5 Best States for E-Commerce Sellers to Register for Sales Tax in 2025

Every time you make a purchase in the US, you might notice an odd-looking sales tax rate, like 7.25%. That’s because sales tax isn’t just a flat statewide rate; it often includes city, county, and even special district taxes.

The same complexities apply to e-commerce, making it essential for online sellers to understand where and how to register for sales tax.

With different states enforcing varying tax laws, choosing the best states for e-commerce sellers to register for sales tax isn’t an easy task.

But how do you choose the best state for your business? Some states offer seller-friendly policies with no sales tax or simplified reporting, while others can be a compliance nightmare.

In this guide, we’ll break down the best states for e-commerce sellers to register for sales tax, key factors to consider, and how doola’s Sales Tax Registration services can help you streamline the process hassle-free.

Why Sales Tax Registration Matters for E-Commerce Businesses

Sales tax registration is a vital step for any e-commerce business, ensuring compliance with state tax laws and avoiding costly penalties.

As an online seller, you may be required to collect and remit sales tax in states where you have a significant presence, known as nexus. Ignoring these obligations can lead to audits, fines, and other financial strain.

Understanding the best states for e-commerce sellers to register for sales tax can help you minimize compliance headaches and optimize your tax strategy.

Choosing the right state can not only simplify reporting but also reduce your overall tax burden, making it easier to manage your business efficiently.

Factors to Consider When Choosing a State for Sales Tax Registration

Not all states follow the same sales tax rules, making it essential for e-commerce sellers to carefully evaluate key factors before registering. Selecting the best states for e-commerce sellers to register for sales tax can help streamline compliance and optimize tax management.

Here’s a list of key factors to consider:

1. Sales Tax Rate

Each state sets its own sales tax rate, which can range from 0% (in states like Oregon and New Hampshire) to over 7% (in states like California and Tennessee). High tax rates can impact your pricing strategy, profit margins, and overall competitiveness in the market.

If your customers are price-sensitive, registering in a high-tax state may make your products less attractive compared to competitors selling from lower-tax states.

2. Economic Nexus Thresholds

Many states have economic nexus laws that determine when an e-commerce business must collect and remit sales tax. These thresholds are typically based on annual sales revenue (e.g., $100,000 in sales) or transaction volume (e.g., 200 or more transactions).

If your business meets a state’s threshold, you are legally required to register, even if you don’t have a physical presence there.

3. Complexity of Tax Filing

Not all states make it easy for businesses to comply with sales tax laws. Some states have straightforward filing systems with less frequent reporting requirements, while others require monthly filings, separate local tax submissions, or complex documentation.

Choosing a state with a user-friendly tax system can save time, reduce administrative burdens, and help you stay compliant with minimal effort.

4. Marketplace Facilitator Laws

If you sell products through online marketplaces like Amazon, Etsy, Walmart, or eBay, some states require these platforms to collect and remit sales tax on your behalf. This can simplify compliance for sellers by reducing the number of states where you need to register.

However, in states without marketplace facilitator laws, you may still be responsible for collecting and submitting sales tax yourself, making it crucial to understand how each state’s rules affect your business.

5. Reseller Certificates

If your e-commerce business purchases inventory wholesale for resale, a reseller certificate exempts you from paying sales tax on those purchases. Some states have streamlined processes for obtaining and using reseller certificates, reducing paperwork and minimizing tax liability.

Choosing a state with a straightforward reseller certification process can simplify supply chain management and lower operational costs.

By evaluating these factors, you can determine the best states for e-commerce sellers to register for sales tax, ensuring compliance while minimizing unnecessary tax burdens.

Best States for E-Commerce Sellers to Register for Sales Tax

Certain states stand out as favorable options for e-commerce sellers due to lower tax rates, streamlined filing processes, and business-friendly policies. In this section we will go over some of the best states for e-commerce sellers to register for sales tax.

Here’s a quick overview of the top 5 tax-friendly states:

Let’s now compare and understand the tax advantages of each state for e-commerce sellers.

1. Florida: Business-Friendly Tax Policies

Florida is an attractive state for e-commerce sellers looking to register for sales tax. The state does not have a personal income tax, which means business owners operating as sole proprietors, LLC members, or S-corp shareholders can keep more of their earnings.

