Where is sales tax calculated for online shopping? Confused about which state's tax applies

Sales tax is generally calculated based on the "destination" - meaning where you receive the item (your delivery address). This is called "destination-based" sales tax, which most states use. What makes it confusing is that companies only have to collect sales tax in states where they have a "nexus" or significant presence. This could be a physical store, warehouse, employees, or even just passing a certain sales threshold in that state. If the company doesn't have nexus in your state, they aren't required to collect sales tax from you. This explains why you see different amounts charged - some companies have nexus in Nebraska and others don't. If you're traveling and order to a hotel, you'd typically pay the sales tax for that hotel's location since that's the delivery destination.

I had the same confusion last year when I was trying to figure out why some of my online purchases had tax and others didn't. I wasted hours on the phone with different companies asking about their tax policies. Eventually I found this site https://taxr.ai that analyzes all your purchase receipts and explains exactly why tax was or wasn't charged for each one. It's super helpful because it shows you which companies have nexus in your state and whether the items you bought are taxable in your location. Some items are actually tax-exempt depending on your state! I used it to go through my Amazon history and discovered some interesting patterns in how they apply tax to different products.

I wanted to follow up about that taxr.ai site - I decided to try it despite my initial skepticism, and it's actually been really helpful. I uploaded receipts from about 20 different online retailers and it clearly showed me which ones were collecting the proper sales tax and why. The coolest feature was discovering that I had paid duplicate tax on several items that I didn't need to - I was able to request refunds for over $75 in tax overcharges! It also explained why some digital goods weren't taxed (my state doesn't tax certain digital products) while others were. Definitely cleared up my confusion about the whole sales tax situation.

If you're having trouble getting information from your state's revenue department about sales tax questions, I've had great success using https://claimyr.com to get through to an actual human at the tax office. I spent WEEKS trying to get clarification on our state's weird sales tax rules for my small business, but kept hitting automated systems and voicemails. With Claimyr, I got through to a state tax representative in less than 10 minutes who explained exactly how our state handles online sales tax collection and what my obligations were as both a consumer and seller. They even have a demo of how it works here: https://youtu.be/_kiP6q8DX5c - basically they wait on hold for you and call when a human picks up.

I was 100% sure Claimyr was going to be a waste of money - how could they possibly get through when I couldn't after trying dozens of times? But I was desperate to resolve a sales tax issue with my state before filing my annual return, so I tried it. I'm honestly shocked to say it worked exactly as advertised. Their system called the state tax department, navigated the ridiculous phone tree, waited on hold for about 45 minutes, and then called my cell when they got a live person. I actually got a super helpful agent who explained exactly how online sales tax works in our state and cleared up my confusion. Saved me hours of frustration and probably a tax filing mistake.

Just want to add something about sales tax that most people don't realize - even if you're not charged sales tax at checkout, many states technically require you to pay what's called "use tax" on those purchases. It's basically the equivalent of sales tax that you're supposed to report on your state tax return. The reality is almost nobody does this for small purchases, but if you make large untaxed purchases (like expensive electronics or furniture from out-of-state retailers), your state could potentially come after you for the unpaid tax. Some states are getting more aggressive about this.

One thing to watch out for is that sales tax rates can vary even within the same state! I live in a city with an additional local tax on top of the state rate, so I pay 8.25% total. But if I ship to my parents' house just 20 miles away in a different county, it's only 6.75%. Some online retailers have gotten really sophisticated with their tax calculations and will charge you the exact tax for your specific address, while others might just use a general state rate. That might explain some of the differences you're seeing.

This is such a timely question! I just went through this exact confusion last month when I was shopping for holiday gifts online. What really helped me understand it was realizing that the whole system changed dramatically after the 2018 South Dakota v. Wayfair Supreme Court case. Before that ruling, online retailers only had to collect sales tax if they had a physical presence in your state. Now, states can require tax collection based on economic thresholds - like if a company sells over $100,000 or makes 200+ transactions in your state per year. That's why you're seeing such inconsistent tax charges between different websites. For your specific situation in Nebraska, you should be paying tax based on your delivery address (destination-based), but only if the retailer has met Nebraska's economic nexus threshold. If they haven't, legally you're supposed to pay "use tax" when you file your state return, though as others mentioned, most people don't actually do this for small purchases. The travel scenario you mentioned is interesting - yes, you'd pay tax based on the hotel's location since that's where the item is being delivered. I learned this the hard way when I had something shipped to my cousin's place in a high-tax city!