Origin vs Destination Sales Tax
Origin State: Pays tax based on where the order was placed. Sales tax should be charged based on the address of the business. Destination State: Pays tax based on where the buyer takes possession of the product. This means sales tax should generally be charged based on the shipping address. This location is also considered the point of sale.
Origin States
- Arizona
- California*
- Illinois
- Mississippi
- Ohio
- Pennsylvania
- Tennessee
- Texas
- Utah
- Virginia
In California, county and city taxes are origin based, but district taxes are destination based.
Destination States
- Alabama
- Arkansas
- Colorado
- Connecticut
- District of Columbia
- Florida
- Georgia
- Hawaii
- Idaho
- Indiana
- Iowa
- Kansas
- Kentucky
- Louisiana
- Maine
- Maryland
- Massachussetts
- Michigan
- Minnesota
- Nebraska
- Nevada
- New Jersey
- New Mexico
- New York
- North Carolina
- North Dakota
- Oklahoma
- Rhode Island
- South Carolina
- South Dakota
- Vermont
- Washington
- West Viriginia
- Wisconsin
- Wyoming
Some states may tax your business differently if your business is not based in that state.
Sources
- taxjar.com
- Should you use billing address or shipping address when calculating sales tax?; Jennifer Dunn; May 9, 2016.
- Do sales made through a marketplace facilitator count towards my nexus threshold?; Lee Breslouer; Nov 1, 2021.
- South Dakota v. Wayfair case
- extension.okstate.edu
- E-Commerce and Sales Taxes: What You Collect Depends on Where You Ship; Brian Whitacre, Shannon Ferrell, J.C. Hobbs; Mar. 2017