United States

Sales taxes

No provisions exist for a sales tax or value-added tax (VAT) at the federal level; however, sales and use taxes constitute a major revenue source for the 45 states that impose such taxes and the District of Columbia. Sales and use tax rates vary from state to state and generally range from 2.9% to 7.25% at the state level. Many states also allow a 'local option' that permits local jurisdictions, such as cities and counties, to impose an additional percentage on top of the state-level tax and to keep the related revenues.

In general, a sales tax is a tax applied to the retail sale of tangible personal property and certain digital products and enumerated services. Although the form of the tax may vary, it is usually imposed directly upon the receipts from the retail sale of the taxable item. The person engaged in the business of making retail sales of the taxable item generally collects the sales tax from the purchaser and remits such amounts to the state. The use tax complements the sales tax and is usually assessed on purchases made out of state and brought into the jurisdiction for use, storage, or consumption. Typically, either a sales tax or a use tax can be assessed on a transaction, but not both.

The states generally impose a sales tax collection and remission liability on a seller once a minimum threshold is met with respect to either the number of sales transactions into or within a state or the dollar amount of sales into or within a state.

Liability for state and local sales taxes was governed by a physical presence nexus standard prior to the US Supreme Court's decision South Dakota v. Wayfair (21 June 2018). That decision voided the physical presence nexus standard and upheld South Dakota's statutory nexus standard of delivery into the state of more than USD 100,000 of sales or 200 or more transactions. Since the decision, most states that impose sales taxes have adopted similar standards. Some states, including South Dakota, have repealed the threshold based on number of transactions, leaving only the receipts threshold to determine whether a collection obligation exists.

States increasingly impose sales and use tax on digital products, remotely accessed software, software as a service, data services, and other electronically delivered products and services. For example, California has enacted legislation extending sales and use tax to certain digital products and software as a service beginning in 2027, while other states have expanded or clarified the taxation of software and digital services. The scope and sourcing rules vary by jurisdiction.

Customs duties and import tariffs

In general

All goods imported into the United States are subject to US Customs entry requirements and are dutiable or duty-free in accordance with their classification under the applicable items in the Harmonized Tariff Schedule of the United States. The tariff classification also identifies eligibility for special programmes and free trade agreement preferential duty rates. Aside from customs duties, the President has authority under US law to impose tariffs in certain cases (e.g. to address national security concerns).

When goods are dutiable on an 'ordinary' basis, ad valorem, specific, or compound duty rates may be assessed. An ad valorem duty rate, which is the type of duty mechanism most often applied, identifies the percentage of tax that will be assessed on the value of the merchandise, such as 7% ad valorem. A specific duty rate is a specified amount per unit, unit of weight, or other quantity, such as 6.8 cents per dozen. A compound duty rate is a combination of both an ad valorem rate and a specific rate, such as 0.8 cents per kilo plus 8% ad valorem.

In addition to ordinary duties, select products also may be subject to punitive tariffs, including anti-dumping and countervailing duties, that are imposed in response to specific trading conditions, at individually determined rates, and for specified time periods. In such cases, the punitive tariffs are assessed in addition to the ordinary duties. Customs requires that the value of the imported goods be properly declared, in accordance with US Customs regulations, regardless of the dutiable status of the merchandise.

Liability for the payment of duty and other customs fees becomes fixed at the time an entry is filed with US Customs and Border Protection (CBP), although the amount of duty owed may change subsequently if any of the information declared on entry is later determined to be erroneous or if the entered value is adjusted through a post-entry value reconciliation or other permissible customs adjustment. The obligation for payment is upon the person or entity in whose name the entry is filed, the Importer of Record.

New trade policies

President Trump announced an 'America First Trade Policy' through an Executive Order (EO) aimed at reshaping US trade relations and encouraging domestic manufacturing. The EO calls for a review of the causes of US trade deficits and recommendations on potential tariffs or other measures that may be appropriate. The EO also states that the US-Mexico-Canada agreement and other trade agreements are to be reviewed and may be renegotiated. 

