When do self-employed individuals need to collect sales tax?

Sales tax in the US is a state-level tax — there is no federal sales tax. Whether you need to collect and remit sales tax depends on your state(s) of nexus and the taxability of what you sell. **Products vs. services:** - **Physical products:** Almost always taxable. If you sell physical products, you must collect sales tax in states where you have nexus. - **Digital products:** Tax treatment varies widely — software, e-books, and digital downloads are taxable in many states (NY, TX, WA) but not others. - **Services:** Many states exempt professional services from sales tax. However, some states (TX, WA, SD, HI) tax certain services. Check your state. **Economic nexus thresholds (post-Wayfair 2018):** Most states impose sales tax obligations once you exceed $100,000 in annual sales to customers in that state, or 200 transactions — whichever comes first. Some states (Oklahoma, Pennsylvania) use $100,000 only. **Practical implications for freelancers:** - Pure service freelancers in most states: no sales tax obligation - Freelancers selling digital products: check each state's digital goods rules - E-commerce sellers: likely have nexus in multiple states — use TaxJar or Avalara **Registration:** Once you reach a state's threshold, register for a sales tax permit in that state and begin collecting and remitting tax on applicable sales.

• No federal sales tax — purely state-level with 45 states + DC imposing it
• Economic nexus: $100,000 sales or 200 transactions in most states triggers obligation
• Service freelancers often exempt — but check your state and service type
• Digital products: taxability varies widely by state — major grey area
• Use TaxJar or Avalara for multi-state compliance automation