US sales tax on digital services

States disharmonies on sales tax for digital goods and services

There is no federal-level Sales Tax in the United States. 45 (and District of Columbia) of the 50 US states impose a local Sales Tax, and then there is approximately 13,000 further local cities, counties and municipalities with taxing rights.

Around 30 of the states impose their Sales Taxes on digital or electronic services. See list below. However, the scope and definitions vary hugely. Most of these have brought non-resident providers into the tax net following the 2018 Supreme Court ruling on South Dakota v. Wayfair which opened the right to tax out-of-state sellers and marketplaces. VAT Calc’s global VAT and GST on digital services blog keeps a live update on how countries are imposing indirect taxes on non-resident providers and electronic marketplaces.

Foreign digital service providers

Following the Supreme Court South Dakota vs Wayfair economic nexus ruling in 2018, out-of-state, remote or non-resident providers of goods and services may be liable to state tax collections and remittance obligations. This includes some states that tax digital services. See table below.

US Sales Tax rates and selling thresholds