The majority of states charge tax on shipping. These states include Arkansas, Connecticut, Georgia, Illinois, Kansas, Kentucky, Michigan, Mississippi, Nebraska, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Washington, West Virginia and Louisiana.
- State sales tax doesn’t apply to separately stated delivery charges in Louisiana.
- In other states, delivery and shipping charges included in the sale price are subject to state sales tax.
As an online seller, you have to charge sales tax on shipping charges in some states but not others.
- You would charge the destination state’s sales tax rate, including any local or county sales taxes.
- You would not collect your own state’s sales tax on products shipped out of state.
- Each state’s laws decide if shipping and handling are taxable.
- On eBay, tax is collected on shipping and handling where required by state law.
- Sales tax is based on the shipping address, not the billing address.
- Tax responsibilities vary based on business structure and nexus with destination states.
- If the items sold are taxable, delivery charges are also taxable in most cases.
- If the sale is tax-exempt, delivery is exempt too.
- When an order contains taxable and exempt items, tax applies only to the percentage of delivery charges for taxable items.
- Sellers should always check state requirements.
- Tax collection depends on business connection with the destination state.
- Most states use destination-based tax for sales tax calculation on shipping.
- Out-of-state online sellers shipping items to Florida customers must charge Florida sales tax.
- Most physical items sold incur tax, including delivery charges.
- Florida exempts certain organizations and products from sales tax, but most items incur tax.
- Most states tax shipping charges for taxable goods unless shipping is optional and separately stated.
- Obtaining legal expertise is important to understand individual state laws regarding taxable shipping charges.