How vat / sales tax works in United States
The United States does not operate a federal value-added tax, so the national VAT headline is 0%. Consumption tax lives at state and local level, where most states levy a retail sales tax on goods and many services.
State base rates run from 0% in states such as Oregon, New Hampshire, Montana, Delaware, and Alaska to 7.25% in California, and cities and counties can stack their own levies on top, pushing combined rates near or above 10% in some metro areas.
Remote sellers face economic-nexus thresholds in most states, so an online store with enough sales or transactions in a state must register, collect, and remit that state's tax even with no office there.
Tax rates at a glance
- Federal VAT
- 0%
- State base sales tax
- 0% - 7.25%
- Combined state and local
- 0% to ~10%
- States with no statewide tax
- 5
- Typical nexus threshold
- USD 100,000
Who benefits most
These profiles tend to benefit most when the rules match their real residence, payroll and business setup.
E-commerce sellersFoundersExpatsRemote workersCross-border shoppers
Watch out for
- There is no single US sales tax rate to quote on a checkout page: the correct rate depends on the ship-to address, product taxability, and sometimes the seller's nexus footprint.
- Groceries, clothing, digital goods, and SaaS are taxed in some states and exempt in others, so a catalog that is tax free in one state can be fully taxable one border over.
- Marketplace facilitator laws mean platforms often collect on a seller's behalf, but sellers still need registration and filing positions where they have direct nexus.
- Use tax mirrors sales tax for out-of-state purchases, so businesses buying equipment across state lines cannot assume the invoice price is the final tax cost.
Frequently asked questions
Does the United States have VAT?
No. The US has no federal value-added tax, so the federal VAT headline is 0%. Consumption tax is collected through state and local retail sales taxes instead.
What is the US sales tax rate?
There is no single rate. State base rates range from 0% to 7.25%, and local add-ons can push combined rates near 10% in some cities, so the rate depends on the exact delivery address.
Do online sellers have to collect sales tax in every state?
Only where they have nexus, usually from exceeding a sales or transaction threshold such as USD 100,000 in that state. Registration, collection, and filing duties then follow that state's rules.