 to remove the 200-transaction alternative trigger, leaving a USD 100,000 sales-volume-only economic nexus test for remote retailers and marketplace providers, effective August 1, 2026. [4] Check each state's current threshold in the Streamlined Sales Tax remote seller state guidance. [5]

Source snapshot — South Dakota DOR: 200-transaction threshold removed effective July 1, 2023 Source snapshot captured 19 July 2026 — original (South Dakota Department of Revenue)

Marketplace facilitator rules​

States have enacted marketplace facilitator laws requiring a marketplace — a business that owns, operates or controls a physical or electronic marketplace, facilitates third-party sales and collects payment from the purchaser — to collect and remit sales tax on facilitated sales once it exceeds the state's threshold. [1]

Marketplace sellers may still need their own registration for direct (non-marketplace) sales, and in some states facilitated sales count toward the seller's own nexus threshold — see the Streamlined marketplace seller guidance. [2]

Digital products, software and streaming​

There is no national rule on digital goods: each state decides whether streaming content, downloads and remotely accessed software fall inside its sales tax base, and the base is widening. Two 2026 enactments change the answer for large markets:

  • Utah — from 1 July 2026. S.B. 162 (Online Sales Tax Amendments, 2026 General Session) adds to the Utah sales and use tax base "amounts paid or charged for access to digital audio-visual works, digital audio works, digital books, or gaming services, including the streaming of or subscription for access", regardless of the delivery method and whether the access is single-use or by subscription. It also taxes prewritten computer software delivered electronically or by load and leave, and — new — seller-hosted prewritten computer software, defined as software "accessed through the internet or a seller-hosted server, regardless of whether the access is permanent" or "any downloading occurs" (i.e. SaaS). Transactions already taxed under Utah's Multi-Channel Video or Audio Service Tax Act are excluded. [1]
  • California — operative 1 January 2027. S.B. 122 (Chapter 23 of 2026, approved 29 June 2026) brings "digital products" into the sales and use tax base, defining the term as prewritten computer software transferred on tangible storage media, transferred electronically, or accessed remotely. New Revenue and Taxation Code § 6016.2 defines "accessed remotely" as access for consideration, by digital code, password or other means, to prewritten software residing on the vendor's server or a third party's server; sourcing follows the purchaser's known address. [2]

Source snapshot — California S.B. 122 bill text defining a transfer of the right to use "a digital product transferred electronically or accessed remotely for a consideration, beginning January 1, 2027" Source snapshot captured 2026-07-28 — original

Because these measures widen the taxable base rather than the rate, they can also change a remote seller's nexus position in states that measure their economic-nexus threshold on taxable sales — re-test Utah from 1 July 2026 and California ahead of 1 January 2027.

Rate structure​

There is no national rate. Each state sets its own state rate, and local jurisdictions (cities, counties, transit and special districts) typically add local rates on top. Illustrative examples (state base rates; local additions vary by location):

StateState rateLocal additionsOfficial source
California7.25% statewide baseDistrict taxes of 0.10%–2.00% apply in many areas (districts can overlap)CDTFA
Colorado2.9%State-administered local taxes plus self-collected home-rule city taxesColorado DOR
District of Columbia6.0% until 30 Sep 2026; 7.0% from 1 Oct 2026None — single district-wide rate (§ 47-2202 sets separate higher rates for certain categories)DC Law Library
Illinois6.25% on general merchandiseHome-rule, mass-transit (NITA, formerly RTA) and other local taxes raise the combined rate — NITA rose 0.25% in six counties from 1 Aug 2026, see belowIllinois DOR
Louisiana5% (from 1 Jan 2025; scheduled to fall to 4.75% on 1 Jan 2030)Parish and local taxes apply in additionLouisiana DOR
New York4%Local rates plus 0.375% in the Metropolitan Commuter Transportation DistrictNY DTF
Texas6.25%Local jurisdictions may add up to 2%, for a maximum combined rate of 8.25%Texas Comptroller

