Sales tax glossary
What is use tax?
Use tax is a tax on taxable goods or services used, stored or consumed in a state when sales tax wasn't collected at purchase. The buyer owes it directly to the state, usually at the same rate as sales tax. It keeps buyers from avoiding sales tax by purchasing from sellers that don't collect it.
Example
A business buys office furniture from an out-of-state seller that doesn't charge sales tax. The business reports and pays use tax on the furniture on its own return.
Why it matters for sellers
Use tax applies to your own purchases, not only your sales. Auditors routinely review equipment and expense purchases for unpaid use tax, and it's a frequent audit finding.
Related terms
This definition is general information, not tax or legal advice. Rules vary by jurisdiction and change over time.
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