If you are a small business owner who sells online to customers in the US or have an ecommerce store and sell to customers in the US, you may need to register for a sales tax permit in some or all of the states where you have sales tax nexus.
A sales tax permit is a document that authorizes you to collect and remit sales tax on taxable sales of products and services, as required by law. Depending on the state, it may also be called a retail license, sales tax license, seller permit, seller’s permit, or vendor’s license.
The Cost of Registering for Sales Tax Permit in Each State in the US
In some states, such as Arizona, Hawaii, and New Mexico, the tax is imposed on the seller rather than the buyer, and the permit may have a different name, such as a transaction privilege tax (TPT) license, a general excise tax (GET) license, or a gross receipts tax (GRT) identification number.
In this blog post, we will provide you with a summary of the cost and the requirements of getting a sales tax permit in each state in the US in 2024, as well as the links to the relevant websites and forms where you can apply for the permit.
States that charge a fee for a sales tax permit in the US in 2024
Some states charge a fee for registering for a sales tax permit, which may vary depending on the type and location of your business. Here are the states that charge a fee for a sales tax permit in 2024, along with the amount, the requirements, and the source of the information:
Arizona: $12 per location. Individual cities have additional fees ranging from $1 to $50. You need to have a federal tax ID number, a business name and address, and a NAICS code. You also need to estimate your monthly taxable sales and use tax liability. Source: AZ Taxes
Arkansas: $50. You need to have a federal tax ID number, a business name and address, and a NAICS code. You also need to provide information about your business structure, ownership, and activities. Source: Arkansas Taxpayer Access Point
California: $0. However, you may need to pay a security deposit based on your estimated monthly tax liability. You need to have a federal tax ID number, a business name and address, and a NAICS code. You also need to provide information about your business structure, ownership, and activities. Source: Tax and Fee Administration
Colorado: $4 – $16 plus a $50 deposit. You need to have a federal tax ID number, a business name and address, and a NAICS code. You also need to provide information about your business structure, ownership, and activities. Source: MyBizColorado
Connecticut: $100. You need to have a federal tax ID number, a business name and address, and a NAICS code. You also need to provide information about your business structure, ownership, and activities. Source: Department of Revenue Services
Florida: $5 by mail, or free if completed online. You need to have a federal tax ID number, a business name and address, and a NAICS code. You also need to provide information about your business structure, ownership, and activities. Source: Department of Revenue
Indiana: $25. You need to have a federal tax ID number, a business name and address, and a NAICS code. You also need to provide information about your business structure, ownership, and activities. Source: InBiz
Nevada: $15 for each in-state location. Out-of-state sellers pay the minimum of $15. You need to have a federal tax ID number, a business name and address, and a NAICS code. You also need to provide information about your business structure, ownership, and activities. Source: [NevadaTax]
Rhode Island: $10. You need to have a federal tax ID number, a business name and address, and a NAICS code. You also need to provide information about your business structure, ownership, and activities.
South Carolina: $50. You need to have a federal tax ID number, a business name and address, and a NAICS code. You also need to provide information about your business structure, ownership, and activities.
Washington: $90. However, you may qualify for a waiver or a reduced fee if you meet certain criteria. You need to have a federal tax ID number, a business name and address, and a NAICS code. You also need to provide information about your business structure, ownership, and activities.
West Virginia: $30. You need to have a federal tax ID number, a business name and address, and a NAICS code. You also need to provide information about your business structure, ownership, and activities.