Florida’s statewide sales tax rate is 6%, with local jurisdictions adding small variations, making it relatively moderate compared to high-tax states like California or Illinois.

The state also enforces economic nexus laws with a $100,000 annual sales threshold but does not impose a transaction-based threshold, meaning you won’t need to register unless you exceed this revenue level in the state.

With a strong economy, no personal income tax, and a seller-friendly approach to sales tax compliance, Florida stands out as one of the best states for e-commerce sellers to register for sales tax while keeping operational costs low and maximizing profitability.

2. Texas: Zero State Income Tax

One of the biggest advantages of Texas is that it has “zero” state income tax, making it highly attractive for business owners looking to maximize profits.

The state’s sales tax rate is 6.25%, with local jurisdictions adding their own rates, bringing the total to a maximum of 8.25%, which is still competitive compared to states with higher tax burdens.

Additionally, Texas enforces economic nexus laws, requiring e-commerce sellers to register only if they exceed $500,000 in annual sales within the state. This high threshold means:

Many small/mid-sized businesses need not register unless they have a high sales volume in Texas.

With its tax-friendly policies, clear sales tax guidelines, and a booming e-commerce market, Texas remains one of the best states for e-commerce sellers to register for sales tax, ensuring compliance while keeping tax burdens manageable.

3. Wyoming: Low Sales Tax Rate

Wyoming stands out as one of the best states for e-commerce sellers to register for sales tax due to its business-friendly tax policies, low sales tax rate, and simplified compliance process.

The state has no corporate or individual state income tax, making it an attractive choice for e-commerce entrepreneurs looking to minimize their tax burden.

Wyoming’s statewide sales tax rate is just 4%, one of the lowest in the country

Local jurisdictions may add small additional rates that bring the total to a maximum of 6%.

The state also offers streamlined tax filing through the Streamlined Sales Tax (SST) program, which simplifies the process for online sellers operating in multiple states.

With its low tax burden, seller-friendly policies, and straightforward compliance process, Wyoming is an ideal state for e-commerce sellers looking for an efficient and cost-effective way to manage sales tax registration.

4. Delaware: Zero State/Local Sales Tax

Unlike most states, Delaware does not impose a state or local sales tax, meaning online sellers operating from or incorporating in Delaware don’t have to worry about collecting or remitting sales tax on transactions within the state.

This makes Delaware an attractive option for e-commerce businesses.

Beyond the sales tax advantage, Delaware also offers a business-friendly legal framework. It is well known for its strong corporate laws, making it a preferred state for business incorporation.

Many companies, including e-commerce startups, choose to incorporate in Delaware due to its efficient business registration process, strong legal protections, and well-established court system specializing in business matters.

Additionally, Delaware does not have state-level inventory taxes, which is beneficial for e-commerce sellers who store products in warehouses. Even if a business needs to register for sales tax in other states due to economic nexus rules, incorporating in Delaware still provides a favorable business climate with fewer tax burdens.

For e-commerce sellers looking for a state with no sales tax, strong legal protections, and a business-friendly structure, Delaware remains one of the best states for e-commerce sellers to register for sales tax

5. New Hampshire: Zero Inventory Tax

New Hampshire is one of the best states for e-commerce sellers to register for sales tax because it does not impose any statewide or local sales tax.

What does it mean for e-commerce entrepreneurs?

New Hampshire businesses don’t have to collect or remit sales tax on transactions within the state.

This significantly reduces tax burdens and compliance requirements.

Without sales tax obligations, businesses can offer more competitive pricing, as customers don’t have to factor in extra sales tax costs at checkout. This can be especially beneficial for direct-to-consumer (DTC) brands and online retailers looking to maximize sales volume and customer satisfaction.

Additionally, New Hampshire has no inventory tax, making it an attractive option for e-commerce businesses that store products in warehouses.

For e-commerce entrepreneurs looking to simplify tax compliance and maximize profits, New Hampshire stands out as one of the best states for e-commerce sellers to register for sales tax

Need expert assistance selecting the best states for e-commerce sellers to register for sales tax? Sign up for our sales tax registration and reseller certificate services today.

