US Sales Tax is a single-stage consumption tax levied by US states and local jurisdictions on the retail sale of tangible personal property and some services.
Unlike VAT or GST, US sales tax is imposed only at the point of final retail sale. There is no federal sales tax. Each state, plus thousands of counties and cities, sets its own rate, base, and rules. Combined rates can exceed 10% (parts of Louisiana, Tennessee, Alabama). Five states have no statewide sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon.
The 2018 Supreme Court decision in South Dakota v. Wayfair removed the physical-presence requirement. States can now require remote sellers to collect sales tax once they cross an economic nexus threshold (commonly USD 100,000 in sales or 200 transactions per state per year). This made compliance dramatically harder for SaaS, e-commerce, and marketplace platforms.
Most states now treat platforms (Amazon, Etsy, eBay) as marketplace facilitators that must collect and remit sales tax on behalf of third-party sellers. Direct-sales channels (your own Shopify store) remain the seller's responsibility. Compliance tools (Avalara, TaxJar, Stripe Tax) are widely used because rates change at the city level and the taxability of digital goods varies by state.
You will encounter US sales tax once you cross an economic-nexus threshold in any state where you sell, when launching a Shopify or direct-sales channel into the United States, when selling SaaS subscriptions to US customers (taxable in some states, exempt in others), and when registering for permits in states with physical presence.
See what a company actually costs in year one, and how the jurisdictions compare on tax, capital and timeline.
