Do You Have to Pay State Tax on Amazon?

With the popularity of online buying, inquiries regarding sales tax on e-commerce platforms like Amazon have grown in frequency. The state you reside in and whether Amazon has a physical presence there are two variables that will determine whether you must pay state tax on purchases made on Amazon.com.

The tax rate charged by Amazon varies by state. While some states have a single flat sales tax rate, others have a range of charges based on where the buyer and seller are located. For instance, the sales tax rate in New York ranges from 4% to 8.875% as of 2021, whereas it is 7.25% in California. Which States Tax Amazon Products?

In all states with a statewide sales tax as of 2021, as well as certain jurisdictions with municipal sales taxes, Amazon will begin to collect sales tax. Only Alaska, Delaware, Montana, New Hampshire, and Oregon do not have a statewide sales tax. Local sales taxes can nevertheless be applicable, even in these states. How Can I Avoid Paying Taxes on Amazon?

Try buying things from independent sellers that don’t have a physical presence in your state if you want to avoid paying sales tax on Amazon. However, keep in mind that as more and more states implement legislation mandating internet sellers to collect sales tax, it will become harder to take advantage of this loophole. Why is Amazon now levying tax?

Because it had no physical presence there in the past, Amazon was able to avoid collecting sales tax in numerous states. Nevertheless, as Amazon has expanded and established warehouses and other operations in additional states, it is now liable for paying sales tax in more of those states. Additionally, regardless of whether they have a physical presence in the state or not, several jurisdictions have regulations that mandate internet businesses to collect sales tax.

In conclusion, a number of variables, such as where you live and whether Amazon has a physical presence in your state, will determine whether you must pay state tax on purchases made through Amazon. While buying from third-party vendors may allow one to avoid paying sales tax, it is become more and more difficult to take use of this loophole. Paying state tax on Amazon and other e-commerce websites will soon become the norm rather than the exception as online shopping expands and more states approve legislation forcing online companies to collect sales tax.