Sales tax glossary
Sales tax vs. use tax: what's the difference?
Sales tax is collected by the seller at the time of sale, while use tax is owed by the buyer when sales tax wasn't collected on a taxable purchase. They're two sides of the same tax. Rates are usually the same, and a buyer who paid sales tax doesn't also owe use tax.
Example
A customer buys a laptop from a local store and pays sales tax at the register. The same customer buys a monitor from an out-of-state seller that doesn't collect tax, and owes use tax on the monitor.
Why it matters for sellers
Sellers collect sales tax; buyers self-assess use tax. Most businesses are both: a seller collecting from customers and a buyer owing use tax on its own untaxed purchases.
Related terms
This definition is general information, not tax or legal advice. Rules vary by jurisdiction and change over time.
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