The District of Columbia is the one jurisdiction in the table with no local layer: D.C. Code § 47-2202 provides that the general rate "shall be 6.0% before October 1, 2026, and 7.0% beginning on October 1, 2026, and continuing thereafter" — the increase enacted by the Fiscal Year 2026 Budget Support Act of 2025 (D.C. Law 26-55, effective 6 December 2025). The rate is therefore 6.0% through 30 September 2026; an interim 6.5% step that had once been scheduled for 1 October 2025 does not appear in the current statute. [1]

Source snapshot — D.C. Code § 47-2202(a) on the DC Law Library, reading "6.0% before October 1, 2026, and 7.0% beginning on October 1, 2026, and continuing thereafter" Source snapshot captured 2026-07-28 — original

Illinois's regional transit tax also rose on 1 August 2026. The Northern Illinois Transit Authority (NITA) — renamed from the Regional Transportation Authority (RTA) — raised its occupation and use tax by 0.25% in Cook, DuPage, Kane, Lake, McHenry and Will counties, effective 1 August 2026. For titled or registered property (Form RUT-25), the new NITA rate is 1.25% in Cook County and 1.00% in the other five counties. For general merchandise (Forms ST-1/ST-556), Cook County's combined NITA rate is 1.25%, or 1.50% on qualifying groceries and drugs; the other five counties apply a flat 1.00%. [2]

Rates change frequently (many states adjust local rates each 1 January and 1 July) — always confirm against the state Department of Revenue's rate lookup for the delivery address.

Source snapshot — Texas Comptroller: 6.25% state rate, up to 2% local, 8.25% maximum combined Source snapshot captured 19 July 2026 — original (Texas Comptroller of Public Accounts)

Sales tax holidays​

Some states run temporary, statutory exemption windows — "sales tax holidays" — usually timed to back-to-school shopping. Formats and price caps are set state by state and can change year to year within the same state.

Ohio's 2026 sales tax holiday runs from 12:00 a.m. Friday, 7 August to 11:59 p.m. Sunday, 9 August 2026, exempting clothing priced at USD 75 or less per item and school supplies and school instructional materials priced at USD 20 or less per item. This is a reversion to Ohio's traditional narrow, three-day format — the 2024 and 2025 holidays ran for roughly two weeks and covered most tangible personal property priced at USD 500 or less; that broader USD 500 design does not apply in 2026. [1]

Always confirm the current year's dates, price caps and qualifying categories directly with the state Department of Revenue before configuring POS or e-commerce exemptions — holiday scope is not stable from year to year.

Invoice requirements​

There is no federal invoice mandate in the United States, and no nationwide list of particulars a sales invoice must carry. This is not an oversight — it follows from the structure described in Overview: there is no federal VAT or GST, so there is no federal body with authority to prescribe invoice content. What exists instead are state-level rules, and they regulate a much narrower question than a VAT act does.

If you are arriving from a VAT jurisdiction, the mental model does not transfer. In a VAT country the invoice is the instrument that transfers a deduction, so the state prescribes its contents in detail. In the US, sales tax is a single-stage tax on the final consumer — there is no input-tax credit to protect — so the invoice carries far less legal weight. The documents that do carry weight are exemption and resale certificates.

What state rules actually require​

The recurring requirements across states concern how the tax is presented, not what else the invoice contains:

  • Separately stating the tax. Where a seller lists a separate amount of sales tax reimbursement on receipts or invoices, the customer is presumed to have agreed to pay it. [5]
  • Tax-included pricing must be disclosed. A seller that folds sales tax reimbursement into the shelf price rather than itemising it must inform the buyer that tax is included. [5]
  • Use tax collected must be separately stated, and the retailer must give the purchaser a receipt showing the amount of tax collected. [5]

Source snapshot — CDTFA explaining that a separately listed sales tax reimbursement is presumed agreed, and that a seller including tax in the price must inform the buyer Source snapshot captured 2026-07-30 — original

The California rules above are cited as a worked example of the pattern, not as a national standard. Each state sets its own; a seller with nexus in multiple states must check each one. See Economic nexus for where those obligations arise.

