2025 SaaS Sales Tax Guide
2025 SaaS Sales Tax Guide
2025-08-29
Sales tax rules vary by state, and SaaS companies face some of the toughest challenges. With 51 different sets of sales tax laws, compliance is one of the biggest headaches for SaaS founders, e-commerce sellers, and small businesses.
This guide covers state sales tax rates, economic nexus thresholds, filing deadlines, and penalties.
For businesses that don’t want to juggle complex jurisdiction rules and differences, Afternoon.co can track thresholds, register your business, and file sales tax for you.
Last updated: August 2025
Who Should Use This Guide?
- SaaS founders and digital product companies
- E-commerce sellers on Shopify, Amazon, Etsy, WooCommerce, etc.
- Small business owners and online retailers
If you’re selling across state lines, sales tax compliance is unavoidable. This guide helps you understand where to start.
What Is Sales Tax?
Sales tax is a consumption tax imposed on goods and services, collected by the seller and remitted to state and local governments.
- 45 states + D.C. impose a statewide sales tax
- Local jurisdictions (cities, counties, transit districts) often add extra rates
- Not all items are taxable; for example, some states exempt SaaS
State Sales Tax Table (2025)
Use this table to find each state’s base sales tax rate, average local sales tax rate, average combined sales tax rate, whether SaaS is taxable, and the state’s economic nexus threshold.
| State | State Rate | Avg Local Rate | Avg Combined Rate | Is SaaS Taxable?* | Nexus Threshold | Official Resource |
|---|---|---|---|---|---|---|
| Alabama | 4.00% | 5.44% | 9.44% | Yes | $250,000 | AL DOR |
| Alaska | 0% | 1.82% | 1.82% | Local | $100,000 | ARSSTC |
| Arizona | 5.60% | 2.92% | 8.52% | Yes | $100,000 | AZ DOR |
| Arkansas | 6.50% | 2.98% | 9.48% | No | $100,000 or 200 txn | AR DFA |
| California | 7.25% | 1.73% | 8.98% | No | $500,000 | CA DTFA |
| Colorado | 2.90% | 4.96% | 7.86% | Local | $100,000 | CO DOR |
| Connecticut | 6.35% | 0% | 6.35% | Yes | $100,000 and 200 txn | CT DRS |
| Delaware | 0% | 0% | 0% | N/A | N/A | DE DOR |
| District of Columbia | 6.00% | 0% | 6.00% | Yes | $100,000 or 200 txn | DC OTR |
| Florida | 6.00% | 1.02% | 7.02% | No | $100,000 | FL DOR |
| Georgia | 4.00% | 3.44% | 7.44% | No | $100,000 or 200 txn | GA DOR |
| Hawaii | 4.00% | 0.50% | 4.50% | Yes | $100,000 or 200 txn | HI Tax |
| Idaho | 6.00% | 0.03% | 6.03% | No | $100,000 | ID Tax |
| Illinois | 6.25% | 2.67% | 8.92% | Varies | $100,000 or 200 txn | IL DOR |
| Indiana | 7.00% | 0% | 7.00% | No | $100,000 | IN DOR |
| Iowa | 6.00% | 0.94% | 6.94% | Yes | $100,000 | IA DOR |
| Kansas | 6.50% | 2.28% | 8.78% | No | $100,000 | KS DOR |
| Kentucky | 6.00% | 0% | 6.00% | Yes | $100,000 or 200 txn | KY DOR |
| Louisiana | 5.00% | 5.11% | 10.11% | Yes | $100,000 | LA DOR |
| Maine | 5.50% | 0% | 5.50% | No | $100,000 or 200 txn | ME DAFS |
| Maryland | 6.00% | 0% | 6.00% | Yes | $100,000 or 200 txn | MD Comptroller |
| Massachusetts | 6.25% | 0% | 6.25% | Yes | $100,000 | MA DOR |
| Michigan | 6.00% | 0% | 6.00% | No | $100,000 or 200 txn | MI Treasury |
| Minnesota | 6.875% | 1.26% | 8.13% | No | $100,000 or 200 txn | MN DOR |
| Mississippi | 7.00% | 0.06% | 7.06% | Yes | $250,000 | MS DOR |
| Missouri | 4.225% | 4.19% | 8.41% | No | $100,000 | MO DOR |
| Montana | 0% | 0% | 0% | N/A | N/A | MT DOR |
| Nebraska | 5.50% | 1.48% | 6.98% | Yes | $100,000 or 200 txn | NE DOR |
