Taxable Sales

Sales and rentals of tangible personal property are taxable unless an exemption applies.

Examples of taxable sales:

• Batteries
• Candy and gum
• Dietary supplements
• Equipment sales or rentals
• Jewelry and watches
• Office supplies
• Pet food

For more information, see the Sales and Use Tax Business Guide.

Business Inventory

Sales of taxable business inventory do not qualify for the isolated or occasional sale exemption. Business inventory is sold in the regular course of business.

To sell taxable inventory exempt from sales tax, you must obtain a completed Form ST3, Certificate of Exemption from the buyer.

For more information, see Isolated and Occasional Sales.

Clothing

The clothing exemption applies to clothing suitable for general use. The clothing exemption does not apply to the following, which are taxable: fur clothing, clothing accessories or equipment, sports or recreational equipment, or protective equipment.

Examples of taxable clothing accessories or equipment:

Examples of taxable sport or recreational equipment:

Examples of taxable protective equipment:

For more information, see Clothing.

Determining Sales Price

For sales tax purposes, sales price is the amount subject to sales tax. Sales price includes the following charges:

• All items required as a condition of the sale
• Delivery or handling charges
• Fabrication labor
• Installation charges
• Layaway fees
• Retail price of the product or service

• Service charges (trip charge, fuel surcharge, processing charges, etc.)
• Taxes that are the obligation of the seller

The entire amount billed to the customer is taxable, even if the charges are separately stated.

Not Included in Sales Price

Sales price does not include the following charges:

• Credit allowed for tangible personal property taken in trade (trade-in allowance)
• Discounts or coupons (see the Discounts and Coupons)
• Interest
• Finance charges
• Taxes legally imposed on the consumer, if separately stated on the invoice

Sales Tax Separately Stated

You should separately state sales tax on the customer’s invoice. If you include sales tax in the price, you must note that the item has tax included on the receipt or post a sign stating tax is included.

Returns

When a customer returns a taxable item, refund the purchase price and sales tax paid on refunded items.

Coupons, Discounts, Rewards, and Rebates

Calculating sales tax on the price of an item may be affected by:

• Coupons, rewards, and rebates
• Retailer discounts
• Daily deal website vouchers and coupons

For more information, see Coupons, Discounts, Rewards, Rebates, and Other Forms of Payment.

Local Sales Tax