How much does each state sales tax permit cost in the US in 2024
| State | Fee | Requirements | Source |
|---|---|---|---|
| Arizona | $12 per location. Additional fees for cities ($1 to $50) | Federal tax ID, business name and address, NAICS code, estimate monthly sales and use tax liability | AZ Taxes |
| Arkansas | $50 | Federal tax ID, business name and address, NAICS code, business structure, ownership, and activities | Arkansas Taxpayer Access Point |
| California | $0 (may require a security deposit based on estimated monthly tax liability) | Federal tax ID, business name and address, NAICS code, business structure, ownership, and activities | Tax and Fee Administration |
| Colorado | $4 – $16 plus a $50 deposit | Federal tax ID, business name and address, NAICS code, business structure, ownership, and activities | MyBizColorado |
| Connecticut | $100 | Federal tax ID, business name and address, NAICS code, business structure, ownership, and activities | Department of Revenue Services |
| Florida | $5 by mail, free if completed online | Federal tax ID, business name and address, NAICS code, business structure, ownership, and activities | Department of Revenue |
| Indiana | $25 | Federal tax ID, business name and address, NAICS code, business structure, ownership, and activities | InBiz |
| Nevada | $15 per in-state location. Out-of-state sellers pay minimum $15 | Federal tax ID, business name and address, NAICS code, business structure, ownership, and activities | NevadaTax |
| Rhode Island | $10 | Federal tax ID, business name and address, NAICS code, business structure, ownership, and activities | Not specified |
| South Carolina | $50 | Federal tax ID, business name and address, NAICS code, business structure, ownership, and activities | Not specified |
| Washington | $90 (may qualify for a waiver or reduced fee) | Federal tax ID, business name and address, NAICS code, business structure, ownership, and activities | Not specified |
| West Virginia | $30 | Federal tax ID, business name and address, NAICS code, business structure, ownership, and activities | Not specified |
States that do not charge a fee for a sales tax permit in the US
The majority of the states do not charge a fee for registering for a sales tax permit. However, some states may require you to post a bond or pay a deposit based on your estimated tax liability. Here are the states that do not charge a fee for a sales tax permit in 2024, along with the links to the relevant websites and forms where you can apply for the permit:
- Alabama
- Georgia
- Hawaii
- Idaho
- Illinois
- Iowa
- Kansas
- Kentucky
- Louisiana
- Maine
- Maryland
- Massachusetts
- Michigan
- Minnesota
- Mississippi
- Missouri
- Nebraska
- New Jersey
- New Mexico
- New York
- North Carolina
- North Dakota
- Ohio
- Oklahoma
- Pennsylvania
- South Dakota
- Tennessee
- Texas
- Utah
- Vermont
- Virginia
- Wisconsin
- Wyoming
States that do not have a sales tax
There are five states that do not have a statewide sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon. However, some local jurisdictions in Alaska and Montana may impose a local sales tax, and you may need to register with them if you make sales in those areas. Here are the links to the websites where you can find more information about the local sales tax requirements in these states:
- Alaska
- Delaware: No sales tax
- Montana
- New Hampshire: No sales tax
- Oregon: No sales tax
What is a sales tax permit
A sales tax permit is a document that allows a business to make retail sales subject to sales tax and collect the tax from customers. Other names for “sales tax permit” are retail license, sales tax license, sales and use tax permit, seller permit, seller’s permit, or vendor’s license.
In most states, businesses are intermediaries that collect sales and use tax for the state. In a few states, the tax is levied on the business itself, which can transfer it to the customer. For example:
- Arizona has a transaction privilege tax (TPT) license
- Hawaii has a general excise tax (GET) license
- New Mexico requires businesses that sell taxable tangible personal property in the state to register and get a New Mexico Business Tax Identification Number for gross receipts tax (GRT)
There is no sales tax at the state level in Alaska, Delaware, New Hampshire, Montana, or Oregon. However, some localities in Alaska, such as Ketchikan, impose a local sales and use tax and mandate certain businesses to register for sales tax.
Businesses usually need one or more state or local business licenses. The exact requirements depend on the location and type of your business.