States That Are Less Favorable for E-Commerce Sales Tax

Some states impose high sales tax rates, strict compliance requirements, or complicated tax laws that can make them less attractive for e-commerce sellers.

Here’s an overview of states e-commerce sellers should avoid:

Let’s now understand how each of these states impose heavy tax burdens and strict compliance rules, making them unfavorable for e-commerce entrepreneurs.

1. California: High Sales Tax Rates

California has high tax rates, strict nexus laws, and complex filing requirements. With a 7.25% base sales tax plus additional local district taxes, total rates can exceed 10%, increasing costs for sellers.

The state’s strict economic nexus threshold of $500,000 means that even without a physical presence, businesses meeting this threshold must register and collect sales tax.

California also has aggressive enforcement, with strict audits and steep penalties for non-compliance.

These challenges make it a compliance-heavy and costly state, leading many e-commerce sellers to favor more business-friendly alternatives.

2. New York: Strict Nexus Laws

New York has complex nexus laws and strict compliance requirements. The state’s combined sales tax can exceed 8.875%, with a 4% statewide base rate plus additional county and city taxes, making it one of the more expensive states for sellers.

Also, New York enforces strict economic nexus laws, requiring remote sellers with over $500,000 in sales and 100+ transactions to register and collect sales tax, even without a physical presence.

3. Illinois: Complex Filing Requirements

Illinois enforces strict economic nexus rules, requiring remote sellers who generate $100,000 in sales or 200 transactions annually to register and collect sales tax.

The state has a 6.25% base sales tax, but local jurisdictions can push the total rate above 10%, making it one of the highest in the country.

Lastly, the state’s origin-based and destination-based tax system adds complexity, as different tax rates apply depending on whether sales occur within or outside the seller’s location.

4. Washington: High Tax Rates and Strict Nexus laws

Washington has high tax rates, strict economic nexus laws, and complex tax structure. The state imposes a 6.5% base sales tax, but with local taxes, the total rate can exceed 10%, increasing costs for businesses.

Additionally, Washington has a Business & Occupation (B&O) tax, which applies to gross revenue rather than profits, creating an extra financial burden for e-commerce sellers.

The destination-based sales tax system further complicates compliance, as sellers must calculate tax based on the buyer’s location rather than a fixed rate.

Need help sorting out the best states for e-commerce sellers to register for sales tax? Speak to an expert at doola today.

How to Register for Sales Tax in the Right State

Once you’ve determined the best states for e-commerce sellers to register for sales tax, the next step is to complete the sales tax registration process. This typically involves:

1. Determining Nexus: Identify which states you have a tax obligation in based on sales volume and transaction count.

2. Gathering Required Information: Business details, EIN, estimated sales figures, and owner information.

3. Filing with the State Tax Authority: Each state has its own online portal for sales tax registration.

4. Receiving Your Sales Tax Permit: Once registered, you will receive a permit allowing you to collect and remit sales tax.

5. Setting Up Collection & Reporting: Use accounting tools or professional services to track sales tax collections and ensure timely payments.

State-by-state tax rules in the US are indeed complex, but doola’s Sales Tax Registration simplifies the process, whether you’re operating in a high-tax state or one of the best states for e-commerce sellers to register for sales tax.

Simplify Sales Tax Compliance With doola

Managing sales tax compliance starts with knowing where to register; and doola can assist with that. We help you navigate the process and choose the best states for e-commerce sellers to register for sales tax, ensuring compliance without the hassle.

With doola, you get the following services:

1. State-Specific Guidance: We identify which states require your business to register.

2. Hassle-Free Registration: Our experts handle the paperwork, so you don’t have to.

3. Ongoing Compliance Support: Stay ahead of deadlines with expert guidance.

4. Seamless Integration: Easily connect sales tax registration with bookkeeping and financial tools.

The best part is: doola never lets tax compliance slow your growth.

Whether you’re expanding or just starting out in the best states for e-commerce sellers to register for sales tax, doola can give your business a competitive edge.

Book a free consultation with us today and streamline your sales tax process.