Practical operating guides for U.S. sales tax, nexus, tax rate calculation, and cross-border e-commerce compliance.
In Ohio, SaaS taxability depends on how the software service is used. SaaS used for business purposes is generally taxable, while SaaS used for personal purposes is generally not taxable. Ohio focuses on the customer’s use of the software service rather than whether the software is delivered through a cloud-based subscription model.
In North Dakota, software taxability depends on whether the software is Commercial Off-the-Shelf (COTS) software or custom software. COTS software is generally treated as tangible personal property and is taxable, while custom software is generally exempt. This article explains North Dakota sales tax rules for computer software transactions.
In North Carolina, SaaS is generally not subject to sales and use tax. North Carolina defines SaaS as a software distribution model where customers access provider-hosted software electronically without downloading the software to their own devices. Since no taxable software transfer occurs, charges for SaaS services are not subject to North Carolina sales tax.
In New Mexico, SaaS and software-related transactions are analyzed under the state’s Gross Receipts Tax (GRT) system rather than a traditional sales tax. The tax treatment depends on the nature of the software transaction and how the service is provided.
In Nevada, software and digital products delivered electronically are generally not subject to sales or consumer use tax. Nevada distinguishes between electronically delivered products and tangible physical items. Downloaded software, electronic magazines, clipart, and program code are generally non-taxable, while software delivered on physical media is taxable as tangible personal property.
In Nebraska, SaaS and software-related transactions require analysis based on the nature of the transaction. Nebraska distinguishes between taxable software transactions and services that provide access to software without transferring ownership or possession. The tax treatment depends on the structure of the software arrangement and applicable software classifications.
In Maryland, Software as a Service (SaaS) is subject to sales tax. Maryland applies different tax treatment depending on the customer’s use of the SaaS product. SaaS used for personal purposes is fully taxable, while SaaS used for business purposes is subject to a reduced 3% tax rate.
In Missouri, software taxability depends primarily on the delivery method and nature of the transaction. Canned software delivered through physical media is generally taxable, while digitally delivered canned software and custom software are generally not taxable. Mandatory installation, maintenance, upgrade, and training services included in a software purchase agreement may also be taxable.
In Mississippi, SaaS and remotely accessed software are generally subject to sales tax unless specific exemptions apply. Mississippi provides an exemption for remotely accessed software hosted on servers located outside the state. The location of the hosting server is a key factor in determining taxability.
In Minnesota, SaaS and online hosted software subscriptions are generally not subject to sales tax when customers do not obtain ownership or possession of the software. Minnesota distinguishes between prewritten software, custom software, and online hosted software. Prewritten software is taxable, while qualifying custom software and online hosted software subscriptions are generally non-taxable. Certain digital products are taxable.
In Michigan, SaaS taxability depends primarily on whether software is considered delivered to the customer in Michigan. Software that is only accessed remotely without downloading or local storage is generally not treated as taxable prewritten computer software. However, software that is partially or fully downloaded to customer hardware may be considered delivered software and subject to sales and use tax.
In Maine, SaaS taxability depends on whether the service falls within Maine’s definition of taxable products or services. Maine sales tax generally applies to tangible personal property and specifically enumerated taxable services. Since SaaS typically involves access to software rather than a transfer of tangible property, SaaS services are generally not subject to Maine sales tax.
In Louisiana, SaaS, prewritten computer software access services, and digital products are generally subject to sales tax unless specific exemptions apply. Louisiana provides exemptions for certain business-use software and digital products when they are purchased exclusively for commercial purposes and directly used in producing taxable goods or services.
In Kentucky, SaaS and prewritten computer software access services are subject to sales tax. Kentucky treats prewritten computer software as tangible personal property, whether delivered by download or another method. Access to prewritten software while the seller or a third party maintains possession of the software application is also taxable as a software as a service (SaaS) transaction.
In Kansas, software taxability depends primarily on whether the software is custom software or prewritten software. Prewritten software and related modification, update, and maintenance services are generally taxable, while customized software is exempt. This article explains Kansas software and SaaS tax treatment.
In Iowa, SaaS, software, and digital products are generally subject to sales tax. Iowa treats software delivered in physical or digital form and software as a service as taxable. Certain exemptions may apply, including specific business uses by manufacturers under Iowa law.
