Is There Sales Tax for Electronics?

When you buy or sell electronics, sales tax usually applies. The exact rules and sales tax rates will vary depending on what state you’re in.

This post is provided for general information only. Please confirm the details and circumstances of your unique situation with your tax accountant or other appropriate advisor before taking action.

Do you pay sales tax on electronics?

If your state has a sales tax, you’re usually going to pay sales tax on electronics.

In most cases, electronics count as physical goods. That’s pretty easy to see when you’re talking about sales tax on electronics like TVs.

Sales tax on software can get more complicated.

What’s the sales tax on software?

The sales tax on software depends on how you buy the software.

Software Bundled with Electronics

Software that comes bundled with electronics, like computers, is usually taxed as part of the computer. You pay sales tax based on the computer’s full purchase price if the computer is subject to sales tax. You don’t split off the value of the software.

Software on a Disk

Most states treat software that comes on a standalone disk as a physical item. You’ll usually pay the standard state sales tax rate on software that comes on a DVD or USB drive.

Downloadable Software

Software downloads often count as a service. That’s because you never receive a physical item.

It’s less common for states to tax services versus physical goods. Some places do tax services, including software.

In some cases, states have even added special sale tax rates for online software and other services.

Web Applications

If you use a web application in your browser instead of on your computer, the sales tax rules may be different yet again.

In many cases, the web app may count as a service. Special sales tax rates could also apply.

What about used electronics?

Many states don’t have a sales tax on used goods. That’s because the original buyer already paid sales tax on the item.

You’re most likely to not have to pay sales tax when you’re buying or selling personal items as a private buyer. For example, if you sell your old phone on eBay, you usually don’t need to collect sales tax, and the buyer doesn’t need to pay it.

The rules can change for stores that buy and sell used electronics. Some states tax used items when they’re sold by a business, even if the item was already subject to sales tax when it was new.

Which states have no sales tax on electronics?

Delaware, Alaska, Montana, New Hampshire, and Oregon are the five states that don’t have a sales tax at all. So you won’t pay sales tax on electronics in those states.

Which state has less tax on electronics?

Alaska has the lowest sales tax rate by far at 1.76%. Hawaii is next at 4.44%. 

Wyoming, Wisconsin, Virginia, and Maine have sales tax rates that are a little over 5%.

Every other state is 6% or higher.

Can you buy electronics in another state to save on sales taxes?

You usually can’t go shopping for better sales tax rates.

If you buy online, many retailers have to charge you your local sales tax rate. If you buy from an online retailer that doesn’t charge sales taxes, your state law will often say you have to file a sales tax return and pay your state and local sales tax on your purchase.

Similar rules may apply if you drive across state lines. If you go to another state to buy something or buy something while you’re traveling, you generally need to pay your local sales taxes minus any tax you paid to the other state at the time of purchase.

For example, if your state has an 8% sales tax and you buy electronics in a state with a 5% tax, you’ll have to pay your state 3%.

These rules usually only apply to temporary travel whether you’re on vacation or a short shopping trip. If you move states, you generally don’t need to pay sales tax on all of your electronics at the time of your move.

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