PayPal Sales Tax

by TaxJar July 12, 2021

Guidelines for Collecting Sales Tax on PayPal

PayPal generally only allows sellers to collect one sales tax rate per state. This system isn’t ideal for sellers based in a destination-based sales tax state or sellers who have sales tax nexus in more than one state.

So how much do you collect?

With PayPal, you have two options:

1. Set sales tax rates by zip code in every state – With this method, you can enter a separate sales tax rate for each zip code in your state. This will require finding the sales tax rate at each zip code. While this method will be more accurate, most states have hundreds of zip codes, so this can be time consuming. Also, states vary in when and how they publish their sales tax rates (many don’t publish them by zip code) so this can also be frustrating to attempt to even find the information to enter here.

2. Charge your customers the “average” sales tax rate in a state – If you sell in multiple states and don’t yet have time or the information to enter a different sales tax rate for every zip code in a state, we recommend charging your customers the “average” sales tax rate in each state. Use the information in the table below to charge customer’s the state’s average rate. If you do this, you’ll need to use a tool like TaxJar’s Expected Sales Tax Due Report to ensure you are remitting the right amount of sales tax to the state. (Keep in mind that, we provide an average rate, so once in awhile one of your customers may be charged more or less sales tax than they are accustomed to. If they are charged more, you can refund the excess.)

But there’s one exception! If you live in one of the “origin-based” sales tax states, charge the rate at your business location. You can look this rate up with TaxJar’s Sales Tax Calculator. Note: If you do NOT have a location in a state, our accounting advisors recommend taking an average of the sales tax rates in the 5 most populous cities in the state. While this is imperfect, it gives you the best chance of collecting as correctly as possible.

Origin based states:

  • Arizona
  • Illinois
  • Mississippi
  • Missouri
  • New Mexico
  • Ohio
  • Pennsylvania
  • Tennesee
  • Texas
  • Utah
  • Virginia

Use the table below to find your nexus states and fill in your sales tax rates.

PayPal Sales Tax Table

Average expected sales tax rates across thousands of merchants and millions of PayPal transactions.

StateAvg. Sales Tax RateShipping & Handling
Alabama (AL):8.360%
Alaska (AK):1.540%Also charge sales tax on S & H
Arizona (AZ):Lookup Rate
Arkansas (AR):8.570%Also charge sales tax on S & H
California (CA):8.260%
Colorado (CO):6.470%Also charge sales tax on S & H
Connecticut (CT):6.350%Also charge sales tax on S & H
Delaware (DE):0.000%
District of Columbia (DC):6.000%Also charge sales tax on S & H
Florida (FL):6.820%Also charge sales tax on S & H
Georgia (GA):7.330%Also charge sales tax on S & H
Hawaii (HI):4.240%*Also charge sales tax on S & H
Idaho (ID):6.040%
Illinois (IL):Lookup RateAlso charge sales tax on S & H
Indiana (IN):7.000%Also charge sales tax on S & H
Iowa (IA):6.890%
Kansas (KS):8.050%Also charge sales tax on S & H
Kentucky (KY):6.000%Also charge sales tax on S & H
Louisiana (LA):9.580%
Maine (ME):5.500%
Maryland (MD):6.000%
Massachusetts (MA):6.250%
Michigan (MI):6.000%Also charge sales tax on S & H
Minnesota (MN):7.180%Also charge sales tax on S & H
Mississippi (MS):Lookup RateAlso charge sales tax on S & H
Missouri (MO):Lookup RateAlso charge sales tax on S & H
Montana (MT):0.000%
Nebraska (NE):5.860%Also charge sales tax on S & H
Nevada (NV):7.780%
New Hampshire (NH):0.000%
New Jersey (NJ):6.630%Also charge sales tax on S & H
New Mexico (NM):Lookup RateAlso charge sales tax on S & H
New York (NY):8.190%Also charge sales tax on S & H
North Carolina (NC):6.900%Also charge sales tax on S & H
North Dakota (ND):5.510%Also charge sales tax on S & H
Ohio (OH):Lookup RateAlso charge sales tax on S & H
Oklahoma (OK):7.860%
Oregon (OR):0.000%
Pennsylvania (PA):Lookup RateAlso charge sales tax on S & H
Puerto Rico (PR):11.500%Also charge sales tax on S & H
Rhode Island (RI):7.000%Also charge sales tax on S & H
South Carolina (SC):7.360%Also charge sales tax on S & H
South Dakota (SD):5.600%Also charge sales tax on S & H
Tennessee (TN):Lookup RateAlso charge sales tax on S & H
Texas (TX):Lookup RateAlso charge sales tax on S & H
Utah (UT):Lookup Rate
Vermont (VT):6.040%Also charge sales tax on S & H
Virginia (VA):Lookup Rate
Washington (WA):8.760%Also charge sales tax on S & H
West Virginia (WV):6.100%Also charge sales tax on S & H
Wisconsin (WI):5.460%Also charge sales tax on S & H
Wyoming (WY):5.290%

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