In Indiana, Software as a Service (SaaS) is generally not subject to sales tax. Indiana defines SaaS as a service where a provider hosts software applications over the Internet. Access to prewritten software electronically through the Internet is also not taxable when the customer does not acquire permanent ownership, control, or possession of the software.
In Illinois, software taxability depends on the type of transaction. Retail sales of canned or prewritten software intended for general or repeated use are taxable regardless of the form of delivery, including electronic download. Software licenses may be non-taxable if specific conditions are met, and qualifying custom computer software is not taxable. This article explains Illinois software tax rules for SaaS and software businesses.
In Hawaii, sales of prewritten or canned software are treated as sales of tangible personal property (TPP), regardless of whether the software is delivered through physical media or electronically. These transactions are subject to Hawaii General Excise Tax (GET). This article explains Hawaii software and SaaS tax treatment and applicable GET rates.
In Georgia, the taxability of SaaS and software transactions depends primarily on the method of delivery. Software that is delivered through a tangible medium may be subject to sales tax, while software delivered electronically without any tangible medium is generally not taxable.
In Florida, SaaS subscriptions, cloud computing services, and electronically delivered customized software are generally not subject to sales and use tax when no tangible products are provided. The Florida Department of Revenue has determined that electronically delivered software subscriptions and cloud-based services described in the ruling are not taxable.
In Washington D.C., SaaS, software, and digital products are generally subject to sales tax. D.C. taxes computer software transactions, including canned, prepackaged, and customized software, as well as related software services. Digital goods such as applications, digital books, music, video downloads, and streaming services are also taxable.
In Connecticut, SaaS and digital goods are subject to sales tax rules with different treatment depending on the use of the product. SaaS used for personal purposes is taxed at the full state rate of 6.35%, while SaaS used for business purposes is taxed at a reduced rate of 1%. Digital goods are taxable at the standard 6.35% state sales tax rate.
In Colorado, the taxability of software depends on the type of software and the method of delivery. Prepackaged software delivered through physical media may be subject to sales tax when certain conditions are met, while software delivered electronically, through application service providers, or through load-and-leave delivery is generally not taxable. This article explains Colorado SaaS and software sales tax rules.
In California, electronically delivered software, digital books, mobile applications, and other digital products are generally not subject to sales tax when transferred over the Internet. However, transactions involving physical media or printed copies are generally taxable. This article explains California sales tax rules for software, SaaS, and digital products, including the importance of delivery method and transaction structure.
In Arkansas, sales of computer software, including prewritten computer software, are treated as sales of tangible personal property and are subject to Arkansas sales tax rules. This article explains Arkansas software sales tax treatment and key considerations for software businesses.
In Arizona, SaaS, cloud-based software access, and software sales are subject to Arizona Transaction Privilege Tax (TPT) considerations. Arizona applies different classifications depending on the nature of the transaction. SaaS subscriptions and cloud software access generally fall under the personal property rental classification, while one-time software sales fall under the retail classification. Proper classification is critical for TPT compliance and economic nexus analysis.
In Alabama, software, SaaS, and certain digital products are subject to sales tax considerations. Alabama classifies computer software as tangible personal property regardless of the method of delivery. Software transactions delivered through physical media, downloads, and certain cloud-based solutions are generally subject to Alabama sales and use tax. This article explains Alabama SaaS sales tax rules, software subscriptions, digital products, and compliance considerations.
In Wyoming, the taxability of delivery, shipping, and handling charges depends largely on how they are listed on the invoice. Delivery charges are generally taxable if bundled into the item price or mandatory. If the delivery or shipping charge is listed as a separate, optional line item on the invoice, that charge is generally exempt from sales tax.
In Wisconsin, when a retailer sells taxable products or services and charges the purchaser for delivery, the retailer’s total charge, including the delivery charge, is taxable. This applies whether delivery is made by the seller’s vehicle, a common or contract carrier, or the United States Postal Service. For packages containing both taxable and nontaxable items, only the shipping portion related to taxable items is subject to sales tax. Separately stated direct mail delivery charges and charges paid directly by the purchaser to an independent carrier may qualify for exceptions.
In West Virginia, under the State Tax Commissioner’s policy statement, vendors providing delivery services to customers must charge consumer sales and service tax or use tax on the total cost of the delivery service, including postage and handling fees. This article explains West Virginia shipping tax rules and practical compliance considerations for ecommerce sellers.