| Nevada | 6.85% | 1.39% | 8.24% | No | $100,000 or 200 txn | NV Tax |
| New Hampshire | 0% | 0% | 0% | N/A | N/A | NH DRA |
| New Jersey | 6.625% | 0% | 6.625% | No | $100,000 or 200 txn | NJ Tax |
| New Mexico | 4.875% | 2.79% | 7.67% | Yes | $100,000 | NM Tax |
| New York | 4.00% | 4.54% | 8.54% | Yes | $500,000 and 100 txn | NY Tax |
| North Carolina | 4.75% | 2.25% | 7.00% | No | $100,000 | NC DOR |
| North Dakota | 5.00% | 2.08% | 7.08% | No | $100,000 | ND Tax |
| Ohio | 5.75% | 1.55% | 7.30% | Yes | $100,000 or 200 txn | OH Tax |
| Oklahoma | 4.50% | 4.55% | 9.05% | No | $100,000 | OK Tax |
| Oregon | 0% | 0% | 0% | N/A | N/A | OR DOR |
| Pennsylvania | 6.00% | 0.34% | 6.34% | Yes | $100,000 | PA DOR |
| Rhode Island | 7.00% | 0% | 7.00% | Yes | $100,000 or 200 txn | RI Tax |
| South Carolina | 6.00% | 1.49% | 7.49% | Yes | $100,000 | SC DOR |
| South Dakota | 4.20% | 1.91% | 6.11% | Yes | $100,000 | SD DOR |
| Tennessee | 7.00% | 2.61% | 9.61% | Yes | $100,000 | TN DOR |
| Texas | 6.25% | 1.95% | 8.20% | Yes | $500,000 | TX Comptroller |
| Utah | 6.10% | 1.32% | 7.42% | Yes | $100,000 | UT STC |
| Vermont | 6.00% | 0.39% | 6.39% | Yes | $100,000 or 200 txn | VT Tax |
| Virginia | 5.30% | 0.47% | 5.77% | No | $100,000 or 200 txn | VA Tax |
| Washington | 6.50% | 2.97% | 9.47% | Yes | $100,000 | WA DOR |
| West Virginia | 6.00% | 0.58% | 6.58% | Yes | $100,000 or 200 txn | WV Tax |
| Wisconsin | 5.00% | 0.72% | 5.72% | No | $100,000 | WI DOR |
| Wyoming | 4.00% | 1.56% | 5.56% | No | $100,000 or 200 txn | WY Tax |
* SaaS taxation groupings are generalizations. Always confirm with the official resource linked.
- Averages based on Tax Foundation data.
Economic Nexus Thresholds (2025)
The South Dakota v. Wayfair (2018) decision gave states the power to require remote sellers to collect sales tax.
- Most states: $100,000 in sales or 200 transactions (txn) annually
- Some states only use a sales-dollar threshold (no transaction count)
- Applies to remote sellers, SaaS companies, and e-commerce stores
Not sure when you’ll cross a threshold? Afternoon.co monitors your sales across all states, so you can always register on time.
Filing, Deadlines & Penalties
- States assign filing frequencies: monthly, quarterly, or annually
- Most returns are due between the 20th–25th of the following month
- Penalties: Late filing can trigger penalties of up to 30%, plus daily interest
With Afternoon.co, you can automate recurring filings so you never risk penalties or interest.
FAQs: U.S. Sales Tax
Does the U.S. have a federal sales tax?
No. Sales tax is governed by states and local jurisdictions, not the federal government.
What is economic nexus?
Economic nexus means you must collect sales tax if your sales into a state exceed its threshold, even without a physical presence.
Do states tax SaaS and digital products?
Yes, many do. Rules vary — e.g., Washington taxes SaaS, while California generally exempts it. Afternoon.co keeps track of these differences for you.
Which states don’t have sales tax?
Alaska, Delaware, Montana, New Hampshire, and Oregon. (Some still allow local-level taxes.)
How do I register for sales tax?
Every state has their own online registration portal. Afternoon.co can help you register stress-free.
What happens if I don’t collect sales tax?
States can assess penalties of up to 30%, plus interest, and hold you liable for uncollected tax.
Learn more about Afternoon
Seamlessly integrated financial stack, that handles your bookkeeping, taxes, and compliance.
