eCommerce Sales Tax By Each State, Plus Puerto Rico

Tamia Tutson
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    In order to sell online you need to ensure that you’re following your state's guidelines. This includes doing your taxes efficiently, but most importantly accurately. However, we understand that taxes can be a challenge to handle.

    That’s why we’ve done all the research for you and compiled it into an easy-to-understand guide. Keep reading to learn what eCommerce sales tax is and how to make sure you’re getting it right.

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    eCommerce Sales Tax 2021

    Like normal sales tax, eCommerce sales tax is simply a percentage of money that is added to the price of an online purchase. The only items that sales tax is added to are items that are considered taxable.

    As an online retailer, you are not exempt from ecommerce trends like charging your customers taxes. Although how much you tax will be different depending on the state you live in. Some states even allow cities to have their own sales tax too.

    Some shoppers add items to their cart and then forget about them once they see the tax rate. This is when companies utilize their abandoned cart recovery methods. But how do you know when you need to collect sales tax from your customers?

    Well, here’s a basic rule of thumb:

    • Collect sales tax when your product is taxable and has a nexus in that state.

    Let’s explain the term nexus in more detail. A sales tax nexus is just a fancy word for a retailer having a “significant connection” to a state. To have “nexus” means that your state will allow you to charge a sales tax to your customers.

    When starting an eCommerce business in your home state you will always have a tax nexus. Although, you can create a nexus in other states too. Here’s how to do it:

    • Have a physical business location operating in another state
    • Store your inventory in the state you want to have nexus in and use inventory management techniques to help you control it
    • Create a drop-ship relationship. The dropshipping meaning is a form of business where sellers accept customer orders without having any of the product in stock. Instead, items are purchased from third-party suppliers who will ship the product to the customer. So, the seller never handles the items. This can help create nexus.
    • You can create economic nexus if your business exceeds a certain amount of sales in your state.

    eCommerce Sales Tax by State

    The sales tax your customers are required to pay will vary depending on the state you live in. Some states have higher tax rates than others. In addition, eCommerce sales tax rates will change on a monthly basis.

    The average tax percentage ranges from 0-7.2%, with California having the highest. Oregon, Alaska, Delaware, Montana, New Hampshire, and Guam do not have sales tax.

    Knowing this, make sure that when you're budgeting for your business try to utilize prices with taxes included.

    To learn what the sales tax percentage is in your state, utilize the information below:

