US Sales Tax by State 2026: Rates Sellers Must Know
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A candle maker in Ohio sells $120,000 a year on Etsy. One day she gets a notice from California: she owes three years of uncollected sales tax, plus penalties, because enough Californians bought her candles to trigger "economic nexus." She'd never set foot in California. She didn't know she had to care.
She's not unusual. Since the Supreme Court's 2018 Wayfair decision, states can require out-of-state sellers to collect sales tax based purely on sales volume — no physical presence needed. There are 45 states (plus DC) with a statewide sales tax, thousands of local jurisdictions layering their own rates on top, and every state sets its own nexus thresholds. For online sellers, "where do I owe sales tax?" is genuinely one of the hardest questions in small business.
Here's the map, the rules, and what actually matters for your business.
The rate landscape: highest, lowest, and weirdest
Statewide base rates run from 0% to 7.25%, but the number on your receipt is usually the combined rate — state plus county plus city plus special districts. Using widely published 2025 figures (states adjust rates periodically, so confirm current numbers before filing):
Highest combined averages: Tennessee (~9.55%), Louisiana (~9.52%), Arkansas (~9.44%), Washington (~9.35%), and Alabama (~9.29%). In parts of Tennessee and Louisiana, combined rates can exceed 11% — meaning more than one dollar in nine of your purchase price is tax.
Highest statewide base rate: California at 7.25%. But California's combined rates can push past 10% in cities like Los Angeles with district taxes stacked on.
Zero statewide sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon — the famous NOMAD states. Caveat: Alaska allows local jurisdictions to levy their own sales taxes, so "no sales tax in Alaska" isn't quite true everywhere in the state.
The weird ones: Colorado has a low 2.9% state rate but heavy local taxes, plus special-district taxes that make Denver-area receipts look like algebra homework. Arizona's "transaction privilege tax" is technically levied on the seller, not the buyer, though it's passed through on receipts. And several states tax groceries at reduced rates (or exempt them), tax clothing differently (looking at you, Massachusetts with its $175 threshold and New York's $110 clothing exemption), or exempt digital goods while taxing physical ones.
The practical point: there is no "US sales tax rate." There are roughly 13,000 taxing jurisdictions. Your checkout software needs a rate database, not a single number.
Nexus: the tripwire most sellers don't see
Nexus means a sufficient connection to a state that obligates you to collect its sales tax. Two kinds:
Physical nexus is the old rule: offices, employees, warehouses, or inventory in a state. If you use Amazon FBA, your inventory sits in warehouses across the country — which historically created physical nexus in a dozen-plus states overnight. (Many states have since softened this for marketplace sellers; see below.)
Economic nexus is the Wayfair rule: sell enough into a state and you owe collection duties there. The classic threshold is $100,000 in sales or 200 transactions into the state in a year — but states have been modifying this aggressively. Many have dropped the transaction count entirely (it snared tiny sellers shipping 200 $5 items), keeping just the dollar threshold. Some set it higher or lower. A handful measure it differently.
Track this per state, per year. The moment you cross a state's threshold, you generally must register and begin collecting — often within weeks, not at year-end. Most ecommerce platforms and tools like TaxJar or Avalara can monitor thresholds automatically. Doing it by spreadsheet works until about your third nexus state, then it becomes a part-time job.
One more tripwire: trade shows and temporary presence. Sending an employee or even yourself to a three-day expo in a state can create physical nexus in states that haven't adopted temporary-presence exceptions. Check before you exhibit.
Marketplace facilitator laws: the big simplification
Here's the good news that rescues most small sellers: every state with a sales tax now has a marketplace facilitator law. These laws make the marketplace — Amazon, eBay, Etsy, Walmart — responsible for collecting and remitting sales tax on third-party sales, not you.
In practice: if 100% of your sales flow through Amazon, eBay, and Etsy, those platforms handle collection and remittance in every state. You don't register, you don't file, you don't remit. The candle maker's California problem largely disappears for pure marketplace sellers — Etsy collects the California tax at checkout and sends it to the state.
The catch is the word "pure." The moment you also sell through your own Shopify store, at craft fairs, or wholesale, you're back in nexus land for those direct channels. Marketplace sales generally don't count toward your nexus thresholds in most states (the marketplace is the deemed seller), but your direct sales do. Plenty of sellers learn this when their "side" Shopify store crosses $100,000 into Texas and nobody told them.