In Washington, delivery charges by a seller are generally part of the selling price, whether separately billed, itemized on the invoice, or when the seller is also the carrier. Retail sales tax applies to delivery charges for products subject to retail sales tax. If the sale of the goods is exempt, the related delivery charge is also exempt. This article explains Washington shipping sales tax rules for ecommerce sellers.
In Vermont, if an item is taxable, tax is also due on delivery and freight charges for delivering that item. If the item is tax-exempt, delivery charges are also exempt. For mixed packages containing both taxable and tax-exempt items, shipping tax applies only to the taxable portion and may be allocated based on the percentage of price or weight of taxable items in the package.
In Virginia, shipping charges are generally non-taxable when they are separately stated on the invoice and separated from handling fees. However, if shipping and handling are bundled together as one combined charge, the entire combined charge is generally taxable. This article explains Virginia shipping sales tax rules and compliance considerations for ecommerce sellers.
In Utah, delivery charges include transportation, shipping, postage, handling, crating, and packing. If the delivery charge is separately stated on the customer invoice, it is generally not subject to Utah sales or use tax. This article explains Utah shipping sales tax rules and practical compliance considerations for ecommerce sellers.
In Texas, delivery and shipping charges connected with taxable items or taxable services are taxable. In practice, shipping taxability generally follows the taxability of the underlying item or service. This article explains Texas shipping sales tax rules and practical compliance considerations for ecommerce sellers.
In Tennessee, delivery charges are specifically included in the sales price of a transaction. When a seller adds delivery charges such as shipping, freight, postage, or handling to an invoice, those charges are taxable if the transaction is taxable and exempt if the transaction is exempt. This article explains Tennessee shipping sales tax rules for ecommerce sellers.
In South Dakota, delivery charges are included in gross receipts and are subject to the same sales or use tax rate as the product or service sold. Delivery charges include shipping, postage, handling, crating, packing, and fuel surcharge. If the product or service is taxable, the delivery charge is generally taxable. If the product or service is not taxable, the delivery charge is not taxable.
In South Carolina, delivery charges may be included in the sales and use tax measure depending on the delivery method and sales terms. Under South Carolina Revenue Ruling RR19-9, delivery charges are generally taxable when delivery is made by the retailer’s truck, by common carrier under F.O.B. destination terms, or by direct factory shipment where transportation is paid by the seller. Delivery charges are generally not included in the tax measure when delivery is by common carrier and the sale is F.O.B. point of origin.
In Rhode Island, delivery charges are included in the sales price of property and are generally subject to sales tax when the property sold is taxable. If the property sold is exempt, delivery charges are not subject to sales tax. Delivery charges include transportation, shipping, postage, handling, crating, and packing. This article explains Rhode Island shipping sales tax rules for ecommerce sellers.
In Pennsylvania, separately stated delivery charges billed by the vendor in connection with a taxable transaction are generally subject to sales tax. Delivery charges connected with nontaxable transactions are not taxable. Charges for delivery made and billed by someone other than the vendor are also not subject to tax. This article explains Pennsylvania shipping sales tax rules for ecommerce sellers.
In Oklahoma, based on an Oklahoma Tax Commission letter ruling, separately stated shipping and handling charges may fall within the relevant category under Oklahoma Tax Commission Rule 710:65-19-70 and are not subject to tax. This article explains Oklahoma shipping sales tax rules and practical compliance considerations for ecommerce sellers.
In Ohio, charges imposed by the vendor or seller for preparing and delivering taxable tangible personal property or taxable services to a location designated by the consumer are part of the taxable price. These charges include transportation, shipping, postage, handling, crating, and packing. However, charges paid directly by the customer to a delivery company and not imposed or collected by the seller are generally not subject to sales or use tax. This article explains Ohio shipping sales tax rules for ecommerce sellers.
In North Dakota, effective October 1, 2005, freight, delivery, shipping and handling, and other transportation charges are generally considered part of the selling price. If the sale is taxable, those charges are taxable. If the delivered product is exempt from sales tax, the related transportation charges are also exempt. Delivery charges billed directly to the customer by delivery services that are not making the sale remain exempt. This article explains North Dakota shipping sales tax rules for ecommerce sellers.
