Need to check on your sales taxes? Our free, easy-to-use sales tax calculator will keep you and your business organized.
Sales taxes are taxes that are imposed on the ultimate purchaser of goods or non-exempt services. These taxes are generally levied by states, but there are certain municipalities that impose their own sales tax on top of any state sales tax. Any taxes collected by the business are remitted to the state and/or municipality on a regular basis.
Sales taxes are typically paid by the end consumer at the time of purchase. However, the business that sold the goods or services is responsible for collecting the sales tax and passing it along to the state in accordance with that state's rules and regulations.
Ultimately, it depends on the state or municipality, but as a rule of thumb, almost all goods sold to an end consumer are subject to sales tax. Services, on the other hand, are not usually taxed.
There are currently 5 states that do not impose state-level taxes:
• New Hampshire
While these states do not impose their own taxes, there are certain municipalities within each state that do.
We've compiled a list of individual state taxes in our blog post here.
Each state or municipality has its own resources for local businesses to file their state taxes. This will vary state by state, therefore it is important to have a complete understanding of your state's tax laws and exemptions.
There are also services that can help you keep track of, file, and remit your sales taxes. Likewise, some point of sales manufacturers/devices automatically include this service with their devices.
Individuals can deduct sales taxes paid throughout the year from their income taxes. However, this is usually more than is accounted for in the newly revised standard deductions. If you already have deductions exceeding the applicable standard deduction, it makes sense to keep track of sales taxes related to large purchases and then deduct them from your personal taxes.
Assuming your itemized deductions are more than your applicable standard deduction, your sales tax deduction will be worth the value of sales taxes paid multiplied by your applicable federal income tax rate.
Sales taxes are typically not applicable to groceries. They are also largely not applicable to businesses that purchase goods or services in the process of running their business. Finally, services are not subject to sales tax, although there are exceptions for certain types of services depending on the service and the state or municipality where it is offered.
It depends. For the most part, online sellers are required to collect sales tax from buyers who are located in the same state as the physical location of the online seller. If the online seller does not have a physical location, they are not required to collect sales taxes. States can require companies with more than $100,000 in sales or more than 200 transactions of in-state sales to impose, collect and remit taxes to the state in which the customer lives, so it is always best to check with the laws and regulations of the state you are operating in.