Why U.S. Sales Tax Is Complex for International Sellers
Unlike VAT or GST — which operate as single, centralised taxes in the UK, EU, and Australia — U.S. sales tax is administered at the state, county, and city level. There is no federal sales tax. That means a seller shipping goods into California faces a different compliance obligation than one shipping into Texas, Florida, or Oregon.
For UK-based businesses, SaaS providers, and global eCommerce brands expanding into the U.S. market, this fragmented system is one of the most common compliance blind spots. The 2018 South Dakota v. Wayfair Supreme Court ruling changed everything: states can now require out-of-state sellers — including international ones — to collect and remit sales tax once they cross an economic nexus threshold, even without a physical presence in that state.
If you're managing U.S. sales tax obligations for the first time, this guide is your 2026 starting point.
The Five States With No Sales Tax
Before covering states that do tax sales, it's worth highlighting the exceptions. These five states impose no statewide sales tax:
- Oregon — 0% statewide; no local sales tax either
- Montana — 0% statewide; some resort areas levy local taxes
- New Hampshire — 0% statewide; no general sales tax, though meals/rooms are taxed separately
- Delaware — 0% statewide; no local sales tax
- Alaska — 0% statewide; local taxes up to 7.5% apply
Oregon consistently attracts search attention from global merchants — and for good reason. With zero statewide and zero local sales tax, it remains the cleanest entry point for testing U.S. sales without immediate compliance overhead.
2026 Sales Tax Rates by State: Key Reference
The list below covers combined average rates (state + average local) for the 45 states that do levy sales tax, along with their economic nexus thresholds. Rates are sourced from the Tax Foundation's 2025 State & Local Sales Tax Rates report and updated for known 2026 legislative changes.
- Alabama — State: 4.00% | Combined: 9.29% | Nexus: $250,000
- Arizona — State: 5.60% | Combined: 8.37% | Nexus: $100,000
- Arkansas — State: 6.50% | Combined: 9.47% | Nexus: $100,000 / 200 transactions
- California — State: 7.25% | Combined: 8.85% | Nexus: $500,000
- Colorado — State: 2.90% | Combined: 8.00% | Nexus: $100,000
- Connecticut — State: 6.35% | Combined: 6.35% | Nexus: $100,000 / 200 transactions
- Florida — State: 6.00% | Combined: 7.02% | Nexus: $100,000
- Georgia — State: 4.00% | Combined: 7.39% | Nexus: $100,000 / 200 transactions
- Idaho — State: 6.00% | Combined: 6.03% | Nexus: $100,000 / 200 transactions
- Illinois — State: 6.25% | Combined: 8.86% | Nexus: $100,000 / 200 transactions
- Indiana — State: 7.00% | Combined: 7.00% | Nexus: $100,000 / 200 transactions
- Iowa — State: 6.00% | Combined: 6.94% | Nexus: $100,000
- Kansas — State: 6.50% | Combined: 8.71% | Nexus: $100,000
- Kentucky — State: 6.00% | Combined: 6.00% | Nexus: $100,000 / 200 transactions
- Louisiana — State: 4.45% | Combined: 9.56% | Nexus: $100,000 / 200 transactions
- Maine — State: 5.50% | Combined: 5.50% | Nexus: $100,000 / 200 transactions
- Maryland — State: 6.00% | Combined: 6.00% | Nexus: $100,000 / 200 transactions
- Massachusetts — State: 6.25% | Combined: 6.25% | Nexus: $100,000
- Michigan — State: 6.00% | Combined: 6.00% | Nexus: $100,000 / 200 transactions
- Minnesota — State: 6.875% | Combined: 7.49% | Nexus: $100,000 / 200 transactions
- Mississippi — State: 7.00% | Combined: 7.07% | Nexus: $250,000
- Missouri — State: 4.225% | Combined: 8.33% | Nexus: $100,000 / 200 transactions
- Nebraska — State: 5.50% | Combined: 6.97% | Nexus: $100,000 / 200 transactions
- Nevada — State: 6.85% | Combined: 8.27% | Nexus: $100,000 / 200 transactions
- New Jersey — State: 6.625% | Combined: 6.60% | Nexus: $100,000 / 200 transactions
- New Mexico — State: 5.00% | Combined: 7.62% | Nexus: $100,000 / 200 transactions
- New York — State: 4.00% | Combined: 8.52% | Nexus: $500,000 / 100 transactions
- North Carolina — State: 4.75% | Combined: 7.00% | Nexus: $100,000 / 200 transactions
- North Dakota — State: 5.00% | Combined: 6.97% | Nexus: $100,000 / 200 transactions
- Ohio — State: 5.75% | Combined: 7.24% | Nexus: $100,000 / 200 transactions
- Oklahoma — State: 4.50% | Combined: 8.99% | Nexus: $100,000 / 200 transactions
