Beginner Quick Answer
Can I pass sales tax costs on to customers, or must I absorb them?
⚡ TL;DR
Yes — virtually every retailer passes sales tax to the customer as a line item at checkout. You collect it and remit it to the state on your filing schedule. If you choose tax-inclusive pricing instead, you still owe the state's share; you just absorb it rather than the buyer.
Yes, pass it to the customer. Virtually every retailer does. You add tax as a line item at checkout, collect it from the buyer, and remit it to the state. The money flows through you; it was never yours to keep.
Key takeaways
- Standard practice: display tax as a separate line item at checkout, collect from the customer, remit to the state on your filing schedule
- You are legally the collection agent, not the taxpayer: the economic burden is the buyer’s, but the legal obligation to remit is yours
- If you choose tax-inclusive pricing (tax embedded in the listed price), you still owe the state’s share, you bear the economic cost rather than passing it to the buyer
- Hawaii and New Mexico are exceptions: their taxes (GET and GRT) are technically levied on the seller, not the buyer, but most sellers still display and collect them as a line item
- Most ecommerce platforms (Shopify, WooCommerce, BigCommerce) calculate and display sales tax automatically at checkout once configured with your nexus states
- You cannot charge customers more than the actual tax rate, collecting “sales tax” in excess of what you remit is not legal
Frequently asked questions
Can I pass sales tax on to my customers?
Yes. This is the standard practice for virtually every retail seller. You display the tax as a separate line item at checkout, collect it from the customer, and remit it to the state on the filing deadline. The customer pays the tax; you act as the collection agent for the state.
Do I have to show sales tax as a separate line item?
No, tax can be included in the listed price (tax-inclusive pricing), but this is uncommon in US retail. Most ecommerce platforms default to showing tax separately at checkout. If you choose to include tax in your prices, you still owe the tax portion to the state, you're just absorbing the display, not the liability.
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