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Is Shipping Taxable?
Some states consider shipping charges part of a taxable sale. Some don't. When should an e-commerce retailer charge sales tax on shipping?
Learn More Updated: September 27, 2024
Zamp Learnings
- Each state makes its own rules and laws on whether sales tax is charged on e-commerce shipping fees.
- Shipping is taxable in a little over half the US states with a sales tax.
- States that don’t charge tax on shipping charges generally require e-commerce sellers to separate out the shipping charge on the invoice.
- Shipping charges are generally only taxable if the items being shipped are also taxable.
When it comes to e-commerce, some states consider shipping charges to be a necessary part of the sale and consider them taxable. Other states say that, as long as the shipping charge is separately stated from the price of the item, then it isn’t taxable.
The trouble is that all of the forty-six states (plus the District of Columbia) that have a sales tax get to make their own rules and laws. So, there is no uniform rule of thumb when it comes to charging sales tax on shipping charges.
Today, we’ll explain the ins and outs of sales tax laws for which states require businesses to charge sales tax on shipping.
Stressing over sales tax is a thing of the past.
Which States Charge Sales Tax on Shipping?
The below two lists sum up the taxability of shipping charges on “most” e-commerce sales. The below lists of states where shipping charges are and are not taxable apply to an e-commerce transaction where:
- The item or items shipped are subject to sales tax
- The seller ships the item to the buyer using a common carrier like USPS, UPS, FedEx, etc.
- The seller pays for the postage/shipping and then charges the buyer for that exact amount.
- The seller separately states the shipping charges to the buyer (i.e. the shipping charges aren’t included in the sale price).
- There are no unusual scenarios, such as the buyer paying shipping fees directly to the carrier.
States That Charge Sales Tax on Shipping
| Alaska | Mississippi | South Carolina |
| Arkansas | Nebraska | South Dakota |
| Connecticut | New Jersey | Tennessee |
| Georgia | New Mexico | Texas |
| Hawaii | New York | Vermont |
| Indiana | North Carolina | Washington |
| Kansas | North Dakota | Wisconsin |
| Kentucky | Ohio | West Virginia |
| Michigan | Pennsylvania | |
| Minnesota | Rhode Island |
States That Do Not Charge Sales Tax on Shipping
| Alabama | Illinois | Nevada |
| Alaska* | Iowa | Oklahoma |
| Arizona | Louisiana | Utah |
| California | Maine | Virginia |
| Colorado | Maryland | Washington DC |
| Florida | Massachusetts | Wyoming |
| Idaho | Missouri |
States Where Shipping Is Taxable: Conclusion
It’s no secret that consumers want fast and reliable shipping. They also want their items taxed correctly, especially if they have to pay sales tax on shipping costs. An automated sales tax solution lets you collect, remit, and file sales tax effectively so you get it right the first time.
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Is Sales Tax Charged on Shipping?: FAQ
Below are frequently asked questions about whether shipping is taxable or not.
Yes, several states, including Michigan, New Jersey, New York, and Texas, charge sales tax on shipping.
In a destination-based e-commerce transaction, your customer's location is the point of taxation. This is generally known as the shipping address, which your business would use to calculate sales tax.
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