Updated June 17, 2026
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Since the 2018 South Dakota v. Wayfair ruling, most states can require online retailers to collect sales tax without having a physical presence in the state. Large platforms, Amazon, Walmart, eBay, collect tax on nearly every sale. Smaller independent sellers may still not collect. When they do not, the obligation shifts to buyers in the form of use tax.
What the Wayfair ruling changed
Before 2018, sellers only had to collect sales tax in states where they had a physical presence, which let many online-only retailers avoid collecting it almost entirely. The Wayfair case established that economic activity alone, typically $100,000 in sales or 200 transactions in a state per year, creates nexus. All 45 states with a sales tax now enforce economic nexus to some degree.
Digital goods and services
Sales tax on digital products, streaming services, software downloads, and cloud subscriptions varies widely by state. Some states tax them fully, some partially, others not at all. Check your state's rules for the specific product type before assuming.
How tax is calculated at online checkout
The rate applied at checkout is based on your shipping address, reflecting the combined state, county, and city rates for that delivery location. On the same $100 order, a buyer in a Dallas suburb might pay 8.25% while a buyer in Houston pays the same Texas state rate but a different city rate.
When online sellers may not collect tax
Sellers who have not crossed the economic nexus threshold in a state are not required to collect there. This applies to small specialty retailers, independent artists, and newer businesses that have not yet hit the threshold. If you buy from one of them and your state has a sales tax, you technically owe use tax on that purchase.
Marketplace facilitator laws
Most states require marketplace platforms such as Amazon, Etsy, and eBay to collect and remit tax on behalf of the third-party sellers on their platform. Even if an individual seller would not independently have nexus, sales through those platforms are typically taxed at checkout.
See what a checkout should charge
Enter a delivery ZIP code and an order total to check the average combined rate a retailer should apply.