- Pennsylvania — State: 6.00% | Combined: 6.34% | Nexus: $100,000 / 200 transactions
- Rhode Island — State: 7.00% | Combined: 7.00% | Nexus: $100,000 / 200 transactions
- South Carolina — State: 6.00% | Combined: 7.50% | Nexus: $100,000 / 200 transactions
- South Dakota — State: 4.20% | Combined: 6.11% | Nexus: $100,000
- Tennessee — State: 7.00% | Combined: 9.55% | Nexus: $100,000 / 200 transactions
- Texas — State: 6.25% | Combined: 8.19% | Nexus: $500,000
- Utah — State: 4.85% | Combined: 7.19% | Nexus: $100,000 / 200 transactions
- Vermont — State: 6.00% | Combined: 6.36% | Nexus: $100,000 / 200 transactions
- Virginia — State: 4.30% | Combined: 5.75% | Nexus: $100,000 / 200 transactions
- Washington — State: 6.50% | Combined: 9.38% | Nexus: $100,000 / 200 transactions
- West Virginia — State: 6.00% | Combined: 6.55% | Nexus: $100,000 / 200 transactions
- Wisconsin — State: 5.00% | Combined: 5.43% | Nexus: $100,000 / 200 transactions
- Wyoming — State: 4.00% | Combined: 5.44% | Nexus: $100,000 / 200 transactions
Source: Tax Foundation, State & Local Sales Tax Rates 2025; nexus thresholds verified against state revenue department guidance, January 2026.
Note for global sellers: California, New York, and Texas use a $500,000 threshold — significantly higher than the standard $100,000. This matters for smaller cross-border merchants who may assume they're automatically exposed everywhere.
What Global Merchants Must Understand About Economic Nexus
Economic nexus is the trigger that determines whether you must collect and remit sales tax in a given state. For international businesses — whether you're a UK SaaS provider, an EU eCommerce brand, or an Australian marketplace seller — physical presence is no longer the deciding factor.
You can create nexus by:
- Exceeding a state's revenue threshold (most commonly $100,000 in annual sales to that state)
- Exceeding a transaction count threshold (typically 200 transactions)
- Using a U.S. fulfilment centre (including Amazon FBA warehouses)
- Employing remote workers or contractors in a state
Amazon FBA sellers are particularly exposed. Storing inventory in Amazon's U.S. warehouses creates physical nexus in every state where Amazon holds your stock — regardless of your revenue level. This is a common surprise for UK and EU marketplace sellers entering the U.S.
For a deeper look at how this applies to platform-based selling, see our marketplace sellers tax compliance guide.
2026 Legislative Changes Global Sellers Should Know
Several states have updated their rules heading into 2026. Here are the most relevant changes for cross-border merchants:
South Dakota reduced its statewide rate from 4.5% to 4.2% effective 1 July 2025 (Source: South Dakota Legislature, 2024), making it one of the few states to cut rates in recent years.
Colorado continues to enforce its Retail Delivery Fee — currently $0.29 per delivery — on all taxable goods delivered by motor vehicle to Colorado addresses. This applies to international sellers shipping direct-to-consumer into the state.
Minnesota expanded its digital goods and SaaS taxability rules in 2025, capturing a broader range of software-as-a-service products. UK SaaS providers with U.S. customers should review their Minnesota exposure specifically.
Louisiana completed its sales tax restructuring in 2025, consolidating local tax administration. The state rate moved to 4.45%, but combined rates remain among the highest in the country at approximately 9.56% (Source: Tax Foundation, 2025).
How to Determine Your Sales Tax Obligations: Step-by-Step
If you're a UK-based or international business selling into the U.S., follow this process before your next filing period:
- Map your U.S. revenue by state. Pull 12 months of transaction data segmented by ship-to state. Your eCommerce platform or accounting tool can usually generate this.
- Check each state's nexus threshold. Compare your per-state revenue and transaction count against the thresholds above. Flag any state where you're at or above the limit.
- Identify physical nexus triggers. Confirm whether you use U.S. warehouses, FBA fulfilment, or have any U.S.-based staff or contractors.
- Register in triggered states. Once nexus is established, you must register with that state's revenue department before collecting tax. Selling without registration is non-compliant.
