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Sales Tax Permits: Which States Require Them and When?

Introduction

Sales tax permit requirements apply to most businesses selling taxable goods or services, and you must meet them before you can legally collect sales tax. A sales tax permit—also called a sales tax license—is a state authorization that lets a business collect sales tax from customers and remit it to the state.

In 2025, sales tax compliance is more complex than ever, especially for online sellers. Since the South Dakota v. Wayfair Supreme Court decision, states can require businesses with no physical presence to collect sales tax if they meet certain sales thresholds—called economic nexus.

This guide explains sales tax permit requirements, which states require them, when you need one, and how to stay compliant to avoid penalties.

1. What Is a Sales Tax Permit?

A sales tax permit is a legal license from a state to collect and remit sales tax. You cannot legally collect sales tax without this permit. It’s usually free or low-cost to obtain, but failing to register before making taxable sales can result in fines and back taxes. Understanding sales tax permit requirements ensures you avoid these penalties.

2. Which States Require a Sales Tax Permit?

Forty-five states plus the District of Columbia require a sales tax permit for taxable sales.

States without a statewide sales tax:

• Alaska (but local sales taxes may apply)

• Delaware

• Montana

• New Hampshire

• Oregon

📌 Tip: Even in states without statewide sales tax, certain cities or counties may require local sales tax registration.
See our guide on Business Licenses: What You Need by Industry and State (2025 Update) for related state-by-state licensing requirements.

3. When Do You Need a Sales Tax Permit?

You must have a sales tax permit before making taxable sales in a state where you have nexus.

Two main types of nexus:

• Physical Nexus: You have a store, warehouse, office, or employees in the state.

• Economic Nexus: You exceed a state’s sales or transaction thresholds, even without a physical presence.

💼 Example: If you sell $150,000 worth of goods into California in a year, you must register and collect sales tax—even if you have no physical location there. The sales tax permit requirements for each state may differ in thresholds and application process.

4. How to Apply for a Sales Tax Permit

Most states let you apply online through their Department of Revenue. Basic steps:

1. Gather business info (EIN, address, ownership details).

2. Visit the state’s tax department website.

3. Complete the online application.

4. Pay any applicable fee.

5. Keep your permit visible (if required).

🛠 Resource: Streamlined Sales Tax Governing Board – State Links — updated August 2025.

5. Common Misunderstandings About Sales Tax Permits

Many businesses confuse sales tax permits with business licenses—they’re not the same.

• A sales tax permit is for collecting and remitting sales tax.

• A business license is general authorization to operate.

📌 Tip: If you operate in multiple states, you may need a separate permit in each state where you have nexus.

6. Penalties for Not Having a Sales Tax Permit

Selling without a required permit can result in back taxes, penalties, and even criminal charges. Potential consequences include:

• Late registration fines

• Interest on unpaid taxes

• Personal liability for uncollected tax

• Revocation of your right to do business in the state

See What Is a Registered Agent and Why Does Every Business Need One? for more on staying compliant.

FAQ

Q1: Do I need a sales tax permit if I only sell online?
Yes—if you meet a state’s economic nexus thresholds for online sales, you must get a permit.

Q2: How long does it take to get a sales tax permit?
Most states issue permits within a few days to a few weeks after you apply online.

Q3: Is there a fee for a sales tax permit?
Some states charge no fee, while others may charge $10–$100.

Q4: Can I use one sales tax permit for all states?
No—each state where you have nexus requires its own registration.

📌 Conclusion – Key Takeaways

• Sales tax permit requirements apply in most states before you can legally collect sales tax.

• Nexus—physical or economic—determines where you must register.

• Online sellers are subject to the same rules if they meet state thresholds.

• Failure to comply can lead to serious financial and legal consequences.

• Always check both state and local requirements.

If you need legal guidance on sales tax permits, book a consultation with The Law Spot today.

Last Updated: August 18, 2025