Who needs a sales tax permit
You need a seller permit in states where you have nexus, which is a connection with a state that is strong enough to create a sales tax obligation. There are several ways for a businesses to create nexus with a state:
- Economic activity in the state (e.g., $100,000 in sales or 200 transactions in the state in the current or previous calendar year)
- Physical presence in the state (e.g., employees, inventory, real property)
- Referrals from entities in the state
- Relationships with affiliates in the state
States can ask a business to register as soon as it has nexus, so it’s crucial to monitor your nexus in the states where you sell.
Some states may ask you to obtain a temporary or occasional sales tax permit if you make occasional or temporary sales in the state. For instance, you don’t need a sales tax permit if you sell only one or two taxable items in a 12-month period in Texas, but you need a Texas sales tax permit if you sell three or more taxable tangible personal property items in the state in a 12-month period. In Arizona, you need to register for TPT if you intend to rent out your property during the 2023 Super Bowl (and only for the 2023 Super Bowl).
Nexus can persist longer than you expect, so make sure you no longer have nexus with a state before letting your sales tax permit expire.
Do online businesses need a seller’s permit
Like physical businesses, online businesses must get a seller’s permit and follow all relevant sales and use tax rules in states where they have nexus. Since nexus can be created through affiliates (affiliate nexus), sales or transaction volume (economic nexus), or referrals (click-through nexus), you can have nexus in states where you have no physical presence.
However, some states offer an exemption for out-of-state, online businesses that only sell via a registered marketplace facilitator.
Do marketplace sellers need a sales tax permit
All states that impose a general, statewide sales tax now mandate marketplace facilitators that have nexus to register for a seller’s permit and collect and remit sales tax for third-party (marketplace) sellers.
Registration rules for marketplace sellers differ depending on the state and the situation. In Iowa, for example:
- An in-state marketplace seller must register for a sales tax permit even if it only sells through a registered marketplace that takes care of sales tax
- A remote marketplace seller does not need to register for a sales tax permit or file returns with the Iowa Department of Revenue if it only sells through a registered marketplace that handles sales tax
- A remote marketplace seller needs to register for a sales tax permit and file returns if it also makes direct sales to Iowa and has nexus with the state
How do you get a sales tax permit
Getting a seller permit is easier in some states than others, but every state tries to make the process as simple and smooth as possible. Often, the main challenge is finding the information you need on the department of revenue website.
Most states now prefer businesses to register for a seller’s permit online; it’s usually the fastest option. Registering by mail or in person is generally possible but often discouraged.
You normally need to provide a lot of information when registering for a sales tax permit, such as:
- The name and address of your business, and a description of the business
- The name and address of each business owner
- Your Federal Employer Identification Number (EIN) and Tax ID number
- Your social security number
- Your banking information
- The North American Industry Classification System (NAICS) codes for products you sell
- An estimate of your yearly sales in the state
It can take up to four weeks to get your sales tax permit after you finish your registration, so plan ahead.
Businesses with a physical presence in the state must display their sales tax permit in a visible place. Different requirements may apply for remote sellers.
Do I need to renew my sales tax permit
Sales tax permits in some states (e.g., California and Texas) are valid for as long as you run your business. In other states (e.g., Connecticut and Pennsylvania), sales tax permits expire and need to be renewed. See our state-specific sales tax permit information, below, for more details.
What’s the difference between a sales tax permit and a resale certificate
A sales tax permit allows a business to collect and remit sales tax on taxable sales of products and services, as required by law. A seller’s permit is not the same as a resale certificate.
A resale certificate enables a business to buy taxable goods tax-free if they intend to resell them. The resale certificate avoids double taxation of goods. Sellers that don’t get a resale certificate to verify tax-exempt sales could be liable for the unpaid tax.
Conclusion
We hope this blog post has given you a helpful overview of the cost of getting a sales tax permit in each state in the US in 2024.
If you need any assistance with your sales tax compliance, you can contact us at AtomicTax, a professional service that helps you with sales tax registration, filing, and remittance. We can take care of all your sales tax needs, so you can focus on growing your business. Contact us today for a free consultation and a quote.