In North Carolina, shipping, handling, transportation, and delivery charges imposed by the retailer are generally subject to North Carolina use tax when they are connected in any way with the sale of taxable items purchased for storage, use, or consumption in North Carolina. This article explains North Carolina shipping tax rules and compliance considerations for ecommerce sellers.
In New York, shipping and delivery charges included on a seller’s bill are generally taxable when the product or service being shipped or delivered is taxable. The terms shipping and delivery also include charges identified as transportation, handling, or postage. This article explains New York shipping sales tax rules and compliance considerations for ecommerce sellers.
In New Jersey, delivery charges are generally taxable when the items or services sold are taxable. Delivery charges include transportation, shipping, postage, handling, crating, and packing. However, delivery charges for nontaxable items, such as qualifying clothing, property purchased for resale, or property covered by another statutory exemption, are generally not taxable. This article explains New Jersey shipping sales tax rules for ecommerce sellers.
In Nevada, since May 22, 2009, delivery charges, including freight and transportation costs associated with the sale of tangible personal property, are generally not taxable if separately stated on the invoice to the end user. However, handling, packaging, crating, and other delivery-related service charges are taxable even when separately stated. Inbound freight incurred before the sale is also taxable. This article explains Nevada shipping sales tax rules for ecommerce sellers.
In Nebraska, shipping and handling charges are generally taxable when the underlying sale is taxable and the charges are paid to the retailer. If the underlying sale is exempt, the related shipping charges are generally not subject to sales tax. This article explains Nebraska shipping sales tax rules and compliance considerations for ecommerce sellers.
In Missouri, a dealer may elect to separately state charges for delivery, setup, and installation. These separately stated charges are generally not subject to tax because the dealer is performing a service. This article explains Missouri shipping sales tax rules and practical compliance considerations for ecommerce sellers.
In Mississippi, delivery charges are generally taxable. The taxable gross proceeds of sales include installation charges, delivery charges, and other fees added to the selling price of the property, except finance charges. Delivery charges include fees charged by the seller for transportation of the property being sold. This article explains Mississippi shipping sales tax rules and compliance considerations for ecommerce sellers.
In Minnesota, delivery charges generally follow the taxability of the item or service sold. If the item or service is taxable, the related delivery charges are also taxable and are part of the sales price, even when separately stated. This article explains Minnesota shipping sales tax rules and practical compliance considerations for ecommerce sellers.
In Michigan, delivery charges are generally not subject to sales tax when they are separately stated on the invoice. However, if delivery charges are not separately stated or are included in the product price, they may become part of the taxable sales price. This article explains Michigan shipping sales tax rules and compliance considerations for ecommerce sellers.
In Massachusetts, a transportation charge imposed by the seller for preparing and delivering tangible personal property to a purchaser-designated location is generally excluded from the taxable sales price. However, freight-in charges for transporting property to the vendor are not transportation charges under Directive 04-5 and are included in the taxable sales price as part of the vendor’s overhead. This article explains Massachusetts shipping sales tax rules for ecommerce sellers.
In Maryland, separately stated shipping charges are generally not taxable. However, handling charges are part of the taxable price. When shipping and handling charges are combined, the shipping charge loses its exemption and the entire combined amount is subject to Maryland sales tax. This article explains Maryland shipping sales tax rules for ecommerce sellers.
In Maine, shipping charges are generally not part of the taxable sale price when three conditions are met: the product is shipped directly to the customer, shipment is made through a common or contract carrier or U.S. mail, and the shipping cost is stated separately from the property price and other charges such as handling fees. If shipping and handling are bundled together, the combined charge is generally taxable. This article explains Maine shipping sales tax rules for ecommerce sellers.
In Louisiana, transportation charges such as shipping, freight, and delivery are generally included in the definitions of “cost price” and “sales price.” Charges paid to the seller for delivery of tangible personal property or digital products are generally subject to state and local sales and use taxes. However, charges paid directly by the purchaser to a third-party carrier are generally not subject to sales and use tax. This article explains Louisiana shipping sales tax rules and ecommerce compliance considerations.