    • Alabama

    State Rate: 4.000%; Local Rate: 0%-9.0%

    • Alaska

    State Rate: 0.000%; Local Rate: 0%-9.5%

    • Arizona

    State Rate: 5.600%; Local Rate: 0 – 7.30% 

    • Arkansas

    State Rate: 6.500%; Local Rate: 0% – 6.125%

    • California

    State Rate: 7.250%; Local Rate: 0% – 3.25%

    • Colorado

    State Rate:2.900%; Local Rate: 0% – 8.3%

    • Connecticut

    State Rate: 6.350%; Local Rate: 0% -1%

    • Delaware

    State Rate: 0.000%; Local Rate: 0%

    • District of Columbia

    State Rate: 6.000%; Local Rate: 0%

    • Florida

    State Rate: 6.000%; Local Rate: 0%-2.5%

    • Georgia

    State Rate: 4.000%; Local Rate: 1%-5%

    • Hawaii

    State Rate: 4.000%; Local Rate: 0%-0.5%

    • Idaho

    State Rate: 6.000%; Local Rate: 0%-3%

    • Illinois

    State Rate: 6.250%;Local Rate: 0%-5.25%

    • Indiana

    State Rate: 7.000%; Local Rate:0%

    • Iowa

    State Rate: 6.000%; Local Rate: 0%-2%

    • Kansas

    State Rate: 6.500%; Local Rate: 0%-5.1%

    • Kentucky

    State Rate: 6.00%; Local Rate: 0%

    • Louisiana

    State Rate: 4.450%’ Local Rate: 0%-8.5%

    • Maine

    State Rate: 5.500%;Local Rate: 0%

    • Maryland

    State Rate: 6.000%; Local Rate: 0%

    • Massachusetts

    State Rate: 6.250%; Local Rate: 0%

    • Michigan

    State Rate: 6.000%; Local Rate: 0%

    • Minnesota

    State Rate: 6.875%; Local Rate: 0%-2%

    • Mississippi

    State Rate: 7.000%; Local Rate: 0%-1%

    • Missouri

    State Rate: 4.225%; Local Rate: 0.5-7.763%

    • Montana

    State Rate: 0.000%; Local Rate: 0%

    • Nebraska

    State Tax: 5.50%; Local Rate: 0%-2.5%

    • Nevada

    State Tax: 5.50%; Local Rate: 0-1.525%

    • New Hampshire

    State Tax: 0.000%; Local Rate: 0%

    • New Jersey

    State Rate: 6.625%; Local Rate: 0%

    • New Mexico

    State Rate: 5.125%; Local Rate: 0.125%-7.75%

    • New York

    State Rate: 4.000%; Local Rate: 0%-5% 

    • North Carolina

    State Rate: 4.750%; Local Rate: 2%-3%

    • North Dakota

    State Rate: 5.000%; Local Rate: 0%-3%

    • Ohio

    State Rate: 5.750%; Local Rate: 0-2.25%

    • Oklahoma

    State Rate: 4.500%; Local Rate: 0%-7%

    • Oregon

    State Rate: 0.000%; Local Rate: 0%

    • Pennsylvania

    State Rate: 6.000%; Local Rate: 0%-2%

    • Puerto Rico

    State Rate: 11.5000%; Local Rate: 0%

    • Rhode Island

    State Rate: 7.000%; Local Rate: 0%

    • South Carolina

    State Rate: 6.000%; Local Rate: 0%-3%

    • South Dakota

    State Rate: 4.500%; Local Rate: 0%-8%

    • Tennessee

    State Rate: 7.000%; Local Rate: 1.5%-2.75%

    • Texas

    State Rate: 6.250%; Local Rate: 0%-2%

    • Utah

    State Rate: 4.850%; Local Rate: 1%-7.5%

    • Vermont

    State Rate: 6.000%; Local Rate: 0%-1%

    • Virginia

    State Rate: 4.300%; Local Rate: 1%-2.7%

    • Washington

    State Rate: 6.5000%; Local Rate: 0.5%-4.1%

    • West Virginia

    State Rate: 6.000%; Local Rate: 0%-1%

    • Wisconsin

    State Rate: 5.000%; Local Rate: 0%-1.75%

    • Wyoming

    State Rate: 4.000%; Local Rate: 0%-4%

    eCommerce Sales Tax Solutions

    Did you know that there is a simple way to manage your sales tax issues? By using eCommerce sales tax tools you’ll eliminate the frustration of calculating your sales tax percentage. There are so many different business tools out there for you to choose from.

    Meaning that instead of spending time doing math, you can get back to focusing on what matters most for your business. These tools can help make filing yearly returns that much easier. In addition, you’ll be able to breathe better knowing your business is always inventory audit-ready.

    To make things easier, I’ve compiled a list of the best eCommerce software for you to choose from.

    eCommerce Sales Tax Calculator Software

    • Alvara: Alvara is one of the most popular tax software apps for a reason. It offers users a simple and clean interface with up-to-date tax rules and rates. More than this, it has over 700 integrations so that you’re able to manage data across multiple applications. Finally, Alvara has affordable rates starting as low as $25 per month.
    • TaxJar: For companies looking for auto-filing features, TaxJar is your guy. It allows users to organize their data and gather return-ready reports. TaxJar also works seamlessly with any popular eCommerce marketplaces. Pricing starts at $19 per month and plans are customizable.
    • Vertex: Own a small business? Vertex is a good option for you then. It is very user-friendly and easy to navigate. Moreover, it keeps track of the latest tax trends, activity, and regulations and sends you alerts. This platform is highly accurate and centralizes all your data in one place. For questions about pricing you’ll need to contact Vertex directly.
    • DAVO: Finally, there’s DAVO–the best option for traditional a brick and mortar shop. DAVO software collects sales data from your POS systems and tallies the daily collected sales tax. It also has auto-fill functionality and integrates with popular platforms like Quickbooks, Square, and revel. Their pricing is a bit steeper compared to others. Prices start at $39.99 per month, but they offer a free trial so you’re able to see if it’s the right fit for you first.

    Regardless of what eCommerce software you choose to work with you’ll find comfort in knowing your sales tax rates will always be correct. This is especially crucial for your consumers when you accept payments online via ACH payment. If you’d like to learn more about what goes into running a successful eCommerce business check out our blog. We also recommend that you research the best eCommerce platform for SEO.

    By using the tools above and having a competitive and strong business plan, success will come easy to you.

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    ‍Frequently Asked Questions about eCommerce Sales Tax

    What Is Sales Tax?

    Sales tax is a portion of money paid to the government for the sales of specific goods and services. Not all states have sales tax nor does every item incur a sales tax either. 

    Does Every State in the U.S Have a Sales Tax?

    No, every state does not have a sales tax. There are five states who do not, they include Oregon, Alaska, Delaware, Montana, and New Hampshire. 

    What Is the Standard Sales Tax Rate?

    The U.S does not have a national sales tax, so there is no across-the-board rate. However, you can expect to find sales tax rates range between 2.9 to 8.75% in any given state.

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