Do I Charge Sales Tax in Other States? A Simple Guide for Small Business Owners Shipping Nationwide

Do I Charge Sales Tax in Other States? A Simple Guide for Small Business Owners Shipping Nationwide

If you’ve ever Googled “Do I charge sales tax when shipping out of state?” and left more confused than when you started, you’re not alone.

Sales tax laws aren’t exactly known for being straightforward. We recently saw someone ask in a business group:

“If I’m based in one state but sell and ship to other states, do I have to collect their sales tax or just mine?”

It’s a great question. And the answer? It depends, but we’re going to break it down clearly, without the legal speak.

Do I Charge Sales Tax in Other States? Let’s Talk About Nexus First (It's not as scary as it sounds)

To know where you need to collect sales tax, you have to understand a key concept: sales tax nexus.

Nexus just means you have a strong enough connection to a state that you’re required to comply with their tax rules.

You can have two kinds of nexus:

Physical Nexus – You have a location, employee, warehouse, or inventory in another state.

Economic Nexus – You reach a certain sales threshold in that state, usually $100,000 in revenue or 200 separate transactions in a year.

If you cross either one, you’re required to collect that state’s sales tax from your customers. No exceptions.

Do I Have to Collect Sales Tax in Every State I Ship To?

No, not automatically.

You only need to collect sales tax in states where:

1. You’ve created a nexus (physical or economic), and

2. The product or service you’re selling is taxable in that state.

   
   

If you don’t meet the threshold or have any physical presence there, you usually don’t need to collect their sales tax. (The buyer might still owe use tax, but that’s not your problem.)

Do I Charge Sales Tax in Other States? Examples of Economic Nexus Thresholds

Here’s what economic nexus looks like in action:

• Sell $100,000 in goods to customers in California this year? You need to register and collect CA sales tax.

• Make 200 separate sales to customers in Pennsylvania? Same story.

• Just sold five items to someone in Iowa? You're likely in the clear for now.

Every state sets its own rules. You can find a full list on TaxJar’s State Nexus Guide.

Live in a No-Sales-Tax State? Read This.

If your business is based in Oregon, Montana, New Hampshire, Delaware, or Alaska, you might think you're in the clear.

And while you don’t have to charge sales tax to your in-state customers, you’re still responsible for collecting it in other states where you’ve hit economic nexus. That means no free pass just because your state skips sales tax.

Selling on Etsy, Amazon, or Shopify? Here’s When You Must Charge Sales Tax in Other States

Thanks to marketplace facilitator laws, platforms like Amazon, Etsy, eBay, and Walmart Marketplace are required to collect and remit sales tax on your behalf in many states.

✅ If you ONLY sell through those platforms, you're probably in the clear.

🚨 If you ALSO sell on your own website or invoices (hello, Square or Shopify POS), you still need to monitor nexus and may need to register yourself.

Do I Charge Sales Tax in Other States for Digital Goods or Services?

Some states treat digital products and services differently.

• Downloadable files? Taxed in some states.

• Online courses? Depends how it’s delivered.

• Services like consulting or coaching? Usually not taxed, but there are exceptions.

It’s messy. When in doubt, check the specific tax rules in each state where you’re making significant sales.

How to Stay on Top of Sales Tax Compliance (Without Losing Your Mind)

Here’s your KB2-approved action plan:

1. Track sales by state. Keep an eye on how much business you're doing in each one.

2. Know your thresholds. Look up each state's economic nexus rules.

3. Register when needed. Don’t wait to be chased down, register before you hit compliance issues.

4. Use tools to automate. Consider services like TaxJar, Avalara, Stripe Tax, or Shopify Tax to handle the hard parts.

5. Don’t panic. We know it’s a lot, but you don’t have to figure it out alone.

   
   

Final Word: You Don’t Need to Know It All When It Comes to Sales Tax, You Just Need Someone Who Does

Sales tax across state lines is complicated but it’s also manageable, especially when you’ve got the right systems and the right people in your corner.

At KB2 Bookkeeping & Tax, we help small business owners untangle the sales tax web, monitor for economic nexus, and set up the right tools so you can get back to doing what you do best.

➡️ Shipping products across state lines? Let's make sure you're not accidentally breaking tax rules. Contact Us or send us a message, we’ll help you make sense of it all.