The United States also announced a broad package of US import tariffs under the International Emergency Economic Powers Act (IEEPA) on 2 April 2025 – a day President Trump called ‘Liberation Day’. Since then, the administration has been negotiating trade deals with a multitude of countries that will ultimately be formalised in written trade agreements. In February 2026, the US Supreme Court held that IEEPA did not authorise the President to impose the broad reciprocal tariffs announced on ‘Liberation Day,’ creating potential refund issues for affected importers. Following that decision, the administration implemented a temporary global tariff under Section 122 of the Trade Act of 1974 while continuing to rely on other statutory authorities, including Sections 232, 301, and 338. The temporary Section 122 tariffs expired in July 2026 and were largely replaced by new Section 301 tariffs targeting imports from 60 economies based on findings related to forced labour enforcement. During the same period, the administration also announced additional product- and country-specific measures, including Section 338 tariffs on certain Canadian goods and continued expansion of Section 232 actions. As a result, the US tariff landscape continues to evolve rapidly, with ongoing litigation, new investigations, and frequent modifications to applicable duty rates and product coverage.

Excise taxes

Excise taxes (including retail excise taxes) are generally imposed by the federal and state governments on a wide range of goods and activities, including gasoline, kerosene, and diesel fuel used for transportation, air transportation, wagering, foreign insurance, ozone depleting chemicals (or products manufactured using ozone depleting chemicals), superfund taxes, manufacturing/import/distribution of specified goods (e.g. certain sporting goods, tires, firearms and ammunition, alcohol, and tobacco), and selling certain goods at retail (e.g. heavy vehicles, trailers, bodies, and chassis). See the Environmental tax section below for further detail regarding the excise taxes levied on ozone depleting chemicals (or products manufactured using ozone depleting chemicals), among other goods and activities.

The excise tax rates are as varied as the goods and activities upon which they are levied. For example, a federal excise tax of 7.5% is levied on domestic commercial air passenger transportation, whereas the federal excise tax imposed on motor fuel generally is 18.3 cents per gallon of gasoline (plus 0.1 cents per gallon Leaking Underground Storage Tank or LUST tax) and 24.3 cents per gallon of diesel fuel (plus 0.1 cents per gallon LUST tax). The federal excise tax imposed on the first retail sale, lease, or use of heavy vehicles, trailers, bodies, chassis, etc. is 12%. These taxes usually are imposed on the manufacturer, importer, retailer, or provider of the goods and activities and then passed through to the purchaser.

An excise tax is also imposed on publicly traded corporations equal to 1% of the fair market value of stock that is repurchased, or deemed repurchased, by the corporation (or certain of its affiliates) during the tax year. This levy is effective for certain stock repurchases made after 31 December 2022, subject to exceptions and adjustments for certain share issuances.

The OBBBA also added a 1% excise tax on certain cross-border remittance transfers made after 31 December 2025 and funded with cash or specified physical payment instruments. Treasury and the IRS have issued proposed guidance on the application and administration of the tax.

Property taxes

Many states and local governments impose a variety of property taxes on real property. Most states also impose a tax on business personal property.

Stamp taxes

Stamp taxes are not generally relevant at the federal level, except for the federal stamp tax imposed on the transfer of National Firearms Act (NFA) firearms. State and local governments frequently impose stamp taxes at the time of officially recording a transaction involving real property (commonly referred to as transfer taxes). Such taxes generally are based upon the value of the real property being transferred. The tax generally is imposed on the direct sale of real property, but some state and local governments also impose such a tax on the sale of a controlling interest of real property, which is the sale of a direct or indirect ownership of the real property. 

Many state and local governments also impose stamp taxes on certain goods made available for sale in the respective jurisdiction, like cigarettes and other tobacco products.

Accumulated earnings tax

Corporations (other than S corporations, personal holding companies, corporations exempt from tax under Subchapter F of the Code, and passive foreign investment companies) are subject to the accumulated earnings tax. Accumulated earnings and profits for the purpose of avoiding shareholder personal income tax (PIT) are subject to a penalty tax in addition to any other tax that may be applicable, equal to 20% of 'accumulated taxable income'. Generally, accumulated taxable income is the excess of taxable income with certain adjustments, including a deduction for regular income taxes, over the dividends paid deduction and the accumulated earnings credit. 

