Easy Way to Calculate Use Tax on Amazon Purchases

A simple tool to help you determine the use tax you may owe on out-of-state online purchases.

Calculated Use Tax

This is an estimate. You are responsible for verifying your actual tax liability with your state’s tax authority.

Visualizing Your Purchase Costs

A visual breakdown of your total cost, including the base price, shipping, and estimated use tax.

What is Use Tax on Amazon Purchases?

Use tax is a tax on the use, storage, or consumption of a taxable item or service on which no sales tax has been paid. It’s a companion to sales tax. States with a sales tax also have a use tax. When you buy something online from a seller like Amazon (or a third-party seller on its platform) and they don’t collect sales tax for your state, you are generally required to pay use tax directly to your state. This ensures that you pay the same tax rate as you would if you had bought the item from a local retailer, creating a level playing field for in-state businesses.

Since 2018, major online retailers like Amazon collect sales tax in all states that have one, but this often applies to items sold directly by Amazon. A significant portion of sales on Amazon are from third-party sellers who may not always collect sales tax, leaving the responsibility on the buyer to report and pay the use tax. This is an easy way to calculate use tax on Amazon purchases that you may have made without paying local taxes.

Use Tax Formula and Explanation

The formula to calculate use tax is straightforward. It’s designed to mirror the sales tax you would have paid locally. The easy way to calculate use tax on Amazon purchases is to add the cost of your items to the shipping charges, and then multiply by your local tax rate.

Use Tax = (Total Purchase Price + Shipping & Handling) × Local Sales Tax Rate

In many states, shipping and handling charges are considered part of the total sales price and are therefore taxable. Our calculator includes this by default.

Description of variables used in the use tax calculation.

Variable	Meaning	Unit	Typical Range
Total Purchase Price	The pre-tax cost of all items in your order.	Currency ($)	$1 – $10,000+
Shipping & Handling	Charges for delivery of the items.	Currency ($)	$0 – $100+
Local Sales Tax Rate	The combined state, county, and city sales tax rate where you live.	Percentage (%)	4% – 11%
Use Tax	The final amount of tax you owe.	Currency ($)	Varies

Practical Examples

Example 1: Electronics Purchase

You buy a new tablet from a third-party seller on Amazon that doesn’t collect sales tax in your state.

• Inputs:
  • Purchase Price: $799.00
  • Shipping & Handling: $25.00
  • Your Local Sales Tax Rate: 7.5%
• Calculation:
  • Taxable Amount: $799.00 + $25.00 = $824.00
  • Use Tax: $824.00 × 0.075 = $61.80
• Result: You would owe $61.80 in use tax to your state.

Example 2: Clothing Order

You purchase clothing from an out-of-state seller on Amazon. In your state, clothing is taxable.

• Inputs:
  • Purchase Price: $150.00
  • Shipping & Handling: $10.00
  • Your Local Sales Tax Rate: 9.2%
• Calculation:
  • Taxable Amount: $150.00 + $10.00 = $160.00
  • Use Tax: $160.00 × 0.092 = $14.72
• Result: You would owe $14.72 in use tax.

How to Use This Use Tax Calculator

Finding an easy way to calculate use tax on Amazon purchases is simple with this tool. Follow these steps:

1. Enter Purchase Amount: Input the total cost of the items from your Amazon order receipt, before any tax.
2. Add Shipping Costs: Enter the full amount charged for shipping and handling.
3. Input Your Tax Rate: Find your local sales tax rate (including state, county, and city taxes) and enter it as a percentage. The IRS Sales Tax Deduction Calculator can be a helpful resource.
4. Review Results: The calculator instantly shows the estimated use tax you owe. The intermediate values show the total taxable amount and your final cost.

Key Factors That Affect Use Tax

• Seller’s Location: The core principle of use tax is that it applies to purchases from sellers who don’t have a physical presence (nexus) in your state and therefore don’t collect sales tax.
• State Laws on Taxability: Not all goods are taxable. Some states exempt groceries, prescription drugs, or certain types of clothing. You only owe use tax on items that are normally subject to sales tax in your state.
• Shipping and Handling Rules: Most states, like Texas, consider shipping charges part of the taxable sale if the item being shipped is taxable.
• Tax Already Paid: If a seller charges you a sales tax rate that is lower than your local rate, you may only owe the difference.
• Item Destination: The tax rate is determined by where the item is delivered and used, not where the seller is located.
• Marketplace Facilitator Laws: Many states now have laws that require large marketplaces like Amazon to collect and remit sales tax on behalf of their third-party sellers. However, this isn’t universally applied to all sellers in all situations.

Frequently Asked Questions (FAQ)

1. What’s the difference between sales tax and use tax?

Sales tax is collected by the seller at the point of sale. Use tax is paid by the consumer directly to the state when sales tax was not collected on a taxable purchase. They are generally the same rate.

2. Doesn’t Amazon automatically collect all taxes?

Amazon collects sales tax for items it sells directly and for many third-party sellers under “Marketplace Facilitator” laws. However, there can be gaps, especially with smaller sellers, making it the buyer’s responsibility to check their invoice and pay use tax if necessary.

3. How do I pay use tax?

Most state tax agencies have a form on their website (often called a “Use Tax Return”) that individuals can use to report and pay the tax they owe. It is often filed along with your annual state income tax return.

4. What happens if I don’t pay use tax?

While enforcement on small purchases has historically been difficult, states are getting more aggressive. Failure to pay can lead to penalties and back taxes with interest.

5. Is shipping always taxable?

It depends on the state. In many states, if the item being sold is taxable, then the associated shipping charges are also taxable. Some states exempt shipping if it is stated as a separate line item.

6. What if I buy from a state with no sales tax?

If you buy an item from a state like Oregon or New Hampshire (which have no sales tax) and have it shipped to your state (which has a sales tax), you are required to pay use tax on that purchase.

7. Are digital products and services subject to use tax?

This is a complex and evolving area of tax law. Many states have begun to apply sales and use tax to digital goods like ebooks, software, and streaming services. Check your specific state’s regulations.

8. How do I find my exact local sales tax rate?

Your state’s Department of Revenue website is the best source. They often have a tax rate lookup tool where you can enter your address to find the exact combined rate.