The document that matters instead: exemption and resale certificates​

Because there is no input-tax credit mechanism, a US seller does not prove a B2B sale through the invoice — it proves it by holding a valid resale or exemption certificate from the buyer, collected before or at the time of sale and retained for audit. A missing or invalid certificate, not a defective invoice, is what turns an untaxed sale into an assessment against the seller.

Practical consequence for cross-border sellers​

An invoice template built for EU or GCC VAT will generally satisfy US requirements, because those templates carry strictly more information than any state demands. The failure mode runs the other way: a US-designed invoice usually lacks the supplier tax number, sequential numbering and per-rate tax breakdown that VAT jurisdictions require. Build to the strictest jurisdiction you sell into, then add the US "separately stated tax" line.

E-invoicing status​

There is no federal or state B2B e-invoicing mandate in the United States. Adoption is voluntary and market-driven: the Business Payments Coalition (BPC), with Federal Reserve support, convened an E-invoice Exchange Market Pilot in September 2021 with 73 industry organizations, and in 2023 pilot participants launched the Digital Business Networks Alliance (DBNAlliance) as the legal entity overseeing the resulting four-corner e-invoice exchange framework. [1] [2]

Recent changes​

  • 2027-01-01 — California brings "digital products" — including prewritten computer software transferred electronically or accessed remotely — into the sales and use tax base, with a new Rev. & Tax. Code § 6016.2 definition of "accessed remotely" (S.B. 122, Chapter 23 of 2026, approved 29 June 2026). (California Legislative Counsel) — see issue
  • 2026-10-01 — District of Columbia: the general sales and use tax rate rises from 6.0% to 7.0% (D.C. Code § 47-2202 as amended by the FY 2026 Budget Support Act of 2025, D.C. Law 26-55). (DC Law Library) — see issue
  • 2026-08-07 — Ohio's 2026 sales tax holiday runs 12:00 a.m. Friday 7 August to 11:59 p.m. Sunday 9 August, exempting clothing at USD 75 or less and school supplies/instructional materials at USD 20 or less per item — a reversion to the narrow three-day format after the broader, roughly USD 500 general-merchandise holidays of 2024 and 2025. (Ohio Department of Taxation) — see issue
  • 2026-08-01 — Illinois: the Northern Illinois Transit Authority (NITA, renamed from the Regional Transportation Authority) occupation and use tax rises 0.25% in Cook, DuPage, Kane, Lake, McHenry and Will counties — Cook County's combined NITA rate is now 1.25% general merchandise (1.50% on qualifying groceries and drugs) and 1.25% on titled/registered property, with the other five counties flat at 1.00%. (Illinois DOR Bulletin FY 2026-34) — see issue
  • 2026-08-01 — Kentucky simplifies economic nexus for remote retailers and marketplace providers to a USD 100,000 sales-volume-only test, removing the 200-transaction alternative trigger (House Bill 757, which became law by veto override on 14 April 2026 — House 66-18, Senate 31-5 — as Acts Chapter 161, amending KRS 139.340). (Kentucky Legislature) — see issue

Source snapshot — Kentucky HB 757 simplifies economic nexus to a $100,000 sales-volume-only test Source snapshot captured 2026-07-20 — original

  • 2026-08-01 — Kentucky defines "data brokering services" and subjects them to its 6% sales and use tax, exempting state/local government agencies and pre-existing lease/rental agreements (House Bill 757, enacted over the Governor's veto on 14 April 2026 as Acts Chapter 161, amending KRS 139.010, 139.200, 139.202 and 139.470). (Kentucky Legislature) — see issue

Source snapshot — Kentucky HB 757 taxes data brokering services, exempting pre-existing lease/rental agreements Source snapshot captured 2026-07-20 — original

