In 2024, U.S. ecommerce reached $1.192 trillion, with most online purchases involving taxable goods. Sales tax rates vary across more than 13,000 jurisdictions, and the applicable rate depends on state-specific sourcing rules, typically based on the shipping address, but sometimes the seller’s or billing address. Retailers must stay compliant with each state’s rules, including how shipping fees are taxed, especially if they have nexus in multiple states.
Understanding U.S. Sales Tax for Online Retailers
Public
Other countries
Author: Ivana Picajkić
Category:
General subject related
Views:
316
Content accuracy validation date:
28.04.2025
Content accuracy validation time:
08:03h
In 2024, U.S. ecommerce hit $1.192 trillion, with over 80% of Americans shopping online. Most online purchases are physical goods that are taxable, which means retailers must know the correct sales tax rates to charge based on where the buyer is.
There are over 13,000 tax jurisdictions in the U.S., each with its own rules. What makes it trickier is that different states use different sourcing rules to decide which rate applies.
How is Sales Tax determined?
- For most online sales: Tax is based on the shipping address (this is called destination sourcing),
- Sometimes: Tax is based on the seller’s address (known as origin sourcing), but only in some states and for certain in-state sales like store pickups or deliveries,
- Rarely: Tax is based on the billing address, usually only when no shipping address is available, like with digital products.
Examples of state rules:
- Ohio: Uses the location where the order was received for in-state internet sales,
- Illinois: Uses destination sourcing for out-of-state orders and origin sourcing for in-state ones,
- Texas: Tax is based on where the sale is “consummated”, either where the order was taken or fulfilled,
- Virginia: In-state sellers use their business address; out-of-state sellers use the delivery address.
What about shipping fees?
Whether shipping charges are taxable depends on:
- The state,
- Whether the goods shipped are taxable,
- If the shipping fee is listed separately on the invoice.
In general, when shipping charges are applied to taxable items, those charges are also subject to sales tax.
Online retailers with sales across multiple states must apply the appropriate sales tax rate according to each state's rules. With thousands of tax jurisdictions in the U.S., compliance can be complex, but it is crucial for businesses that have a sales tax nexus, established through physical presence or economic activity in a state.
Other news from Other countries
The Philippines Implement VAT on Foreign Digital Services
Public
Other countries
Author: Ljubica Blagojević
Other countries
Author: Ljubica Blagojević
The Philippine BIR has issued Circular No. 47-2025, detailing VAT rules for foreign digital service providers starting 1 June 2025. Registration is required only if annual sales exceed PHP 3 million, and no local tax representative is needed. The simplified process supports fair competition and reduces compliance burdens, aligning with international digital tax practices. The Philippine Bureau of... Read more
Singapore Starts Phased Rollout of Mandatory E-Invoicing
Public
Other countries
Author: Ljubica Blagojević
Other countries
Author: Ljubica Blagojević
Singapore’s Peppol-based e-invoicing system, launched in May 2025, becomes mandatory for new GST registrants from November 2025 and fully enforced by April 2026. Businesses are urged to adopt early via InvoiceNow, IMDA’s national platform. E-invoicing providers help ensure IRAS compliance, secure document handling, and cross-border readiness. Important Components: InvoiceNow: The national e-inv... Read more
UAE to Ban Single-Use Plastics by 2026
Public
Other countries
Author: Ema Stamenković
Other countries
Author: Ema Stamenković
The UAE will ban single-use plastic products from January 1, 2026, as part of a phased strategy to combat plastic pollution. The ban builds on the 2024 ban, aiming for a future free of waste and pollution. The UAE is focusing on efficient resource use, sustainable food practices, and reducing plastic waste. Starting January 1, 2026, the UAE will prohibit the import, production, and trade of single... Read more
Chile Mandates Printed or Digital E-Tickets for All B2C Sales
Public
Other countries
Author: Ema Stamenković
Other countries
Author: Ema Stamenković
The authority has issued exempt resolution No. 53, requiring taxpayers to deliver printed or virtual representations of e-tickets or vouchers for B2C transactions, including cash, bank transfers, debit, credit, and prepaid cards, effective May 1, 2025. The authority has released exempt resolution No. 53, which mandates the delivery of either a printed or digital copy of the e-ticket (which s... Read more
Estonia's VAT Hike: 24% Standard Rate Begins July 2025
Public
Other countries
Author: Ema Stamenković
Other countries
Author: Ema Stamenković
Estonia's standard VAT rate will rise from 22% to 24% from 1 July 2025, with reduced rates from 9% to 13% and 5% to 9%. Starting July 1st, 2025, Estonia is raising its standard VAT rate from 22% up to 24%. The lower VAT rates are going up too, moving from 9% to 13% and from 5% to 9%. So, what do you need to do? When selling to customers in Estonia and charging them VAT, it’s a must to use... Read more
Vietnam Issued New E-Invoicing Rules
Public
Other countries
Author: Ema Stamenković
Other countries
Author: Ema Stamenković
Vietnam's Ministry of Finance has updated regulations on e-invoices, taxpayer risk assessment, and invoicing procedures for business models, effective 1 June 2025. The circular introduces new invoice types, reconciliation periods, and criteria for identifying high tax risk taxpayers. Vietnam’s Ministry of Finance issued Circular 32/2025/TT-BTC on 31 May 2025, updating guidance on invoices un... Read more
Chile: SII Mandates Third-Party Seller Reporting for Digital Marketplaces
Public
Other countries
Author: Ema Stamenković
Other countries
Author: Ema Stamenković
Chilean Tax Authority (SII) introduced new reporting obligations for digital platforms and payment providers starting October 1, 2025, with additional requirements from January 1, 2026. These rules enhance tax oversight and VAT compliance in the digital economy. The Chilean Tax Authority (SII) issued Circular 38/2025, introducing new reporting obligations for digital platforms and electronic payme... Read more