What is US Sales Tax?

US sales tax is a consumption tax imposed by state and local governments, charged on sales of goods and services. Varying by state, it's added to the purchase price, paid by consumers, and collected by businesses to be remitted to the government. 45 states and DC impose a statewide sales tax — rates range from under 3% to over 7% at the state level, and can exceed 11% when combined with local taxes.

Which states have the highest sales tax in the USA?

California has the highest state-level sales tax rate at 7.25%. Indiana, Mississippi, Rhode Island, and Tennessee have the second-highest state rate at 7%. When combined with local taxes, Tennessee and Louisiana often rank highest in total combined rate.

Which state has the cheapest sales taxes?

Colorado has the lowest statewide sales tax rate at 2.9%. Among states that do charge sales tax, it consistently ranks as the lowest base rate. However, Colorado's local rates can be significant, so the combined rate varies widely by location.

Which states have no sales tax in the US?

Alaska, Delaware, Montana, New Hampshire, and Oregon are the five states with no statewide sales tax. Note that Alaska allows local jurisdictions to impose their own sales taxes, so some Alaskan cities and boroughs do collect sales tax even though there is no state-level rate.

What are the 7 tax-free states in the US?

There are 5 states with no statewide sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon. Additionally, some states exempt specific major purchase categories — for example, clothing under $110 is exempt in New York, and most groceries are exempt in many states. However, there is no single list of 7 fully tax-free states — the number depends on which categories of purchases are considered.

As a business, why should I care about US sales tax by state?

Businesses must comply with sales tax laws in every state where they have nexus — either through physical presence or by exceeding economic thresholds. Non-compliance can result in back taxes, penalties, and interest. With economic nexus laws in place since the 2018 South Dakota v. Wayfair Supreme Court decision, even online sellers without a physical location can trigger sales tax obligations in states where they sell.

Are SaaS businesses taxable in the USA?

Yes, SaaS (Software as a Service) businesses can be taxable in the USA, but rules vary significantly by state. Some states — like New York, Texas, and Washington — broadly tax SaaS. Others, like California and Colorado, generally do not tax pure SaaS subscriptions. Alabama specifically exempted SaaS in December 2023. Always verify your product's taxability in each state where you have nexus.

Why should I know about the sales tax nexus?

Understanding sales tax nexus is essential for any business because it determines where you are legally required to collect and remit sales tax. Nexus can be established through physical presence (office, warehouse, employees) or economic activity (exceeding a state's annual sales or transaction threshold). Since most states adopted economic nexus laws post- Wayfair , businesses selling in multiple states must actively monitor their nexus exposure across all 50 states.

When should I register for a sales tax permit?

You must register for a sales tax permit before making your first taxable sale in a state where you have nexus. Once you cross a state's economic nexus threshold, most states require registration by your next transaction — a few (like Colorado) allow 30–90 days. Registering late can expose your business to back taxes and penalties.

How do I register for a sales tax permit?

To register for a sales tax permit, visit the revenue authority website of the state where your business has nexus and complete the online application. You'll typically need to provide your business entity type, EIN, contact information, and a description of your business activities. Some states charge a small registration fee. Galvix can handle state registrations on your behalf as part of our compliance service.

Do businesses have to pay value-added tax (VAT) in the US?

No. The United States does not have a federal value-added tax (VAT). Instead, the US uses a retail sales tax system imposed at the state and local level. VAT is common in most other countries (including the EU, UK, Canada, and Australia), but US businesses only deal with sales tax, not VAT, for domestic transactions.

Use tax is a tax on the use, storage, or consumption of taxable goods and services that were purchased without paying sales tax — typically from out-of-state sellers. Use tax is intended to complement sales tax and prevent consumers from avoiding tax by buying from sellers in states without sales tax. The rate is generally the same as the state's sales tax rate.

As a business, do I have to worry about use tax?

Yes. If your business purchases taxable goods or services from an out-of-state vendor who didn't charge sales tax — for example, office supplies ordered online — you may owe use tax to your state. Businesses are responsible for self-reporting and remitting use tax on qualifying purchases. Use tax compliance is an often-overlooked obligation that can come up during a state sales tax audit.