  • 2026-08-01 — Illinois opens a Remote Retailer Tax Amnesty: remote retailers can apply 1 August–31 October 2026 to settle Retailers' Occupation Tax for 1 Jan 2021–30 Jun 2026 with penalties and interest waived, using simplified flat rates of 9% (general merchandise) and 1.75% (qualifying food and drugs). (Illinois DOR) — see issue
  • 2026-07-01 — Utah extends sales and use tax to access to streaming digital content (digital audio-visual works, digital audio works, digital books and gaming services) and to prewritten computer software in all delivery forms, including seller-hosted software accessed over the internet (SaaS), under S.B. 162. (Utah State Legislature) — see issue

Frequently Asked Questions​

Does the United States have a VAT or GST?​

No. There is no federal VAT/GST. Indirect tax is the state and local sales and use tax: 45 states and the District of Columbia levy a statewide sales tax. [1] The five NOMAD states (New Hampshire, Oregon, Montana, Alaska, Delaware) levy no statewide sales tax, though about 110 Alaska municipalities levy local sales taxes of 1%–7%. [2]

Is an EIN the same as a US sales tax number?​

No. The EIN is a nine-digit federal identifier issued free by the IRS for federal tax purposes (employees, partnerships, corporations, excise taxes). [1] Sales tax registration is separate and state-level: you need a sales tax permit from each state Department of Revenue where you have nexus.

What is economic nexus and when must a remote seller register?​

Since South Dakota v. Wayfair (21 June 2018), states can require remote sellers to collect sales tax without physical presence. [1] Typical thresholds are USD 100,000 in sales and/or 200 transactions, but the measure and period vary by state — South Dakota removed its 200-transaction test effective 1 July 2023, leaving only the USD 100,000 gross-sales threshold, and Kentucky removed its 200-transaction alternative trigger effective 1 August 2026 (House Bill 757), also leaving a USD 100,000 sales-only threshold. [2] [3] Check each state in the Streamlined remote seller state guidance. [4]

Do marketplaces collect US sales tax for their sellers?​

Generally yes. State marketplace facilitator laws require the marketplace operator to collect and remit tax on facilitated third-party sales once it exceeds the state threshold. Sellers may still need their own registration for direct sales, and facilitated sales can count toward the seller's own threshold in some states. [1]

Do US states tax SaaS, streaming and other digital products?​

It varies by state, and the base is widening. Utah taxes access to digital audio-visual works, digital audio works, digital books and gaming services — including streaming and subscriptions, regardless of delivery method — and prewritten computer software in every delivery form, including seller-hosted software accessed over the internet (SaaS), from 1 July 2026 under S.B. 162; transactions already taxed under the Multi-Channel Video or Audio Service Tax Act are excluded. [1] California follows on 1 January 2027: S.B. 122 (Chapter 23 of 2026) adds "digital products" — prewritten software transferred on tangible media, transferred electronically or accessed remotely — to the sales and use tax base, with new Rev. & Tax. Code § 6016.2 defining remote access. [2] There is no national rule: map each product code state by state.

What is the sales tax rate in Washington, D.C.?​

The District of Columbia is a single taxing jurisdiction with no local add-on. D.C. Code § 47-2202 sets the general sales and use tax rate at 6.0% before 1 October 2026 and 7.0% beginning on 1 October 2026 — the increase enacted by the Fiscal Year 2026 Budget Support Act of 2025 (D.C. Law 26-55, effective 6 December 2025). Separate, higher rates apply to certain categories listed in the same section. [1]

Is e-invoicing mandatory in the United States?​

No. There is no e-invoicing mandate at federal or state level for B2B transactions. The Business Payments Coalition's Federal Reserve-supported E-invoice Exchange Market Pilot (2021, 73 organizations) led to the 2023 launch of the DBNAlliance, which oversees a voluntary four-corner e-invoice exchange framework. [1] [2]

To check a US Employer Identification Number (EIN), use our United States EIN validator.