Also note: facilitator laws cover sales tax, not necessarily income tax nexus. Selling into a state can still create state income tax obligations under separate rules. Different tax, different thresholds, different headache.
What you actually have to do: a compliance checklist
If you sell direct (your own site, in person, wholesale) in any state where you have nexus:
Register for a sales tax permit in each nexus state before you collect. Collecting without a permit is illegal in most states; collecting and pocketing it is worse. Registration is usually free or cheap ($0–$100) and done online through the state's revenue department.
Collect the right rate at checkout. Use a rate lookup tied to the buyer's full address (zip codes alone aren't enough — tax boundaries don't follow zip codes). Your ecommerce platform's built-in tax engine handles this if configured; verify it's actually turned on.
File returns on the state's schedule — monthly, quarterly, or annually, assigned based on your volume. File even for periods with zero sales in that state if you're registered; "zero returns" are still required and missing them draws penalties.
Remit what you collected. Keep collected tax in a separate accounting bucket — it was never your money. The sellers who get destroyed in audits are the ones who collected tax, spent it on inventory, and couldn't pay it back.
Exemption certificates: if you sell wholesale or to exempt organizations, collect and keep their exemption certificates. Without the paperwork, the state treats the sale as taxable and bills you. Digital copies are fine; organized digital copies are better.
For pure marketplace sellers: verify each platform is actually collecting in every state (they are, by law, but glitches happen), keep records of marketplace 1099-Ks, and focus your compliance energy on your direct channels and income tax.
The 2026 seller's action plan
If you're starting or scaling an online selling business this year, do these five things in order:
First, list every channel you sell through and mark which are marketplaces (facilitator-covered) versus direct. Your compliance burden lives almost entirely in the direct column.
Second, pull your sales-by-state report for the last 12 months from each direct channel. Flag every state where you're near or over $100,000 (or that state's specific threshold). Those are your register-now states.
Third, register where you have nexus, turn on automated tax collection in your platform, and set calendar reminders for each state's filing frequency. This is a one-time setup cost of a few hours that prevents the candle-maker scenario.
Fourth, if you use Amazon FBA or third-party warehouses, check each relevant state's current stance on inventory-based nexus for marketplace sellers — several states have carved out exceptions, and the rules changed recently enough that old blog posts (even from a couple of years ago) may be wrong.
Fifth, revisit annually. Thresholds change, states tweak rates, and your sales mix shifts. A 30-minute yearly review beats a three-year back-tax notice.
Rates change by legislation, so treat any published table — including this one — as a starting point and verify current figures with the state's revenue department or a tax rate service before you file. For quick estimates on any transaction, the VAT & Sales Tax Calculator Online handles the forward and reverse math in seconds.
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Open the VAT & Sales Tax Calculator OnlineFrequently Asked Questions
Which state has the highest sales tax?
By average combined state-plus-local rate, Tennessee (~9.55%) typically tops the list, followed by Louisiana, Arkansas, Washington, and Alabama. By statewide base rate alone, California leads at 7.25%. Local taxes can push combined rates above 11% in parts of several states. (Figures from widely published 2025 data; verify current rates before filing.)
Which states have no sales tax?
Alaska, Delaware, Montana, New Hampshire, and Oregon have no statewide sales tax. Note that Alaska permits local sales taxes, so some Alaskan localities do tax sales. These five are sometimes called the NOMAD states.
What is economic nexus for sales tax?
Economic nexus is a sales-volume threshold that obligates out-of-state sellers to collect a state's sales tax without any physical presence there. The common standard (from the Wayfair decision era) is $100,000 in sales into the state per year, though many states have modified or dropped the companion 200-transaction test. Thresholds vary by state.
Do I need to collect sales tax if I only sell on Etsy or Amazon?
Generally no — marketplace facilitator laws make the platform responsible for collecting and remitting sales tax on your marketplace sales in every state that has such a law (which is now all of them with a sales tax). You only face your own collection duties for direct channels like your own website, in-person sales, or wholesale.
How often do sales tax rates change?
State base rates change occasionally by legislation; local rates change more often, sometimes yearly. Special-district taxes (transit, stadium, public safety) are a frequent source of small changes. If you collect tax yourself, use a rate service or your platform's tax engine rather than a static table.
What happens if I don't collect sales tax when I should?
The state can assess the uncollected tax against you (not your customers), plus penalties and interest — often reaching back 3–4 years. Voluntary disclosure programs in many states reduce penalties if you come forward before you're caught. The candle-maker scenario at the top is real: ignorance of nexus is not a defense.