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Is Shipping Taxable?


sales tax and shipping

Frequently Asked Question: Are shipping charges taxable?

Answer: It depends.

Like almost everything else in sales tax, the laws around taxability of shipping charges you pass along to your customers is not universal. Some states say it’s taxable. Others say it’s not. Imagine how much easier sales tax would be if the states worked together?

This post is for online sellers who need some guidance on how each state handles shipping charges. Sort through the list below to find your state as well as other states in which you have sales tax nexus.

Here are some important assumptions to keep in mind as you use this list:

  • You’re an eCommerce seller, not a traditional brick-and-mortar merchant
  • You’re delivering items to your customers via common carrier (USPS, etc)
  • You’re not delivering items yourself using your own vehicle. States may have entirely different rules for that scenario.
  • You’re shipping taxable items to customers within your state. For example, you live in Georgia and are shipping a taxable item to a customer in Georgia.
  • If you have more specific scenarios not covered by these assumptions, you’re best option is to talk to a representative in your state.

Shipping is Taxable
The following states say if you charge for shipping as part of an order then it’s taxable. It doesn’t matter if the shipping charge is part of the price of the item or if it’s listed separately from the price of the item.

  • Arkansas
  • Connecticut
  • District of Columbia
  • Florida (Shipping may not be taxable if it meets certain criteria. See more in Florida Sales Tax for Online Sellers)
  • Georgia
  • Hawaii
  • Indiana
  • Kansas
  • Kentucky
  • Michigan
  • Minnesota
  • Mississippi
  • Nebraska
  • New Jersey
  • New Mexico
  • New York
  • North Carolina
  • North Dakota
  • Ohio
  • Pennsylvania
  • South Carolina
  • South Dakota
  • Tennessee
  • Texas
  • Vermont
  • Washington
  • West Virginia
  • Wyoming

Shipping is Not Taxable if Separately Stated
These states say shipping charges are not taxable if you show the charge separately from the selling price of the item. They are taxable if you include the charge as part of the price of the item.

Feedback? Comments? Share them with us in the discussion group below or on our Facebook group dedicated to sales tax.




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    • PSand

      Actually, in Illinois, you are required to charge tax on shipping. See Illinois Wal-Mart case, Nov 21, 2008 (Nancy Kean v. Wal-Mart Stores, Inc.) No. 1-07-1341.

      • http://www.brand5.com Mark Faggiano

        The state of Illinois will say otherwise. According to their website (and the folks employed on the Department of Revenue) shipping is only taxable if it’s included in the price of the item. They state very specifically that shipping is not taxable if it is separately states on the bill or invoice.

        • PSand

          I understand that, but we are currently undergoing an audit, and the Wal-mart case is very specific, and is being referenced by the auditor. Imagine our surprise when we found out that IDOR’s guidance is wrong and is not what is used by their auditors! Paraphrasing the judge in the Wal-mart case – “It doesn’t matter if IDOR says shipping is not taxable. Shipping is taxable.” I will email the case to you if I can locate your email address.

          • http://www.brand5.com Mark Faggiano

            I even called the state again and they still say it’s not taxable if separately stated.

            Thanks for the info, PSand. Scary stuff when the state says one thing and the auditor the exact opposite.

            • uggh

              we are being sued for said case and we are forced to pay and change our sites to charge sales tax on shipping – you see whislteblower law nets IL 70% of the money received – so why should they make a decision.

            • http://www.brand5.com Mark Faggiano

              So the state told you that shipping IS taxble in Illinois as well?

            • uggh

              Nope -the state is being quiet on it – problem is IL supreme court judge says charge tax – IDOR has no clear decision – the courts will side with the legal case so bussinesses cannot win if pushed to trial -

            • Jennifer Dunn @ TaxJar

              Hi there, We investigated this one further and put up a blog post about it. Here it is: http://blog.taxjar.com/sales-tax-on-shipping-illinois/ Please share with your Illinois eCommerce seller colleagues and ask them to comment if they’ve found anything different. Thanks!

    • Joyce

      My company was audited by the Illinois around two years ago. We do not collect sales tax on shipping. We had no issue with shipping, it was not taxable. The audit went smoothly, we owed no money. In fact we got a refund!!!
      Best audit ever…the worst was the state of California.

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