The accumulated earnings tax is not self imposed; it is generally assessed by the IRS upon audit. If the IRS asserts that the corporation has accumulated too much income for the year, a corporation may be able to rebut the assertion by providing evidence supporting the reasonable business needs for such accumulation.

Personal holding company tax

US corporations and certain foreign corporations that receive substantial 'passive income' and are 'closely held' may be subject to personal holding company tax. The personal holding company tax is 20% of undistributed personal holding company income and is levied in addition to the regular tax. Unlike the accumulated earnings tax, this tax is self imposed.

Payroll taxes 

Wages paid to employees in the context of employment are subject to US federal, state, and local employment taxes, unless an exception applies. These taxes include federal income tax withholding; social security, Medicare, and Additional Medicare (collectively, FICA); federal unemployment (FUTA); state income tax withholding; local income tax withholding; and state unemployment (SUI).

Employers generally are subject to FUTA of 6% on the first USD 7,000 of wages paid to employees meeting certain criteria, with potential reduction of up to 5.4% for state unemployment taxes. For 2026, employers also are subject to social security tax of 6.2% on the first USD 184,500 (up from USD 176,100 in 2025) of wages paid to employees and Medicare tax of 1.45% on all wages. Employers are required to withhold an equivalent amount of social security and Medicare taxes from employee wages, federal income tax at graduated or supplemental rates, and Additional Medicare tax of 0.9% on wages in excess of USD 200,000.

For 2026, the supplemental wage withholding rates for federal income tax purposes on supplemental wages up to USD 1 million in the aggregate in a calendar year are either a flat rate of 22% when applicable or based on the wage withholding table rate for aggregate wages when applicable. A mandatory flat rate of 37% applies to supplemental wages in excess of USD 1 million in the aggregate in a calendar year.

In addition, states may impose state income tax, state unemployment tax, workers' compensation insurance tax, and other state-level benefit requirements at varying rates depending on state law and the nature of employees' activities. Localities in certain states may also impose local income tax withholding requirements on wages paid to employees for services performed in those jurisdictions.

Environmental taxes

Importers, manufacturers, and sellers of ozone-depleting chemicals (ODCs), or imported products manufactured using ODCs, are subject to environmental taxes calculated per weight of the ODC. These taxes are reported on Forms 6627 and 720. The ODC tax on imported taxable products is determined under an exact method by weight or via the table method based on the listed product (such table is provided in Reg. sec. 52.4682-3(f)(6)). If the weight cannot be determined, the tax is 1% of the entry value of the product.

There also is a tax on crude oil and petroleum products. Before 1 January 2026, the rate of tax was the combined oil spill liability trust fund tax rate and the hazardous substance superfund financing rate. Following the expiration of the oil spill liability trust fund tax after 31 December 2025, only the hazardous substance superfund financing rate (adjusted annually for inflation) continues to apply. The tax is imposed on operators of refineries that receive crude oil and petroleum products entered into the United States for consumption, use, or warehousing.

The Infrastructure Investment and Jobs Act, enacted on 15 November 2021, reinstated certain chemical excise taxes. These excise taxes are commonly referred to as 'Superfund' taxes and are imposed on the first sale or use of certain chemicals and substances. The taxes were reinstated effective 1 July 2022 (these taxes had previously expired in 1995). In general, Section 4661 imposes on manufacturers, importers, and producers a per ton federal excise tax on the first sale or use of 42 enumerated chemicals ('taxable chemicals'). Section 4671 imposes taxes on an importer’s sale or use of a list of specified substances ('taxable substances') that are produced using these taxable chemicals. 

The taxes are reported on Forms 6627 and 720, and rates of tax on taxable chemicals range from USD 0.44 to USD 9.74 per short ton (2,000 lbs.). Taxable substances are taxed based upon their underlying chemicals. The taxes currently expire on 31 December 2031.

Other state and municipal taxes

Other taxes that states may impose, in lieu of or in addition to taxes based on income, include franchise taxes and taxes on the capital of a corporation. Some states and municipalities also impose, or are considering, taxes or fees on digital advertising, data, social media, and other digital activities. State and municipal taxes are deductible expenses for federal income tax purposes.