Handling your sales tax obligations can be especially challenging when it comes to clothing products, as each state in the U.S. has its own set of rules and exemptions. Whether you have brick-and-mortar stores or operate fully in eCommerce, you must ensure compliance to avoid penalties.
This guide will help you understand your clothing sales tax obligations, the state-specific rules and how tax-free weekends work. We’re here to help you stay on top of your sales tax.
Understanding Your Clothing Sales Tax Obligations
Sales tax is a consumption tax imposed by the government on the sale of goods and services. The rules vary across different states, with some states imposing no sales tax on clothing, some taxing clothing above a certain price threshold, and others taxing clothes the same as any other goods.
Summary of Sales Tax Rules for Sellers
- Each state has its own laws regarding the taxation of clothing. You are responsible for calculating the correct tax rate for each order based on the product(s), item prices and the customer’s location.
- Some states exempt certain types of clothing or impose taxes only on items above a specific price.
- Many states offer tax-free weekends where clothing sales are exempt from sales tax.
- You must comply with the sales tax laws in states where you have physical or economic nexus.
Sales Tax on Clothing by State
Here is a rough guide to the taxability of clothing in each US state. Bear in mind that local taxes may still apply and rules are subject to change.
- Alabama: Clothing is generally subject to state sales tax. Some exemptions apply during tax-free weekends.
- Alaska: No state sales tax, though local taxes apply in some districts.
- Arizona: Clothing is subject to state sales tax.
- Arkansas: Clothing is subject to state sales tax. Exemptions are available for tax-free weekends.
- California: Clothing is subject to state sales tax in most cases.
- Colorado: Clothing is subject to state sales tax.
- Connecticut: Clothing priced under $100 is exempt from state sales tax. Clothing and accessories priced over $1000 are subject to a higher ‘luxury’ tax rate.
- Delaware: No state sales tax.
- Florida: Clothing is subject to state sales tax. Tax-free weekends provide exemptions.
- Georgia: Clothing is subject to state sales tax. Exemptions available during tax-free weekends.
- Hawaii: Clothing is subject to state sales tax.
- Idaho: Clothing is subject to state sales tax in most cases.
- Illinois: Clothing is subject to state sales tax.
- Indiana: Clothing is subject to state sales tax.
- Iowa: Clothing is subject to state sales tax. Tax-free weekends offer exemptions.
- Kansas: Clothing is subject to state sales tax.
- Kentucky: Clothing is subject to state sales tax.
- Louisiana: Clothing is subject to state sales tax. Exemptions available during tax-free weekends.
- Maine: Clothing is subject to state sales tax.
- Maryland: Clothing is subject to state sales tax. Tax-free weekends provide exemptions.
- Massachusetts: Clothing priced under $175 is exempt from state sales tax, unless it is athletic. The tax for items over $175 only applies to the amount exceeding this limit.
- Michigan: Clothing is subject to state sales tax.
- Minnesota: Clothing is exempt from state sales tax, except for a few categories: accessories, fur clothing, pet clothing, protective and athletic wear.
- Mississippi: Clothing is subject to state sales tax unless it will be used in a motion picture. Tax-free weekends offer exemptions.
- Missouri: Clothing is subject to state sales tax. Exemptions available during tax-free weekends.
- Montana: No state sales tax.
- Nebraska: Clothing is subject to state sales tax.
- Nevada: Clothing is subject to state sales tax.
- New Hampshire: No state sales tax.
- New Jersey: Clothing is generally exempt from state sales tax, with some exceptions.
- New Mexico: Clothing is subject to state sales tax.
- New York: Clothing priced under $110 is exempt from state sales tax in most cases. Costumes and rented formalwear are always taxable.
- North Carolina: Clothing is subject to state sales tax.
- North Dakota: Clothing is subject to state sales tax.
- Ohio: Clothing is subject to state sales tax except for protective clothing and gear. Exemptions available during tax-free weekends.
- Oklahoma: Clothing is subject to state sales tax.
- Oregon: No state sales tax.
- Pennsylvania: Clothing is generally exempt from state sales tax, except for sportswear, formalwear and certain luxury products.
- Rhode Island: Clothing priced over $250 is subject to state sales tax, but only the amount exceeding the limit is taxable.
- South Carolina: Clothing is subject to state sales tax in most cases. Tax-free weekends provide exemptions.
- South Dakota: Clothing is subject to state sales tax.
- Tennessee: Clothing is subject to state sales tax in most cases. Exemptions available during tax-free weekends.
- Texas: Clothing is subject to state sales tax. Tax-free weekends offer exemptions.
- Utah: Clothing is subject to state sales tax.
- Vermont: Clothing priced under $110 is exempt from state sales tax, but accessories are taxable.
- Virginia: Clothing is subject to state sales tax in most cases. Exemptions available during tax-free weekends.
- Washington: Clothing is subject to state sales tax.
- West Virginia: Clothing is subject to state sales tax. Tax-free weekends provide exemptions.
- Wisconsin: Clothing is subject to state sales tax.
- Wyoming: Clothing is subject to state sales tax.
Tax-Free Weekends Across the US
Many states offer tax-free weekends, during which clothing and other items are exempt from sales tax. These weekends usually occur around back-to-school time and are a great opportunity for both consumers and retailers. For example:
- Florida: Offers a tax-free weekend typically in August.
- Texas: Holds a tax-free weekend for clothing and school supplies in early August.
- Virginia: Runs a tax-free weekend in August for clothing and footwear.
It’s your responsibility as a seller to ensure you don’t collect sales tax on eligible products during tax-free weekends. Also, these events can significantly impact sales, so you should prepare by promoting the offer and stocking up to meet increased demand.
How to Manage Clothes Sales Tax as an eCommerce Seller
Selling clothing online has been more complicated since the South Dakota vs. Wayfair ruling of 2018, as you need to comply with the tax regulations of every state where you pass the economic nexus threshold.
Most sellers integrate their eCommerce platform with a tool that sets the correct tax rate for each product. This tax rate will be based on the customer’s location and any exemptions that apply, whether those are related to the type of product, the product’s price or a tax-free weekend.
Some eCommerce platforms allow you to set the tax rates manually, but when it comes to clothing and accessories, it’s very easy to make mistakes and incur penalties.
Automated Solutions
Utilizing automated solutions simplifies the management of sales tax for eCommerce sellers. These tools can help:
- Calculate the correct sales tax: Automatically calculate the correct sales tax for each transaction based on the shipping destination.
- File tax returns: Streamline the process of filing sales tax returns to the appropriate states.
- Stay updated on tax laws: Keep track of changes in clothing sales tax laws to ensure ongoing compliance.
Explore Our eCommerce Sales Tax Services
At Yonda Tax, we offer a comprehensive eCommerce sales tax solution designed to help you navigate state-specific tax laws. Our solutions ensure accurate tax calculations, timely filings, and up-to-date compliance, allowing you to focus on growing your business.
We Help You Stay Compliant with State-Specific Sales Tax Laws
Don't let the intricacies of sales tax regulations overwhelm you. Book a free consultation with Yonda Tax today to better understand what compliance looks like for your business.