Sales tax and invoicing in the United States (2026)

If you sell in the United States, forget VAT. There is no federal sales tax or value-added tax. Instead, most states, and many cities, counties and special districts, charge a sales tax on retail sales of goods and some services, collected by the seller from the final customer. Each state sets its own rates, rules, exemptions and filing calendar. This guide explains, for a small business owner, how it fits together: where you must collect, what rate to charge, how exemption certificates work, how returns are filed, what to put on your invoices, and what changed recently. Figures are as of October 2026.

US sales tax at a glance

• 45 states and the District of Columbia levy a statewide sales tax. Alaska, Delaware, Montana, New Hampshire and Oregon do not, although Alaska allows local sales taxes.
• 38 states allow local sales taxes on top of the state rate, so the rate depends on where the goods are delivered or the service is received.
• State rates run from 2.9% to 7.25%; California has the highest statewide rate. Combined with local taxes, the population-weighted national average was 7.53% in mid-2026.
• Sales tax is administered by each state's tax agency, for example the California Department of Tax and Fee Administration (CDTFA), the Texas Comptroller of Public Accounts and the Florida Department of Revenue.
• Use tax is the companion of sales tax: when you buy something taxable for use in a state and the seller did not charge that state's tax, you usually owe use tax yourself. Generally only one of the two applies to a transaction.

Average combined state and local rates on 1 July 2026:

What is taxable also differs. Many states tax software, digital products and electronically delivered services, but the scope and the sourcing rules vary from state to state, so check each state where you sell.

Nexus: when you must collect a state's sales tax

You must register and collect a state's sales tax when you have nexus there. Having a physical presence in a state, such as an office, staff or stock, has always created nexus. In South Dakota v. Wayfair, Inc., decided on 21 June 2018, the Supreme Court overruled the physical presence rule of the earlier Quill decision and upheld South Dakota's law, which applied to sellers delivering more than $100,000 of goods or services into the state, or making 200 or more separate sales there, each year. Since then the states with a sales tax have adopted economic nexus thresholds for remote sellers, many of them at $100,000 of sales a year:

The trend is towards a sales-only test: Illinois dropped its 200-transaction test on 1 January 2026 and Kentucky on 1 August 2026. Once you pass a threshold you must register for a sales tax permit before you collect. Texas, for example, requires a remote seller that exceeds $500,000 to get a permit and start collecting no later than the first day of the fourth month after the month in which it went over.

Marketplaces: if you sell through an online marketplace, the marketplace may have to collect the tax on those sales for you. Florida, for example, requires marketplace providers that facilitate remote sales to register and collect. Your direct sales still count towards your own obligations, so read each state's rules.

Sales tax IDs: there is no national sales tax number. Each state where you register issues its own permit or account number.

Exemption and resale certificates

Not every sale is taxable. The most common exemption for small businesses is the sale for resale: when a retailer buys your goods to sell them on, it gives you a resale certificate and you do not charge sales tax. Depending on the state, other exempt buyers can include non-profit organisations and government bodies.

• Collect the certificate before or at the time of the sale, check it is complete, and keep a copy for every exempt customer. If you cannot produce it in an audit, the state may assess the tax on you.
• Some certificates expire. Florida's annual resale certificates expire on 31 December each year, and you document each tax-exempt sale with a copy of the customer's certificate or a Department authorisation number.
• Multistate forms: the Multistate Tax Commission's Uniform Sales and Use Tax Resale Certificate has been accepted by 36 states, and the Streamlined Sales Tax Certificate of Exemption can be used in the 23 full member states of the Streamlined Sales and Use Tax Agreement. Each comes with conditions, so confirm with the state.

Sales tax returns and payment

• Frequency: each state assigns you a filing frequency, usually monthly, quarterly or annual depending on how much tax you collect.
• Deadlines are set by each state. In Texas, monthly returns are due on the 20th of the following month, quarterly returns on 20 April, 20 July, 20 October and 20 January, and annual returns on 20 January; a deadline on a weekend or legal holiday moves to the next working day.
• Local taxes: Texas lets remote sellers elect a single local use tax rate (1.75% in 2026) instead of tracking every local rate.
• Remit what you collected. The tax you collect belongs to the state, so keep it apart from your working cash until you pay it over.

