Federal Tax

Use Tax: Complete Guide 2026

Updated 2026-03-11

Data Notice: Figures, rates, and statistics cited in this article are based on the most recent available data at time of writing and may reflect projections or prior-year figures. Always verify current numbers with official sources before making financial, medical, or educational decisions.

Use Tax: Complete Guide 2026

Tax information is for educational purposes only and does not constitute tax advice. Consult a licensed tax professional for your specific situation.

Use tax is a state-level tax that applies to purchases where sales tax was not collected at the point of sale. It is designed to complement the sales tax and ensure that goods and services used within a state are taxed regardless of where they were purchased. Common triggers include online purchases from out-of-state sellers, items bought during travel, and goods purchased from sellers who do not collect the buyer’s state sales tax. While use tax has existed for decades, it has become increasingly relevant in the e-commerce era. Following the Supreme Court’s 2018 decision in South Dakota v. Wayfair, most online retailers now collect sales tax, but use tax obligations persist for certain transactions.

Use Tax Rates by Select State (2026)

StateUse Tax RateSame as Sales Tax?
California~7.25% (base)Yes
New York~4.0% (state) + localYes
Texas~6.25% (state) + localYes
Florida~6.0% (state) + localYes
Illinois~6.25% (state) + localYes
Washington~6.5% (state) + localYes
Ohio~5.75% (state) + localYes
Pennsylvania~6.0%Yes

Use tax rates are always the same as the applicable sales tax rate in the buyer’s jurisdiction, including any local additions.

When Use Tax Applies

Common Scenarios

  1. Online purchases without sales tax collected. If an online seller does not collect your state’s sales tax (less common post-Wayfair, but still occurs with small sellers below the state’s economic nexus threshold), you owe use tax.

  2. Purchases made in other states. If you buy an item in a state with no sales tax (or a lower rate) and bring it home for use, you may owe the difference.

  3. Items purchased for resale but used personally. If you purchase inventory under a resale certificate and then use the items yourself instead of selling them, use tax applies.

  4. Gifts and prizes from out of state. Tangible goods received as gifts or prizes from out-of-state sources may trigger use tax.

  5. Catalog and phone orders. Older purchasing channels where sales tax was not collected still trigger use tax obligations.

Post-Wayfair Landscape

The 2018 Wayfair decision allows states to require sales tax collection from remote sellers meeting economic nexus thresholds (typically ~$100,000 in sales or ~200 transactions). Most major online retailers now collect sales tax in all applicable states, which has reduced (but not eliminated) individual use tax obligations.

How to Report and Pay Use Tax

On Your State Income Tax Return

Many states include a use tax line on the individual income tax return. You can:

  • Report the actual amount of untaxed purchases, OR
  • Use the state’s lookup table (many states provide estimated use tax amounts based on AGI)

Separate Use Tax Return

Some states require businesses or individuals with significant untaxed purchases to file a separate use tax return, often on a monthly or quarterly basis.

Vehicle and Major Purchases

Most states collect use tax at the time of vehicle registration if the vehicle was purchased out of state. Similarly, boats, aircraft, and other titled property typically trigger use tax collection at the point of registration or titling.

States Without Use Tax

The following states have no general sales or use tax:

  • Alaska (no statewide sales tax, though some localities impose sales tax)
  • Delaware
  • Montana
  • New Hampshire
  • Oregon

Residents of these states do not owe use tax on purchases. However, purchases brought into a state with sales tax from these states do trigger use tax in the buyer’s state.

Common Mistakes to Avoid

  1. Assuming all online purchases include sales tax. Small sellers below economic nexus thresholds may not collect sales tax. You still owe use tax on these purchases.

  2. Ignoring the use tax line on your state return. Many filers skip this line, but states increasingly cross-reference purchase data and may assess use tax during audits.

  3. Not tracking out-of-state purchases. Keep receipts for purchases made in lower-tax or no-tax states, especially for high-value items.

  4. Forgetting about business use of resale inventory. Items purchased tax-free for resale but consumed or used by the business are subject to use tax.

  5. Overlooking vehicle purchases. Buying a car in a no-sales-tax state does not eliminate the tax. Your home state will collect use tax at registration.

  6. Confusing credit for taxes paid. If you paid sales tax in another state, you typically receive a credit against your home state’s use tax for the amount already paid, up to your home state’s rate.

Key Takeaways

  • Use tax applies when sales tax is not collected on taxable purchases used in your state
  • Use tax rates equal the applicable sales tax rate in your jurisdiction
  • Most states include a use tax reporting line on the individual income tax return
  • The Wayfair decision has reduced but not eliminated individual use tax obligations
  • Vehicle and major purchases typically trigger use tax at registration
  • Five states (Alaska, Delaware, Montana, New Hampshire, Oregon) have no general sales or use tax

Next Steps