Sales tax in the United States is governed at the state and local level, not federally. If your business sells to U.S. customers, you might be required to collect tax in one or more states, even if your company is based outside the country. Solidgate Tax automates the calculation process across all 50 states, the District of Columbia, and U.S. territories.
States and territories
Solidgate applies tax across all 50 U.S. states, the District of Columbia, and U.S. territories such as Puerto Rico. Each jurisdiction sets its own tax rates, taxable product definitions, and exemption rules.
Rates, taxable categories, and exemptions differ not only between states but also between counties and cities within a single state. Five states (Alaska, Delaware, Montana, New Hampshire, and Oregon) do not impose a statewide sales tax, though Alaska permits local jurisdictions to set their own.
For each supported jurisdiction, Solidgate covers the following standard areas:
| Area | What it covers |
|---|---|
| Tax types | State sales tax, plus county and city-level taxes where applicable |
| Registration threshold | Economic nexus thresholds (revenue or transaction count) that trigger a registration obligation |
| Taxable products | Product categories subject to tax in the jurisdiction, mapped through Solidgate tax categories |
| Transaction types | Sales, refunds, chargebacks, and other actions that generate tax events |
When and how to register
Nexus overview
Before you can collect sales tax in a U.S. state, that state must consider your business to have nexus there. Nexus is the legal connection between a seller and a taxing jurisdiction. Two forms exist:
- Physical nexus. Your business maintains a tangible presence in the state, for example, an office, a warehouse, employees working remotely, or inventory held at a fulfillment center.
- Economic nexus. Your sales into the state exceed a revenue or transaction-count threshold set by that state. The most common threshold is $100,000 in gross revenue or 200 separate transactions in a calendar year, but each state defines its own numbers.
Once nexus exists, you must obtain a sales tax permit from that state before charging tax.
Register with state tax authorities
Each U.S. state has its own tax authority where you need to register individually. You can register through:
- Individual state tax authority websites. Each state offers an online registration portal for sales tax permits.
- Streamlined Sales Tax Registration System (SSTRS). A single application to register in the 24 member states of the Streamlined Sales and Use Tax Agreement (SSUTA). This can reduce the number of separate registrations you need. Additional requirements and limitations apply:
- SSTRS covers only SSUTA member states. Register directly with every other state.
- Each state reviews your application and might ask for more information.
- You must still meet each state’s nexus requirements.
- SSTRS does not accept tax returns. You file with each state, even when you have no sales.
- Registration does not cover tax owed on past sales.
After you register with the relevant authorities, add the corresponding tax locations in Solidgate Hub to start collecting tax on transactions in those locations.
How tax is calculated
Solidgate Tax calculates tax on each transaction based on the following factors:
| Factor | Description |
|---|---|
| Business location | The state associated with your company's legal entity address on file with Solidgate |
| Active tax registrations | The states you added in the Taxes > Locations section of Solidgate Hub |
| Customer location | Resolved from the country on the billing address and the postal code supplied by the customer, payment method, or provider. If no postal code is available, Solidgate falls back to IP-based geolocation |
| Product tax category | The tax category you assigned to the product |
| Customer status | Individual (B2C) or registered business (B2B) |
Solidgate resolves each customer address down to its geographic coordinates and maps those coordinates to the applicable state, county, and municipal tax boundaries. This precision matters because neighboring ZIP codes can fall under different tax jurisdictions with different rates.
Different state
When your business location and your customer are in different states, Solidgate uses destination-based sourcing and applies the tax rate at the customer location. This is the default rule in the majority of U.S. states.
Same state
When your business location and your customer share the same state, Solidgate still applies tax at the customer location in most cases. A group of states, however, follow origin-based sourcing rules that shift the tax point back to your business location:
- Arizona, Illinois, Missouri, Pennsylvania, Tennessee, and Virginia. Tax is based entirely on your business location.
- California. State, county, and city components follow your business location. District-level taxes follow the customer address.
- Mississippi, Ohio, Texas, and Utah. Physical and digital goods are taxed at your business location rate. Services are taxed at the customer address.
From abroad
For companies headquartered outside the United States, Solidgate applies tax at the customer location in every state where you hold an active registration. In states where you are not registered, the transaction is treated as a zero-rated export from your home country.
Product type matters
The product is taxed differently across U.S. states:
| Product type | Tax treatment |
|---|---|
| Digital products (SaaS, e-books, streaming) | Taxability differs by state. Some states tax all digital goods, others exempt them entirely, and some tax only specific categories. |
| Services | Most states do not tax services broadly, but many tax specific service categories (for example, data processing or cloud computing services in specific states). |
| Physical goods | Generally subject to sales tax in states that have one, with exemptions for categories such as groceries, clothing, or medical supplies varying by state. |
Postal code updates and tax recalculation
If tax was not calculated on a transaction, for example, because the customer’s postal code was missing or invalid, you can update the postal code and trigger a recalculation. Solidgate recalculates the tax as if it had been included in the original transaction amount. This recalculation applies to standalone transactions, not to invoice line items or transactions in AUTH status.
Reports and filing
Solidgate provides tax data exports, both transactional and summary reports that cover all U.S. tax calculations. These reports include state-level breakdowns of taxable amounts, tax rates, and collected amounts.
You can generate and download tax reports through the Solidgate Hub or the API.