Invoices: what to show

There is no federal law that sets out what an invoice must contain, and no VAT-style invoice is needed to reclaim tax. In practice, a clear invoice protects you in an audit and helps your customer check the tax. A good US invoice shows:

1. 1Your business name and address, and your sales tax permit number in the states where you are registered
2. 2A unique, sequential invoice number and the invoice date
3. 3The customer's name, billing address and ship-to address, because the delivery address usually decides the rate
4. 4A description, quantity and price for each line, with taxable and exempt lines clearly marked
5. 5The sales tax rate and amount shown separately from the price (state and local parts if you can)
6. 6For exempt sales, a reference to the customer's exemption or resale certificate
7. 7The total, the payment terms and the due date

Corrections: do not edit or delete an invoice you have sent. Issue a credit memo that refers to the original invoice number, and refund or credit the sales tax on the amount reduced, so your returns and your customer's records match.

Foreign currency: you can quote in another currency, but you report and pay state sales tax in US dollars.

Record keeping: each state sets how long you must keep sales tax records, so check every state where you are registered. For federal income tax, the IRS's general rule is 3 years, longer in some cases (6 or 7 years), and at least 4 years for employment tax records.

E-invoicing: no federal mandate

Unlike Mexico, Brazil or much of Europe, the United States has no federal e-invoicing, invoice clearance or real-time reporting mandate for business-to-business sales, and no federal sales tax to report. A PDF invoice sent by email is normal practice.

There are voluntary developments worth knowing:

• Federal government suppliers submit invoices to many agencies through the Treasury's Invoice Processing Platform (IPP), which is free for agencies and their vendors.
• The DBNAlliance, an industry-led open exchange network, supports the exchange of business-to-business e-invoices in the United States. Joining it is optional.

A worked example in dollars

You sell office furniture from Austin, Texas, and deliver it to a customer in a Texas city where the combined rate is the maximum 8.25% (6.25% state plus 2% local):

Over a quarter you make $40,000 of such taxable sales, so you collect $3,300 and you remit $3,300. Sales tax has no input tax deduction like VAT:

• The furniture you bought for resale was bought tax-free with your resale certificate, so there is nothing to reclaim.
• The laptop and office supplies you use in your own business are taxed when you buy them. That tax is a business cost, not a credit against what you collected.
• If you bought a taxable item for your own use from an out-of-state seller that did not charge Texas tax, you report use tax on it.

To find the tax in a price that includes it, divide by 1 plus the rate: $1,082.50 ÷ 1.0825 = $1,000.00, so the tax is $82.50.

When customers pay late

There is no general federal rule that sets late-payment interest between private businesses. What you can charge depends on your contract and on state law, so put your payment terms and any late fee or interest rate in writing before you start work, and print them on every invoice.

If you sell to the federal government, the Prompt Payment Act requires agencies to pay proper invoices on time, and in most cases to pay interest when they pay late. The Prompt Payment interest rate for 1 July to 31 December 2026 is 4.75%. Our guide on getting paid faster covers the practical side.

Common sales tax mistakes

1. 1Assuming that no office means no obligation. Economic nexus can make you collect in a state you have never visited.
2. 2Charging your home rate on deliveries instead of the rate at the customer's delivery address.
3. 3Making exempt sales without a certificate on file, or with an expired one.
4. 4Forgetting local taxes in states such as California, Texas or Florida.
5. 5Treating sales tax on your purchases as reclaimable, as if it were VAT.
6. 6Not filing a return for a period with no sales when the state expects one.
7. 7Ignoring use tax on taxable purchases from out-of-state sellers.

How Clientlly helps

Clientlly handles the invoicing side and keeps your books in one place:

• sequential invoice numbering per series, with your tax rate and tax amount on every invoice
• credit notes linked to the original invoice
• invoice PDFs in your client's language, multiple currencies and a card payment link on the invoice
• you can see when an invoice was opened, and automatic reminders go out 3, 14 and 30 days after the due date
• recurring invoices for retainers and subscriptions
• receipts you scan have their tax read automatically
• sales and purchase tax books per rate and tax reports for you and your accountant, with Excel and PDF exports
• importing clients, suppliers, products and opening balances from Excel or CSV, low-stock notifications and reorder suggestions, and a mobile app

Clientlly does not look up the rate for each delivery address or file state returns for you; if you sell into many states, a dedicated sales tax service handles that part. See the invoicing module, the reporting module and pricing.