Sales Tax
Sales tax is a consumption tax charged once, usually at the final retail sale.
Sales tax — used in the United States and some other jurisdictions — is typically collected only at the point of final sale to the consumer, unlike VAT which is collected at each stage. Rates and rules are set by states, counties, or cities, so a seller may need to charge different rates in different locations and register in each taxing jurisdiction where they have nexus.
Example
A Texas retailer adds 8.25% sales tax to a customer's purchase at checkout.
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Frequently asked questions
Do I charge sales tax on B2B invoices?
Often not — sales for resale are usually exempt if the buyer provides a valid resale certificate. But rules vary by state, so confirm the buyer's exemption status before invoicing tax-free.
What is nexus in sales tax?
Nexus is the connection between your business and a state that obliges you to collect its sales tax — it can come from a physical presence or from exceeding sales thresholds. Each state defines it differently.
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