Are Freight Costs For My Business Taxed Separately?

Taxability rules can change from state to state when shipping and handling fees are separated or kept together on an invoice.

Showing freight charges separately from other charges on an invoice can sometimes result in freight being tax exempt in certain states. However, some states will still tax freight even if separately stated. It is important to determine this distinction in the state where one is doing business, because sellers sometimes combine the freight and handling charges (e.g., “S&H.”) Since most states charge tax on handling, combining freight and handling renders both taxable, while listing them separately makes one non-taxable in certain states.

To learn more about taxability differences for shipping and handling, check out our e-book on the 5 Factors for Freight Taxability.

Five Factors of Freight Taxability

The rules for the taxability of freight or delivery charges vary from state to state. How do retailers figure out when freight and shipping charges are subject to sales and use tax?

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Five Factors of Freight Taxability