In Kentucky, separately stated shipping charges may be exempt from sales tax when taxable products are shipped to a customer-specified point and delivered by the postal service or common carrier. However, shipping charges are generally taxable when the seller makes the delivery. Handling charges are always taxable, and combined shipping and handling charges are taxable regardless of who makes the delivery. This article explains Kentucky shipping sales tax rules for ecommerce sellers.
Beginning July 1, 2023, handling and delivery charges in Kansas are generally not subject to sales tax when separately stated on the invoice, clearly denominated as delivery, transmission, or transportation charges, and representative of a true or reasonable cost of delivery. This article explains Kansas shipping sales tax rules and ecommerce compliance considerations.
In Iowa, shipping charges are generally not taxable when they are separately stated on the invoice. However, if shipping is not separately stated or is included in the product price, it may become part of the taxable sales price. This article explains Iowa shipping sales tax rules and compliance considerations for ecommerce sellers.
In Indiana, shipping charges are generally taxable unless a specific exception applies. Shipping may be non-taxable only when the charge is separately stated and the delivery is made by a public carrier. If the charge is not separately stated, or if it is separately stated but delivered through carriers such as FedEx or UPS, it may still be taxable. This article explains Indiana shipping sales tax rules and ecommerce compliance considerations.
In Illinois, shipping and handling charges may be taxable depending on whether the transportation and delivery charges are separately identified and whether the purchaser has an option to avoid the charge. If shipping is not separately stated, or if the customer has no option other than paying the delivery charge, the charge is generally taxable. This article explains Illinois shipping sales tax rules for ecommerce sellers.
In Idaho, shipping and handling charges are generally not subject to sales or use tax when they are separately stated on the invoice and are for shipping goods directly to the buyer. This article explains Idaho shipping sales tax rules and practical compliance considerations for ecommerce sellers.
Hawaii does not impose a traditional sales tax. Instead, it imposes the General Excise Tax, or GET, on gross income from business activities. Shipping, delivery, and freight charges are generally included in gross income and are taxable when connected with taxable sales. This article explains Hawaii shipping tax rules and compliance considerations for ecommerce sellers.
In Georgia, delivery, transportation, freight, and shipping and handling charges are generally included in the sales price. If the underlying item is taxable, separately stated delivery or shipping charges are also taxable. This article explains Georgia shipping sales tax rules and compliance considerations for ecommerce sellers.
In Florida, delivery charges are generally taxable when imposed with the sale of taxable tangible personal property. However, delivery charges are not subject to tax when they are separately stated on the invoice and can be avoided by a decision or action solely by the purchaser, such as pickup or arranging third-party transportation. This article explains Florida shipping sales tax rules and compliance considerations for ecommerce sellers.
In Connecticut, shipping, delivery, and freight charges are generally taxable when they are connected to the sale of taxable goods. This article explains Connecticut shipping sales tax rules, how delivery charges are treated, and what ecommerce sellers should consider when configuring sales tax settings.
In Colorado, delivery and freight charges are generally not subject to sales tax when they are separable from the purchase and separately stated on the customer invoice. This article explains Colorado shipping sales tax rules, including when shipping is non-taxable, when it may become taxable, and what ecommerce sellers should document for compliance.
In Arkansas, shipping, freight, and transportation charges are generally included in the taxable gross receipts when the products being shipped are subject to Arkansas sales and use tax. However, freight charges billed directly to the purchaser by a common carrier are not taxable. Shipping charges for non-taxable goods are also not subject to Arkansas sales and use tax.
Alaska does not impose a statewide sales tax, but certain local jurisdictions may levy local sales taxes. As a result, the taxability of shipping, delivery, and freight charges in Alaska depends on the local rules that apply to the customer’s delivery address. This article explains Alaska shipping sales tax rules and key compliance considerations for e-commerce sellers.
In Alabama, shipping charges are generally non-taxable when they are separately stated on the invoice and the delivery is made by a common carrier or the U.S. Postal Service. However, delivery charges may become taxable if the seller uses its own vehicle or includes shipping in the sales price.
In California, the sales tax treatment of shipping, delivery, freight, postage, and handling charges depends on how the goods are delivered, how the charge is stated on the invoice, whether the charge exceeds the actual delivery cost, and whether the seller keeps proper records. This article summarizes the CDTFA rules to help ecommerce and cross-border sellers determine when delivery-related charges are non-taxable, partially taxable, or taxable.
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