- Configure tax calculation. Integrate your sales platform with a tax engine that applies the correct combined rate (state + county + city) to each transaction. A flat state rate is rarely sufficient.
- File and remit on schedule. Filing frequencies vary — monthly, quarterly, or annually — based on your sales volume in each state. Missing a deadline triggers penalties and interest.
- Monitor for new nexus. As your U.S. revenue grows, you may cross thresholds in additional states. Set quarterly nexus reviews as a standing process.
For businesses that prefer expert management over DIY compliance, explore how Yonda's eCommerce sales tax solution handles nexus monitoring, registration, and filing across all 50 states.
Local Sales Tax: The Layer Most Guides Miss
State rates are only part of the picture. Most states allow counties and cities to levy additional local sales tax on top of the state rate. This is why the combined rate matters more than the state rate alone.
Some notable combined rates for cities that global merchants frequently ship into:
- Minneapolis, MN — approximately 8.025% combined
- Tacoma, WA — approximately 10.4% combined
- Orlando, FL — approximately 6.5% combined
- Scottsdale, AZ — approximately 8.05% combined
- Bellevue, WA — approximately 10.2% combined
- Colorado Springs, CO — approximately 8.2% combined
Washington state is particularly notable — cities like Tacoma and Bellevue carry combined rates well above the state's 6.5% base, due to county and transit authority levies. Sellers using a flat state rate for Washington will consistently under-collect.
Use our sales tax rate calculator to look up the exact combined rate for any U.S. zip code before your next shipment.
Digital Products and SaaS: A Separate Complexity
If you sell software, digital downloads, or SaaS subscriptions into the U.S., taxability rules vary dramatically by state. Some states tax digital products at the full rate; others exempt them entirely; others apply partial rules based on whether the product is "delivered electronically."
States that currently tax most digital products include: Tennessee, Washington, Minnesota, and Pennsylvania. States that largely exempt digital goods include: California, Florida (for most SaaS), and New Jersey.
This is an area of active legislative change in 2025–2026, particularly as more states seek to capture revenue from the growing digital economy. Our guide to digital products tax compliance covers current taxability rules by state for SaaS and digital goods sellers.
Managing U.S. Sales Tax Without a U.S. Entity
A common misconception among UK and EU merchants: you do not need a U.S. legal entity to have a U.S. sales tax obligation. Economic nexus applies to foreign businesses selling to U.S. consumers, regardless of where the seller is incorporated.
This means a UK-registered eCommerce brand shipping direct from a UK warehouse to U.S. customers can still trigger nexus in California, Texas, or New York if revenue thresholds are crossed. The obligation to register, collect, and remit falls on the seller — not the marketplace or platform (unless it qualifies as a Marketplace Facilitator, which Amazon, eBay, and Etsy typically do).
General information notice: This article provides general guidance on U.S. sales tax rules and is not tax advice. Rules change frequently and vary by jurisdiction. Consult a qualified tax professional for advice specific to your business.
Ready to get your U.S. sales tax compliance under control? Contact the Yonda Tax team to discuss nexus monitoring, multi-state registration, and managed filing services tailored for international businesses.
FAQ
What is the highest sales tax rate in the U.S. by state?
Louisiana has the highest average combined sales tax rate in the U.S. at approximately 9.56% when state and local taxes are combined (Source: Tax Foundation, 2025). Tennessee is a close second at around 9.55%.
Which states have no sales tax in 2026?
Five states have no statewide sales tax: Oregon, Montana, New Hampshire, Delaware, and Alaska. Note that Alaska allows local municipalities to impose their own sales taxes, so buyers in some Alaskan cities may still pay local tax.
Do international sellers need to collect U.S. sales tax?
Yes. Following the South Dakota v. Wayfair (2018) ruling, economic nexus rules apply to all sellers — including international businesses — that meet a state's revenue or transaction threshold. Physical presence in the U.S. is not required to trigger an obligation.
What is economic nexus and how does it affect global merchants?
Economic nexus is a threshold-based rule that requires sellers to collect and remit sales tax in a state once they exceed a set level of sales (typically $100,000) or transactions (typically 200) in that state within a 12-month period. It applies to foreign sellers shipping goods or delivering digital services to U.S. customers.
How often do U.S. sales tax rates change?
State and local sales tax rates change frequently — often multiple times per year. The Tax Foundation publishes updated rate surveys annually, and individual states may adjust rates mid-year through legislative action. Global merchants should review their rate configurations at least quarterly.