Shipping is taxable in some US states and exempt in others. About two dozen states include delivery charges in the total taxable price (assuming the item being shipped is taxable to begin with). Others exempt shipping, but only when the charge is listed as a separate line item on the invoice and reflects the delivery cost.

Below, we’ll explore which states tax shipping outright, which ones exempt it and under what conditions, and how sellers can track taxation rules across states.

Key takeaways

• About half of US states include shipping in the taxable price by default. The other half exempt it, but often under specific conditions.

• In many states, shipping charges have to be separate and priced at the delivery cost to qualify for exemption. Combining them with handling charges can make both taxable.

• In some places, orders that combine taxable and exempt items need to split the shipping charge proportionally, with tax applied only to the portion tied to taxable goods.

Is shipping taxable in the US?

Whether shipping is taxable depends on the state. In some cases, it also depends on how the business writes the invoice. About half of all states include delivery charges in the taxable price (i.e., the price that sales tax applies to) by default.

Which states generally consider shipping exempt from tax?

About half of US states exempt shipping from tax; the other half include it in the taxable price. State tax rules regarding shipping shift periodically, so it’s important to verify each state’s current guidance and specifics for online sellers. Even in a state that taxes shipping, sales tax applies only if the underlying item is taxable; similarly, the shipping charge will likely be exempt on exempt items. Sellers who ship a mix of taxable and exempt products into these states need to track taxability at the item level, not just the order level.

Here’s a rundown of which states tax shipping at the state level and which don’t.

* States without a state-level sales tax

In most cases, certain conditions must be met for shipping fees to be tax-free. For example, states often require the shipping charge to be stated separately on the invoice.

Here are a few examples of other state conditions for exemption:

• California: The seller must ship directly to the buyer via common carrier, contract carrier, or US Mail for shipping fees to be exempt. If the delivery fee is more than the cost to get the goods to the customer, anything the delivery charge adds on top is taxable.

• Florida: Shipping is exempt from sales tax if it’s stated separately on the invoice. Customers must also have the option of arranging alternative pickup, either from a third party or by picking up the goods themselves.

• New York: Any shipping or delivery charge the seller includes on the bill becomes part of the amount that’s subject to sales tax. A customer can arrange and pay separately for delivery of a taxable item by a third party.

How does invoice formatting affect whether shipping is taxable?

Some states tie shipping taxability to invoicing. In many exempt states, the shipping costs must appear as a distinct line item on the invoice, separate from the price of the goods. What the customer sees matters: some states don’t count internal bookkeeping that separates shipping from the item price if the customer’s receipt shows one combined total. Ecommerce platforms that display a single “total” without itemizing shipping can turn an otherwise exempt charge into a taxable one, even if the seller calculated it correctly on the backend.

In some places, the amount shown also has to reflect what shipping really costs since a padded or flat-rate number can undercut the exemption.

Does combining shipping and handling change whether the charge is taxable?

Combining shipping and handling into a single line item on an invoice can make the whole charge taxable, even in a state that would otherwise exempt shipping. Handling covers the labor and materials that go into packing an order and many states treat that labor as a taxable service. As a business owner, if you list a single “shipping and handling” charge on your invoice, you’re combining a nontaxable delivery charge with a taxable service charge. And some states respond by taxing the combined total rather than trying to decipher which part was which.

Mixed shipments complicate this further. When one shipping charge covers both taxable and exempt items, some states that tax shipping require the charge to be allocated proportionally between the two—based on price, weight, or another reasonable method—with tax applied only to the portion tied to taxable goods. If you skip that allocation, some states will default to taxing the entire shipping charge on the assumption that the seller never established a basis for exempting any part of it.

How can online sellers determine whether shipping is taxable in their states?

Many states use destination-based sourcing for remote transactions. That means the customer’s location determines taxability. A business in California that ships to a customer in Ohio and establishes economic nexus there has to apply Ohio’s tax treatment for shipping.

Regardless of sourcing rules, sellers need a way to track several facets at the transaction level: the relevant state’s stance on shipping, whether the invoice separately states the charge, and whether the items in the shipment are themselves taxable. Tracking these manually across dozens of states and thousands of local jurisdictions is difficult since state legislatures revise these rules on their own schedules and local rates can shift, too.

How Stripe Tax can help

Stripe Tax reduces the complexity of tax compliance so you can focus on growing your business. Start collecting taxes globally by adding a single line of code to your existing integration, clicking a button in the Dashboard, or using our powerful application programming interface (API).

Stripe Tax helps you monitor your obligations and alerts you when you exceed a tax registration threshold based on your Stripe transactions. It can also register to collect tax on your behalf in the US, automate US filings in the Dashboard, and manage global filings through trusted partners. Stripe Tax automatically calculates and collects sales tax, value-added tax (VAT), and goods and services tax (GST) on:

• Digital goods and services in all US states and over 100 countries

• Physical goods in all US states and 42 countries

Stripe Tax can help you:

• Understand where to register and collect taxes: See where you need to collect taxes based on your Stripe transactions. After you register, switch on tax collection in a new state or country in seconds. You can start collecting taxes by adding one line of code to your existing integration, or add tax collection with the click of a button in the Stripe Dashboard.

• Register to pay tax: If you need to register for sales tax in the US, let Stripe manage your tax registrations. You’ll benefit from a simplified process that prefills application details—saving you time and simplifying compliance with local regulations. If you need help registering outside of the US, Stripe partners with Taxually to help you register with local tax authorities.

• Automatically collect tax: Stripe Tax calculates and collects the right amount of tax owed, no matter what or where you sell. It supports hundreds of products and services and is up-to-date on tax rules and rate changes.

• Simplify filing: Stripe Tax automates US filings in the Dashboard, powered by TaxJar. For global filings, Stripe Tax seamlessly integrates with filing partners, so your global filings are accurate and timely. Let our partners manage your filings so you can focus on growing your business.

Learn more about Stripe Tax, or get started today.