Is shipping taxable? A state-by-state guide

When it comes to e-commerce, some states treat shipping charges as a necessary part of the sale and tax them. Other states say that, as long as the shipping charge is separately stated from the item's price, it isn’t taxable. 

The trouble is that all 46 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 for 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.

Is there tax on shipping?

Sales tax laws can be highly complex, and whether or not you should charge sales tax on shipping is no exception. Shipping charges generally refer to fees associated with delivering goods to customers. Shipping taxability generally depends on several factors, including:

• Whether the item or items being shipped are subject to sales tax
• How the item is being delivered (such as a common carrier vs. personal delivery)
• How the items are presented on the invoice (ie, separately stating shipping fees)

These may not be all the scenarios where sales tax may be charged on shipping. You should always consult a state’s department of revenue or a trusted tax expert.

Shipping tax by state

Most US states impose a tax on shipping. However, several states do not. Here’s a look at overall shipping taxability by state. We’ll break this down further in the sections below.

Which states charge tax on shipping?

The following states generally charge sales tax on shipping. Here’s what you need to know by state.

Alaska

Alaska does not have a statewide sales tax. However, under the Uniform Code, local jurisdictions may charge sales tax on the sales price of all remote sales into a member jurisdiction. Delivery charges are included in the sales price, so shipping is taxable.

Arkansas

Arkansas imposes a statewide sales tax, and delivery charges are generally included in the taxable sales price. When a taxable item is sold, shipping, freight, or delivery fees billed by the seller are treated as part of the gross receipts and are therefore taxable. However, if the item being sold is exempt, or if a common carrier bills the customer directly for delivery, those charges are not taxable.

Colorado

Colorado exempts transportation charges, including shipping, only when they are separately stated and separable from the sales transaction. Charges are separable when the seller allows the buyer to use the seller’s transportation services or an alternative carrier. Because shipping charges are considered taxable when they are not “separable” from the sales transaction, shipping is taxable.

Connecticut

Connecticut imposes sales tax on the sales price of tangible personal property. Shipping charges are included in the sales price and are therefore taxable.

Florida

Florida sales tax on shipping is charged when the purchaser cannot elect to avoid the charge for shipping services, whether or not it is separately stated on the invoice.

Georgia

Georgia charges sales tax on the total sales price of taxable goods and enumerated services, including delivery charges such as shipping. So, shipping is taxable in Georgia.

Hawaii

Hawaii imposes an excise tax on the gross proceeds of sales of products and services, which includes any related expenses or services. Shipping charges are related to the sale of taxable goods and are thus taxable.

Illinois

Illinois treats shipping charges as part of the taxable gross receipts when they are inseparable from the sale of the product. Shipping is considered inseparable when the buyer is charged for delivery but has no other option to receive the item, such as picking it up in person. Because alternate delivery options are rarely offered, shipping charges are included in gross receipts and are therefore taxable in Illinois.

Indiana

Indiana imposes sales tax on the gross retail income of sales, which includes delivery charges such as shipping. So, Indiana sales tax applies to shipping.

Kentucky

Kentucky sales tax applies to the gross receipts from sales of tangible personal property. Delivery charges, such as shipping, are included in gross receipts making it taxable.

Louisiana

Louisiana imposes sales tax on the sales price of tangible personal property, and the definition of “sales price” includes transportation charges. Because shipping is treated as a transportation charge, shipping fees are taxable in Louisiana.

Minnesota

Minnesota levies sales tax on the gross receipts from sales of tangible personal property, and the definition of “sales price” includes delivery charges like shipping. Therefore, shipping charges are taxable in Minnesota.

Missouri

Missouri taxes the gross receipts from sales of tangible personal property, and while separately stated delivery charges are generally excluded, they become taxable when the buyer is required to pay them as part of the sale. 

Mississippi

Mississippi taxes the gross proceeds from sales of tangible personal property, and those proceeds include any delivery charges added by the seller. Because shipping is a delivery charge, shipping fees are taxable in Mississippi.

Nebraska

Nebraska requires sales tax on the gross receipts from retail sales of tangible personal property, and the sales price used to calculate those receipts includes delivery charges such as shipping. Since shipping is part of the taxable sales price, shipping charges are taxable in Nebraska.

New Jersey

New Jersey applies sales tax to the receipts from retail sales of tangible personal property, and the sales price—used to calculate those receipts—includes delivery charges such as shipping. 

New Mexico

New Mexico’s gross receipts tax is imposed on the full amount a business receives from selling tangible personal property, and this amount includes delivery charges that the seller pays and then bills to the customer. Although New Mexico doesn’t explicitly define what counts as a delivery charge, shipping almost certainly falls within this category.