Why should I choose a sales tax compliance software like Galvix?

Sales tax compliance software like Galvix automates the most error-prone parts of the process: calculating the correct rates by jurisdiction, preparing returns, and filing on your behalf. This is especially valuable for businesses operating in multiple states, where manual tracking across different due dates, rates, and exemption rules is impractical. Galvix pairs automated software with expert human review — our tax specialists check every return before it's filed, so you get accuracy without the administrative burden.

US Sales Tax by State in 2026

Last updated: April 2026

Quick Answer:

US sales tax is a consumption tax imposed by state and local governments on the sale of goods and services. 45 states and the District of Columbia collect a statewide sales tax — combined rates (state + local) range from 0% to over 11% depending on the jurisdiction. Five states — Alaska, Delaware, Montana, New Hampshire, and Oregon — levy no statewide sales tax. Businesses selling across state lines must track where they have sales tax nexus and file returns in each of those states.

Sales Tax In The US By State

Find your state's sales tax requirements below. Click on a state for a detailed guide.

Statewide sales tax

No statewide tax, some areas levy local tax

No sales tax

Guide coming soon

Get accurate local and state sales tax information curated by Galvix's team of sales tax experts.

Key Highlights of US Sales Tax by State

Here is a brief overview of the sales tax structure in the US, highlighting rate variations across different regions.

General Overview: 45 states and the District of Columbia collect state sales tax in the US. Alaska, Delaware, Montana, New Hampshire, and Oregon do not levy any statewide sales tax.
Local Sales Taxes: 38 states impose additional local sales taxes, leading to intra-state rate variability.
High Combined Sales Tax States: Tennessee's combined rate at 9.548% ranks among the highest for combined state and local sales taxes.
High Local Sales Tax States: Alabama, Louisiana, and Colorado display significant local tax rate differences, with average local rates exceeding 4.5%.
Recent Changes: South Dakota temporarily reduced its statewide sales tax from 4.5% to 4.2% starting July 1, 2023, set to revert after four years.

Sales Tax Rates For Every State in 2026

Check out the most recent sales tax rates and local tax range for all 9 states below. Click any state name for a detailed guide including nexus rules, filing deadlines, exemptions, and penalties.

State	Tax Rate Range	Base Rate	Nexus Threshold
Alabama	5–12%	4%	$250,000
Arizona	6–11%	6%	$100,000
Arkansas	6–8%	6%	$100,000 OR 200 transactions
California	7–11%	6%	$500,000
Colorado	3–11%	3%	$100,000
Connecticut	6–6%	6%	$100,000 AND 200 transactions
District of Columbia	6–6%	6%	$100,000 OR 200 transactions
Florida	6–8%	6%	$100,000
Georgia	6–9%	4%	$100,000 OR 200 transactions

Recent Changes in State Sales Tax Rates

Over the past year, there have been hundreds of local sales tax rate changes in states, cities, and counties across the United States. Here are recent notable changes:

Florida: Decreased the sales tax rate on commercial leases from 5.5% to 4.5%, effective December 1, 2023.
Louisiana: Increased the sales tax rate from 9.1% to 9.85% in November 2023.
South Dakota: Reduced statewide sales tax rate from 4.5% to 4.2% for four years starting July 1, 2023.
Wisconsin: Door and Bayfield counties raised their sales tax rates from 5.5% to 6%.
West Virginia: Increased the sales tax in Wayne, WV from 6% to 7%.

How Sales Tax Compliance Works for Businesses

Once you've established nexus in a state, you must:

Register for a sales tax permit with the state's revenue authority.
Calculate the correct sales tax rate for each transaction (state + local jurisdiction).
Collect tax from customers at the point of sale.
File periodic returns (monthly, quarterly, or annually based on your volume).
Remit the collected tax to the state by the filing deadline.

Missing a deadline or underpaying can result in penalties and interest. Learn how Galvix automates steps 2–5 for multi-state businesses.