**Highest state base rates**: California (7.25%), Indiana/Mississippi/Rhode Island/Tennessee (7.0%). **Highest combined rates** (state + average local): Tennessee 9.55%, Louisiana 9.56%, Arkansas 9.45%, Washington 9.38%, Alabama 9.29%. **Lowest/Zero tax states**: Alaska, Delaware, Montana, New Hampshire, Oregon (0% state sales tax). **Lowest taxable states**: Colorado (2.9% state), Alabama/Georgia/Hawaii/New York/Wyoming (4.0%).

Note: Effective rates vary by locality—California can reach 10.75% in some cities, while Oregon remains 0% statewide.

Follow **economic nexus rules** (post-South Dakota v.

Wayfair, 2018): **1) Nexus threshold** = $100,000 revenue OR 200 transactions in a state per year (most states). **2) Register** in each nexus state for sales tax permit. **3) Collect** destination-based tax (buyer's location) using this calculator: $100 item to CA with 7.25% state + 2.5% local = $109.75 total. **4) File returns** monthly/quarterly/annually per state. **5) Use marketplace facilitator** (Amazon, Etsy) who auto-collect tax in 45+ states, relieving you of compliance in those states. **Critical**: Each state has different rates, exemptions (clothing exempt in PA/NJ, groceries in 32 states), and filing deadlines.

Non-compliance = penalties 5-25% + interest.

Common exemptions vary by state: **Groceries**: Exempt in 32 states (taxed in AL, HI, ID, KS, MS, OK, SD at reduced/full rate). **Prescription drugs**: Exempt in all states except IL (1%). **Clothing**: Fully exempt in MN, NJ, PA, VT; partially exempt in MA ($175+ taxed), NY ($110+ taxed), RI ($250+ taxed). **Manufacturing equipment**: Exempt for resale in 38 states (not exempt in CA, WA). **Medical devices**: Exempt in most states. **Digital goods** (software, e-books, streaming): Taxed in 30+ states (exempt in OR, MT, NH, DE, AK). **Services**: Generally exempt (exceptions: HI, NM, SD tax most services). **Resale certificate**: Exempt if buying for resale (requires valid resale license).

Always verify current state rules—this calculator assumes general merchandise taxability.

Depends on **origin vs. destination sourcing**: **Destination-based** (45 states + DC): Charge tax based on customer's ship-to address.

Example: You're in TX, customer in CA → charge CA rate (7.25% + local).

Use customer's city/county/district for precise local rate. **Origin-based** (5 states): Charge your business location's rate regardless of buyer's location. **Origin states**: Arizona (retail), California (some scenarios), Illinois (unless Chicago), Mississippi (4% state only), Missouri (some intrastate), New Mexico, Ohio (some cases), Pennsylvania (shipping exempt), Tennessee (single location), Texas (some intrastate), Utah (some cases), Virginia (most). **E-commerce rule**: If shipping across state lines, use destination sourcing even in origin states.

If economic nexus exists in buyer's state, charge their rate.

Use tax automation software (Avalara, TaxJar) for 11,000+ US tax jurisdictions.

Change frequency: **State rates**: Rarely change, typically 1-3 states per year (last major changes: AL 4% since 2019, CA 7.25% since 2011). **Local rates**: Change quarterly in many jurisdictions. **High-frequency states**: Over 1,000 rate changes per year across all US localities. **Quarterly change dates**: Jan 1, Apr 1, Jul 1, Oct 1 (most states). **Recent 2024-2025 changes**: Illinois various local increases, Texas voter-approved local changes, California district updates. **Ballot measures**: Nov elections often include local tax increases effective Jan 1. **Compliance risk**: Using outdated rates = collecting wrong amount = audit exposure. **Best practice**: Update rates quarterly minimum, monthly for high-volume sellers.

This calculator uses 2025 Q1 base state rates—verify local rates with state DOR websites (revenue.state.xx.us) or use certified software.

Yes, but process varies: **Immediate refund** (if caught at checkout): Ask retailer to void transaction and reprocess without tax. **Merchant refund** (post-purchase): Contact seller with receipt within 30-90 days; most will refund tax if error confirmed (you bought in OR/DE/MT/NH/AK where no state tax applies). **State tax refund** (if merchant refuses): File claim with state Department of Revenue: **Required docs** = Receipt showing incorrect tax, proof of purchase location (GPS/address), completed refund form (ST-119 in some states). **Time limit** = 3-4 years from purchase (varies by state). **Common mistakes**: Tourist charged sales tax in NH (100% refundable), exempt organization not given exemption (provide exempt cert), internet seller charged origin state tax instead of destination (buyer files claim in buyer's state). **Note**: If you voluntarily paid use tax to your home state on an out-of-state purchase, that's not refundable (it's your legal obligation). **Success rate**: 70-80% if documented within 90 days, <40% after 1 year.