Disclaimer: This is general information, not legal advice. Consult a tax professional for your specific situation.

Quick Answer

Yes, you likely need to collect and remit sales tax if you ship products to customers in states where you have "nexus" (physical or economic presence).

instxnt does NOT collect sales tax for you. You are responsible for calculating, collecting, and remitting sales tax according to each state's laws.

1. What is Sales Tax?

Sales tax is a state and local tax applied to the sale of goods. It varies by state and can range from 0% to over 10%.

Key Points:

Sales tax applies to tangible products, not services
Each state has different rates, rules, and exemptions
Local tax may apply in addition to state tax
Some products are exempt (e.g., food, clothing in some states)
You collect tax at the point of sale from the customer

2. Do You Need to Collect Sales Tax?

You must collect sales tax in a state if you have "nexus" there. Nexus means you have a significant connection to the state.

Physical Nexus (Clear-cut):

Your home/office is in that state
You have inventory stored there
You have employees working there
You own property there

Economic Nexus (Changed in 2018):

Threshold: Most states require tax collection if your sales exceed a threshold (typically $100,000 - $500,000 annually)
You may be required to collect even if you don't have physical presence
Thresholds vary by state—check your specific states

3. How to Calculate Sales Tax

Sales Tax = Sale Price × Tax Rate (of the state where the customer is located)

Example:

Product Price: $50

Customer Location: California (7.25% tax rate)

Sales Tax: $50 × 0.0725 = $3.63

Total Charged: $53.63

Important: Stripe will help you collect the address at checkout. You use that address to determine the applicable tax rate.

4. State-Specific Tax Rates

Tax rates vary significantly. Here's a quick reference for selected states:

State	Rate	Notes
California	7.25% - 10.75%	Varies by county
Texas	6.25% - 8.25%	Varies by location
Florida	6% - 7.5%	Varies by county
New York	4% - 8.88%	Varies by location
Washington	6.5% - 10.25%	Varies by location
Delaware	0%	No sales tax!
Montana	0%	No sales tax!
New Hampshire	0%	No sales tax!

For complete, up-to-date rates: Visit TaxJar or your state's department of revenue website.

5. How instxnt Helps (and Doesn't)

What instxnt does:

Collects customer shipping address at checkout
Provides clear, transparent pricing (you set your price + customer pays tax)
Passes all funds directly to your Stripe account

What instxnt does NOT do:

Calculate sales tax for you
Collect sales tax from customers
File sales tax returns
Remit sales tax to states
Provide tax advice

Your responsibility: You must ensure you're collecting and remitting sales tax according to your obligations.

6. Tools & Services

Several third-party services can help with sales tax compliance:

TaxJar

Automated sales tax calculation, reporting, and filing. Integrates with many e-commerce platforms.

Avalara

Real-time tax calculation and compliance management. Enterprise-grade solution.

Local Tax Professional

A CPA or tax attorney familiar with e-commerce sales tax can provide personalized guidance.

State Revenue Websites

Each state has resources and guidance. Example: california.gov/taxes/

7. Important Reminders

⚠️ Failing to Collect Tax = Penalty Risk

If you fail to collect and remit sales tax, states can impose penalties and back taxes.

✓ Keep Records

Maintain records of all sales by state and date. instxnt provides transaction history via your Stripe account.

💡 Plan for Quarterly/Annual Filing

Most states require sales tax to be filed and remitted monthly, quarterly, or annually. Budget accordingly.

📞 Ask a Professional

If you're unsure, consult with a tax professional. One hour of advice now can save headaches later.

Questions About instxnt?

For questions about how instxnt handles payments and pricing, contact us at [email protected].

For tax-specific questions, consult a tax professional or your state's department of revenue.

Sales Tax Guide for Sellers