As you may already know, the United States of America is a country consisting of 50 states, a federal district, five self-governing territories, and the United States Minor Outlying Islands. Within these 50 states, the tax system continues to grow and develop. Despite this fact, some states differ in their approach towards Sales Tax, which is a consumption tax. If the state you are living or operating your business in has Sales Tax, purchasing products will cost you more than the listed price, both as a buyer and even as an e-commerce seller who acquires products from different sources (distributor, manufacturer…). However, unlike ordinary buyers, e-commerce sellers can avoid paying Sales Tax and frittering away money on things that don’t really matter with the help of getting Tax Exempt. Handling taxes is crucial for building an ecommerce business, so we recommend going through this Prestige Auditors blog for detail information on tax exemption.
In one of our previous blogs, we showcased states that have Sales Tax, and their rate. Currently, the rates vary from 7.25% in California to 2.9% in Colorado. However, there are no federal regulations concerning sales tax laws, which means that each state is in charge of its own sales tax. As of February 2020, there are only 5 states that are exempted from Sales Tax, including Alaska, Montana, Delaware, Oregon, and New Hampshire.
Alaska, North to the Future
Residents in Alaska seem happy due to the absence of sales tax; however, local governments are in charge of imposing sales tax in some areas and it can be as high as 7.5%. According to Avalara, some cities of Alaska are lucky enough to have 0% sales tax rate, while In Juneau, the sales tax is 5%. Residents of Alaska have a high personal income, which is why high Sales Tax rates are balanced.
Cities in Alaska
Delaware, The Diamond State
Unlike Alaska, where some cities have to pay Sales Tax, Delaware knows no Sales Tax. Even though each and every city of Delaware has no Sales Tax, businesses are obliged to pay gross receipts tax, which is levied on the sales a company makes before accounting for its costs. Yes, consumers do not suffer from this directly, but it has a big effect on the price of goods. Delaware may seem like heaven for those who are sick and tired of paying taxes, however personal income is very low, and the cost of living is relatively high.
Cities in Delaware
Wilmington city 0%
Newark city 0%
Smyrna town 0%
Milford city 0%
Seaford city 0%
New Castle 0%
Montana, The Treasure State
Speaking of this state, we must recall the previous ones. The thing is, Montana allows local governments to impose Sales Tax; however, as you can see from the graph, they don’t impose sales taxes. Here, in Montana, personal income is relatively low, together with the cost of living.
City rates in Montana
Great Falls 0%
Miles City 0%
New Hampshire, The Granite State
The list below speaks for itself, because Sales Tax rates in New Hampshire are 0%, and residents don’t pay Sales Tax. Sounds too good to be true? You are right! The cost of living is very high, approximately 5% above the national average, where personal income is also very high. Balance is a good thing!
Cities in New Hemisphere
Oregon, She Flies with Her Own Wings
Oregon is one of the states which allows local governments to impose Sales Tax on certain goods such as tobacco, alcoholic beverages and so forth. Oregon has a low personal income; meanwhile the cost of living is average.
Like we said before, “Two things are unavoidable in this world; death and taxes.” In other words, it is always good to know which state has Sales Tax and which doesn’t, because it is directly connected with your business and its future. Does not matter whether you are a veteran, or an ecommerce business startup. If you are an online seller and don’t want to pay Sales Tax, Prestige Auditors will help you get a resale certificate, and therefore, make your business more profitable and money-spinning from the get-go.