Mississippi became the first US state to adopt a general sales tax, converting a gross-receipts levy into a modern retail sales tax in 1930 and formally codifying it under the Mississippi Business and Occupation (Sales) Tax Act, effective March 1, 1934. The trigger was the Great Depression: collapsing property values and incomes gutted the traditional tax base, and states desperately needed a new, harder-to-evade revenue source tied to everyday spending.

The idea spread fast. By the end of the 1930s, 22 states had enacted their own sales taxes. Unlike a European-style VAT, US sales tax stayed a single-stage, retail-only tax — a structural choice made state-by-state that still defines the system nearly a century later.

For most of the 20th century, sales tax only applied to businesses with a physical presence — a store, warehouse, or employee — in a state. Mail-order and later e-commerce exploited this gap for decades. That ended with South Dakota v. Wayfair, Inc. (2018), in which the Supreme Court overturned the physical-presence rule and allowed states to tax remote sellers based on economic nexus alone. Within two years, every taxing state had adopted an economic-nexus law, reshaping sales tax into the destination-based, e-commerce-inclusive system this calculator models.

Today, five states still collect no statewide sales tax at all — a direct legacy of decisions some made in the 1930s–60s to rely instead on income or property taxes, or in Alaska's and New Hampshire's case, resource and tourism revenue.

If you sell online, you must collect sales tax in any state where you have nexus — either physical (an office, warehouse, or inventory, including Amazon FBA stock) or economic (crossing a sales/transaction threshold).

Most states set economic nexus at $100,000 in annual sales, though some use $250,000 or $500,000, and several have dropped the 200-transaction test. Once you cross the threshold you must register, collect, and remit.