Is Shipping and Handling Taxable?
Taxes and regulations vary by state and unfortunately there is no universal rule. We’ve created a list to be of guidance for you to get started on how to handle tax on shipping. Some states say yes and others say no. Below, there are two lists, one of the states where shipping is taxable and the other of where it is not (and special circumstances).
Assumptions In Mind:
- You sell your products online and are not a traditional brick and mortar storefront
- The items you sell are being delivered by UPS, Fedex, USPS etc.
- The items you are shipping are taxable items shipped to customers within your state (Ex: You live in Virginia and are shipping the item to a customer also located in Virginia)
Note** In general, when selling an item to a customer located out of state, you are not required to charge or collect taxes on the item (shipping, sales tax etc). However, if you have a nexus within the state of which your customer is located, you may be required to charge and collect taxes. You very likely have a nexus if you have a physical presence in a state or locality.
States Where Shipping IS Taxable
The States listed below require that you charge tax on shipping and handling. You should charge the tax regardless of whether shipping is combined into the price of the item you are selling or whether it is listed separately from the price of the item you are selling.
- District of Columbia
- New Jersey
- New Mexico
- New York
- North Carolina
- North Dakota
- Rhode Island
- South Carolina
- South Dakota
- West Virginia
- Where it is taxable
States Where Shipping IS NOT Taxable (As long as it is stated separately)
These states require that you charge tax on shipping if the shipping and handling charges are not listed separately from the price of the item (some states have more distinctive rules and are notated *). If the shipping and handling charges are stated separately from the price of the item, it is not required to collect tax on the shipping portion.
*In Florida, shipping may not be taxable depending on the condition
**Illinois has one of the most complex set of rules for shipping and handling taxes in the USA.
***In Virginia and Maryland if the shipping and handling are combined then the total of shipping and handling is taxable. In this case it is taxable regardless of whether or not the charges are listed separately from the price of the item.
Learn more about eCommerce Sales Tax! Here is a fantastic guide outlining sales tax for eCommerce recommended for businesses. https://www.bigcommerce.com/blog/ecommerce-sales-tax/
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