The U.S. market lures in businesses of every size. Its mix of people, industries, regions, culture, and freedom still makes the American Dream feel within reach.
But the U.S. sales tax system can also feel confusing. Rules shift from state to state, and even from city to city, which leaves many business owners confused before they even begin.
In part one of this two-part blog series, you’ll learn why the system feels so tangled and where the pressure points start. Part 2 walks through how to handle that complexity, build a steady process, and feel confident selling in this market.
U.S. sales tax is complicated for a few reasons. Here are the top 3.
Out of 50 states, 45 states collect a statewide sales tax, and 38 let local jurisdictions add their own.
Together, they create more than 13,000 unique tax jurisdictions, each with its own rates and rules. And while those jurisdictions often overlap on a map, they rarely align in practice.
For example, most states manage both state and local filings under one system, but not all. Some cities have what’s called home-rule authority, giving them full control over their own sales tax administration. They can create local rules, audits, and filing processes.
Denver, Colorado, is a good example. As a “home-rule” city, it audits, collects, and enforces its own rules, separate from the state. That setup means a business might file two different returns for the same sale. One return sends the state tax to Colorado. The other sends the local tax to Denver. It is still one transaction, but it becomes two filings, which adds more work for your team.
For businesses selling nationwide, the volume of returns can pile up fast. A mid-sized retailer could file in thirty states and dozens of localities every month or quarter, each with its own login, due date, and process.
Order is possible here. Part two explains how your team can create it.
Thousands of jurisdictions mean thousands of interpretations. Each state decides what counts as taxable, so an item exempt in one place can be fully taxable in another.
For example, in New York:
Software sales tax interpretations are even trickier:
Until 2018, a business only had to collect sales tax in states where it had a physical presence. The South Dakota v. Wayfair ruling changed that. The Supreme Court decided states could now also base sales tax obligations on economic activity.
After Wayfair, almost every state quickly passed its own economic nexus laws, with varying thresholds:
Economic nexus isn’t the only nexus trigger. There are various types of nexus that businesses can trigger across states. To learn more, read our guide on the 7 nexus types businesses often overlook.
A simple routine keeps nexus from spiraling, and part two explains how to build that routine.
Software can do a lot for your sales tax compliance. It can look up rates, calculate tax on each sale, and remind your team when filings are due. These tools save time and reduce manual work, but accuracy still hinges on how well they’re set up and monitored.
At a very high level, these are some of the common ways that automation could fail you:
These gaps don’t make automation useless. They just show why people still matter in the process. Part two explains how to build that balance.
As your business grows, sales tax complexity grows with it. The hidden costs often surprise even experienced teams.
The U.S. market is one of the most rewarding places to grow a business, but it comes with a tax system that few can manage alone.
With the right support, compliance turns from confusion into clarity.
That’s what TaxValet helps create. We act as your Fractional Sales Tax Department. We stay on top of nexus changes, state updates, and product taxability rules. We handle filings accurately and on time.
Let us help your business find clarity in the chaos, so you can stay focused on enjoying the market.
The United States is often considered the most complicated. Each state, and sometimes each city, can set its own rules, rates, and definitions. That creates thousands of jurisdictions and taxability interpretations. Many businesses rely on a sales tax service provider like TaxValet to manage this complexity so they can stay compliant with less stress.
There’s no real way to “avoid” sales tax if your business has sales tax nexus or sells taxable goods in the U.S. Teams often work with a service like TaxValet to make sure they meet their obligations without guesswork.
Hungary holds the record for the highest standard value-added tax rate at 27%. Unlike U.S. sales tax, Hungary’s VAT is managed nationally, not locally, so it’s consistent across the country.
Several countries don’t charge a national sales tax or VAT, including Hong Kong, the Cayman Islands, and Bahrain. These countries often rely on other forms of taxation to fund public services.
Alaska, Delaware, Montana, New Hampshire, and Oregon don’t collect sales tax. However, some local jurisdictions in Alaska still charge local sales tax, so “zero” isn’t always truly zero. Many companies use a provider like TaxValet to confirm whether a location is fully tax-free before they make a sale.
Most cities in Alaska, Delaware, Montana, New Hampshire, and Oregon don’t have a local sales tax. In Alaska, though, some smaller cities, like Anchorage, don’t collect local sales tax even though others in the state do. A team like TaxValet helps businesses check these variations so they never assume a rate that is wrong.
New Hampshire and Delaware often rank among the most tax-friendly states. Neither collects statewide sales tax, and both have low income and property tax burdens. Still, the “best” state depends on your type of business and where your customers are located. Many growing companies work with TaxValet to review this as part of their full compliance plan.