Which States Charge Sales Tax on Freight?
Freight is taxable in West Virginia, Washington, Vermont, Texas, Tennessee, South Dakota, South Carolina, Rhode Island, Pennsylvania and Ohio. It is also taxable in New York, New Mexico, New Jersey, Nebraska, North Dakota, North Carolina, Mississippi, Minnesota, Michigan and Kentucky. Other states include Hawaii, Indiana, Connecticut, Georgia and Arkansas.
For the states listed above, shipping is considered taxable as long as it is listed in connection with an order. This includes instances where the shipping cost is included separately from the price of the item as well as instances where it is included as part of the cost. The freight rules largely apply to eCommerce sellers who intend on shipping orders using a common shipping carrier to a customer within the state lines.
The rules for freight shipping vary slightly with other states. In some states, freight charges are not taxable as long as they are listed separately from the selling cost of the item. States that adopt this taxing system include Virginia, Utah, Rhode Island, Oklahoma, Nevada and Missouri. Other states with a similar tax-exemption rule include Massachusetts, Maryland, Maine, Louisiana, Iowa, Idaho, Colorado, California, Arizona and Alabama. An important point worth noting is that in most states, freight taxes are exempted for non-taxable goods.