Understand the “Nexus” Trigger Before You Choose
Before comparing states, you must understand why you are registering. In the US, you only register for sales tax in states where you have “nexus”, a significant connection.
- Physical Nexus: Having an office, employees, or inventory in a state. If you use Amazon FBA or a 3PL (Third-Party Logistics) provider, you likely have physical nexus in every state where your goods are stored.
- Economic Nexus: Reaching a specific sales threshold (typically $100,000 in sales or 200 transactions, though many states are now removing the transaction count requirement in 2026).
Register only where required. Don’t volunteer for taxes you don’t owe. However, if you have a choice of where to house your inventory or where to focus your marketing, the following comparisons will help you strategize.
The “NOMAD” States: Zero Sales Tax
If your goal is to minimize the tax burden on your customers and simplify your life, the “NOMAD” states are the gold standard. These five states do not have a general state-level sales tax:
- New Hampshire
- Oregon
- Montana
- Alaska (Note: Some local municipalities in Alaska do charge sales tax, though there is no state-level tax).
- Delaware
The Benefit: If you base your operations or warehouse in Delaware, you don’t have to worry about collecting sales tax on items shipped from that location to other no-tax states. It also makes your pricing more competitive for local customers.
The Strategy: Many international sellers choose to incorporate their US LLC in Delaware for its business-friendly laws, but remember: you still have to collect sales tax in other states if you ship goods to customers there and meet their nexus thresholds.
Best States for Simplicity and Low Rates
For many businesses, the nightmare isn’t the tax rate itself, it’s the calculation. Some states have a single flat rate, while others allow every tiny town to add its own “local” tax on top of the state rate.
1. Kentucky (The Simplicity Leader)
Kentucky remains a favorite for international sellers. It features a flat 6% sales tax rate across the entire state. There are no local jurisdictions, no city taxes, and no county add-ons.
- Why it works: You always know the rate. Whether you sell to someone in Louisville or a rural farm, it’s 6%. This makes your bookkeeping and tax calculations incredibly straightforward.
2. New Jersey
New Jersey offers a flat 6.625% state rate. Similar to Kentucky, there are no local sales taxes.
- Why it works: It’s a major logistics hub. If your goods enter through the Port of New York and New Jersey, registering here is often a necessity. The lack of local complexity is a massive relief for your compliance team.
3. Michigan
Michigan holds a steady 6% rate with no local sales taxes.
- Why it works: It provides a predictable environment for businesses looking to scale in the Midwest without getting bogged down in municipal filings.
The “Home Rule” States: Proceed with Caution
If you are looking for ease of compliance, you should generally avoid focusing your physical presence in “Home Rule” states unless your market data demands it. In these states, local cities and counties administer their own taxes, often requiring separate registrations and filings.
- Colorado: Rates can fluctuate from 2.9% to over 11% depending on the specific street address.
- Alabama: Known for complex local requirements that can make manual filing nearly impossible for a small team.
- Louisiana: Extremely fragmented local tax authorities.
The Sterlinx Advice: If you have economic nexus in these states, you must register. However, if you are choosing where to set up your first US warehouse, these states will significantly increase your administrative costs.
Comparing Popular States for International Sellers
| State | State Rate | Local Taxes? | Compliance Difficulty |
|---|---|---|---|
| Delaware | 0% | No | Very Low |
| Kentucky | 6% | No | Low |
| Florida | 6% | Yes (up to 1.5%) | Moderate |
| Texas | 6.25% | Yes (up to 2%) | Moderate |
| California | 7.25% | Yes (up to 3%) | High |
| New York | 4% | Yes (up to 4.8%) | High |
The Impact on International Sellers
For a non-US resident, US sales tax registration is not just about the money; it’s about the documentation. To register, you will generally need:
- An EIN (Employer Identification Number) from the IRS.
- A US business address (virtual offices often work).
- A breakdown of your sales by state.
Don’t worry about the lack of a Social Security Number (SSN). While many state forms ask for one, most states have alternative procedures for international owners. This is where having a partner like Sterlinx Global becomes essential. We bridge the gap between US regulatory requirements and your international reality.
Managing Finances Across Borders
Choosing a state is only half the battle. You must also manage the currency exchange and the movement of funds to pay these tax authorities. Many sellers lose 3-5% of their margin simply on poor exchange rates when paying their US tax bills. We recommend exploring cross-border currency management to protect your profits.
Step-by-Step Selection Guide
If you are currently deciding where to register, follow this checklist:
