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Resources Sales Tax Fundamentals
by TaxJar August 1, 2026
Ditch the sales tax complexity.
For sales tax assessment on purchases, the general rule of thumb has always been “products are taxable, while services are non-taxable.”
Under that scenario, if your business sells coffee mugs, you should charge sales tax for those products. But if your business creates logos for coffee shops, you shouldn’t charge sales tax for those services.
However, as with anything sales tax-related, there are plenty of exceptions to this rule. Why?
The term services encompasses a wide variety of businesses. Services are organized into these four categories:
While services are not subject to sales tax in all states, it’s important to note that exclusions are not absolute. Here’s what you need to know about the general services sales tax landscape:
Of course, if you do business in more than one state, you must understand how each state treats each of your particular products or services.
For example, in Hawaii, services are taxable unless specified otherwise. But in Texas, dry cleaning is taxable while veterinary services are not. Why? It’s simply because the state says so.
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Where are services taxable? Use our chart to quickly assess service tax guidelines in states where you have nexus.
It’s important for every business to perform a nexus study , which reviews all your business activities and sales in a state or multiple states and determines if these activities create sales tax nexus.
Your business should conduct a nexus study when you start selling in a new state or when you start selling a new product or service.
Consider this example: say you are a CPA in Arizona, (where CPA services are not taxable. If you open a second office in New Mexico, you need to understand that while Arizona doesn’t require CPAs to charge sales tax on their services, New Mexico does. This means, you must register with the state, ensuring you collect and remit New Mexico gross receipts tax (GRT, their equivalent of sales tax) at state-specified intervals. If you fail to collect from your New Mexico customers, you’re on the hook for paying New Mexico GRT out of your own profits.
Once you’ve conducted a nexus study, your next steps are:
Managing all the moving parts of sales tax can be challenging. Are accounting services taxed? What about hair care or car maintenance? They may not be taxed in your state today, but sales tax laws change all the time.
TaxJar makes it easier for you to stay current with it all, especially as you scale your business across states.
If you need to charge sales tax on services, TaxJar takes all of these state laws into account and simplifies the process. To learn more about TaxJar and get started automating your sales tax compliance, sign up for a free, 30-day trial today .
by TaxJar September 25, 2026
by TaxJar August 3, 2026
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