Online Sales Tax, Explained: Why Every Cart Charges It Now
By Mo Basha · Updated September 15, 2026
For two decades, "buy it online" quietly meant "skip the sales tax." That ended with the Supreme Court's 2018 Wayfair v. South Dakota decision, which let states tax remote sellers with no physical presence. Today, virtually every major retailer and marketplace collects sales tax on delivery to the 45 states (plus D.C.) that levy one.
The rate that applies is your doorstep's
Online sales tax is destination-based: the combined state + local rate of your delivery address, not the seller's location. Ship the same laptop to Portland, Oregon and pay zero; to Seattle and pay about 10.35%; to a Louisiana parish and pay north of 10%. That's also why your cart's tax estimate sometimes changes after you enter your ZIP — the checkout is resolving your exact district rates.
What small sellers need to know
States can only require collection from sellers above economic nexus thresholds — commonly $100,000 in annual sales into the state (many states have dropped the older 200-transaction test). Below the threshold, you don't collect for that state. Two big simplifiers: marketplace facilitator laws make Amazon, Etsy and eBay collect on sellers' behalf for marketplace orders, and automated services handle rate lookup and filing for direct sales. The trap is growth: crossing a state's threshold mid-year creates an obligation many sellers discover late — registering promptly is far cheaper than back-taxes.
The edge cases shoppers hit
Shipping charges are taxable in some states and exempt (when separately stated) in others. Digital goods and streaming are taxed in a growing list of states. Groceries and clothing exemptions apply online exactly as in-store (New York's under-$110 clothing exemption works in your cart too). And technically, buying untaxed and owing "use tax" to your home state has always been the law — Wayfair simply moved collection to the checkout so the honor system stopped being load-bearing.
Do the math yourself
Written by Mo Basha
Mo runs payroll, sales-tax compliance and e-commerce operations for several businesses, and builds DollarCalcs to make that math free for everyone. Every figure in this article is computed with the same engines that power the calculators, using current-year IRS and state data. More about how we work →
Frequently asked questions
+Why does the same item's tax change with my address?
Because the applicable rate is your delivery address's combined state + local rate, resolved to your exact taxing districts. Two addresses in the same city can genuinely differ if one sits in a special district.
+Which states charge no sales tax on online orders?
Delaware, Montana, New Hampshire and Oregon have no sales tax at all. Alaska has no state rate but allows local taxes, which some boroughs apply to remote sales.
+Do I owe tax if the seller doesn't collect it?
Formally, yes — that's use tax, reported on many state income tax returns. Compliance among individuals is famously low, which is precisely why states pushed for Wayfair-era collection at checkout.