US Sales Tax for Freelancers: When It Applies and How to Handle It

US sales tax is complicated because it’s handled at the state level — not federal. Each state has different rules for what’s taxable. The good news: most professional services are exempt in most states. Here’s how to know where you stand.

Do Freelancers Need to Charge Sales Tax?

General rule: Services are not taxable in most US states. If you provide consulting, design, writing, marketing, or professional services, you likely don’t charge sales tax.

Exceptions exist. Some states tax specific services:

State	Services Taxed
Hawaii	Almost all services (4% GET)
New Mexico	Most services (5–8.5% GRT)
South Dakota	Most services (4.5%)
Texas	Some services (data processing, security, cleaning)
New York	Some services (information services, maintenance)
Washington	Digital products, some services (B&O tax applies to all)

Digital products (software, downloads, SaaS) are taxed in more states than traditional services. If you sell digital goods, check your specific state.

The Nexus Question

You only owe sales tax in states where you have nexus — a taxable presence. Nexus is created by:

Physical presence (office, employees, inventory)
Economic nexus (exceeding sales thresholds — typically $100K or 200 transactions)

For most freelancers: You have nexus in your home state only. You don’t need to worry about other states unless you have significant sales volume there.

States With No Sales Tax

These states have no general sales tax:

Alaska (but local taxes may apply)
Delaware
Montana
New Hampshire
Oregon

If you’re based in these states and sell services, sales tax generally doesn’t apply to you.

What About Selling to Other States?

Services: Generally sourced to where the service is performed (your location) or where the benefit is received (client’s location). Rules vary by state. In practice, most interstate service sales are not taxed.

Products/digital goods: May be taxable in the buyer’s state if you have nexus there.

Foreign clients: Export of services outside the US is not subject to US sales tax.

Do You Need to Register?

Only register for sales tax in states where:

You have nexus, AND
You sell taxable goods or services

Registering unnecessarily creates filing obligations. Don’t register “just in case.”

What Goes on the Invoice

If you do charge sales tax:

Show the tax separately — line item for the tax amount
State the rate — e.g., “NY Sales Tax (8%)”
Include your tax registration number if required by the state

If you don’t charge sales tax (most service freelancers): No special notation needed. Just invoice your service fee.

Common Situations

Freelance developer in California billing a Texas company:

California doesn’t tax most services
Texas client location doesn’t matter — you’re not registered in Texas
No sales tax applies

Designer in New York billing a New York company:

Check if your specific service is taxable in NY
Most design services are exempt
No sales tax applies

SaaS developer in Texas selling subscriptions nationwide:

Digital products/SaaS have different rules
You may need to collect tax in states where you have economic nexus
Consult a tax professional for SaaS-specific guidance

Estimated Taxes vs Sales Tax

Don’t confuse sales tax with income tax. As a freelancer, you still owe:

Federal income tax — quarterly estimated payments
State income tax — in most states
Self-employment tax — 15.3% for Social Security and Medicare

These apply regardless of whether you charge sales tax.

Wageasy and US Invoicing

Wageasy handles US invoicing with or without sales tax. Set your tax rate (or leave it at zero for exempt services), and every invoice calculates correctly. Track payments, send reminders, and stay organized.

Download Wageasy →

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