New York

New York treats delivery charges—such as shipping—as part of the taxable receipt whenever they relate to the sale of a taxable product.

North Carolina

Shipping charges are taxable in North Carolina.

North Dakota

North Dakota includes delivery charges—such as shipping—in the gross receipts from sales of tangible personal property, and those gross receipts are subject to sales tax. Because shipping is part of the taxable amount, shipping charges are taxable in North Dakota.

Ohio

Ohio treats the full price of a retail sale as taxable, and that price includes delivery charges like shipping. Since hese charges cannot be excluded from the total consideration paid for tangible personal property, shipping is part of the taxable amount.

Pennsylvania

Pennsylvania requires sales tax on the full purchase price, and no deduction is allowed for shipping charges.

Rhode Island

Rhode Island’s sales tax is based on a retailer’s gross receipts from sales of tangible personal property, and those gross receipts reflect the full sales price. The sales price includes delivery charges—defined to cover preparation and delivery services such as shipping. Because shipping falls within these taxable delivery charges, it becomes part of the gross receipts. 

South Carolina

South Carolina bases its sales tax on the gross proceeds from retail sales of tangible personal property, and those proceeds include transportation costs. Although the state does not define what counts as “transportation costs,” shipping reasonably falls within that category. 

South Dakota

South Dakota taxes the gross receipts from retail sales of tangible personal property, and those gross receipts include the full amount paid without deducting delivery charges. Delivery charges—defined to include shipping, postage, and handling—are therefore part of the taxable amount.

Tennessee

Tennessee calculates sales tax based on the sales price of tangible personal property, and that sales price includes delivery charges such as shipping.

Texas

Texas treats transportation and delivery charges as taxable whenever they are billed to the customer in connection with the sale of a taxable item. These charges include all carrier terms for transporting goods, including shipping.

Vermont

Vermont bases its sales tax on the sales price of tangible personal property, and that sales price includes the full amount paid without deducting delivery charges such as shipping.

Washington

Washington calculates sales tax using the selling price of tangible personal property, and that selling price includes the full amount paid without subtracting delivery charges such as shipping.

West Virginia

West Virginia taxes the sales price of goods unless a specific exemption applies, and that sales price includes delivery charges with no deduction allowed. Delivery charges—defined to include shipping, postage, and handling—are therefore part of the taxable amount.

Wisconsin

Wisconsin bases its sales tax on the sales price of tangible personal property, and that sales price includes delivery charges with no deduction allowed. Delivery charges—defined to include shipping, postage, and handling—are therefore part of the taxable sales price. 

What states do not charge sales tax on shipping?

These states do not generally require sales tax on shipping charges:

• Alabama (exempt if by common carrier)
• Arizona
• California
• District of Columbia
• Idaho
• Iowa
• Kansas
• Maine (exempt if by common carrier)
• Maryland
• Massachusetts
• Michigan
• Nevada
• Oklahoma
• Utah
• Virginia
• Wyoming

How to stay compliant with sales tax on shipping

To handle sales tax on shipping like a pro, you need to start by following best practices to keep your company compliant. First off, always make sure you're calculating the tax accurately and applying it correctly. This means staying on top of the latest tax rates and rules in each state where you do business. Using sales tax software to automate these calculations can be a huge help and save you tons of time. 

Another best practice is to double-check your shipping invoices to make sure that the correct amount of tax is being charged and collected. Mistakes can happen, so it's essential to review your records regularly to catch any errors and fix them promptly. Additionally, consider implementing a system that separates shipping and handling fees on invoices. This can help streamline the process and make it easier to track and report sales tax on shipping accurately.

Lastly, staying informed about changes in tax regulations is key to managing sales tax on shipping effectively. Tax laws can vary from state to state and can change over time, so it's important to stay vigilant and adapt accordingly. Consider subscribing to newsletters or joining industry forums where you can stay updated on the latest developments.

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.

Why choose Zamp?

Zamp is a completely managed solution that handles the full sales tax lifecycle for you. From the initial onboarding process to staying updated with the latest changes in sales tax regulations, we handle it all. 

Our automation tools streamline the entire compliance process, allowing you to focus on growing your business while we take care of the nitty-gritty details. With our commitment to accuracy and reliability, you can trust Zamp to keep your business compliant and free from the burden of managing sales tax.

Schedule a demo with Zamp today and discover how our solutions can revolutionize your business operations.

About the author

Emily Kordys

Emily Kordys is a Content Marketing Manager with seven years of experience in the sales tax, auto, and real estate industries. She currently resides in North Carolina with her boyfriend and dogs, Shadow and Copr.