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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]

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
Illinois6.25% on general merchandiseHome-rule, mass-transit and other local taxes raise the combined rateIllinois 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

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)

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​

  • 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, 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, 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 — North Carolina: Mecklenburg County imposes an additional 1% local sales and use tax, raising the combined rate from 7.25% to 8.25%. (NCDOR) — see issue

  • 2026-07-01 — Colorado: the Retail Delivery Fee rises from USD 0.28 to USD 0.31 per retail delivery (annual inflation adjustment). (Colorado DOR) — see issue

    Source snapshot — Colorado DOR Retail Delivery Fee rates table: $0.31 for July 2026 to June 2027 Source snapshot captured 19 July 2026 — original (Colorado Department of Revenue)

  • 2026-07-01 — Illinois: new local 1% grocery occupation taxes take effect in many municipalities and counties, replacing the statewide 1% grocery tax abolished on 1 January 2026, alongside 40+ local sales-tax rate changes (Bulletins FY 2026-25 and FY 2026-26-A). (Illinois DOR) — see issue and earlier issue

  • 2026-05-01 — Alabama: the 2% state sales and use tax on food (SNAP-eligible items) is suspended from 1 May through 30 June 2026; local food taxes are unaffected. (Alabama DOR) — 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]

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.