Do freelancers have to charge sales tax on services?

For most freelancers in most states: no. Sales tax has historically applied to tangible goods, and professional services have generally sat outside it.

But “generally” is doing real work in that sentence, and the exceptions have been expanding steadily. Three things determine your answer.

1. Does your state tax services at all?

This varies enormously.

A handful of states tax services broadly — Hawaii, New Mexico, South Dakota and West Virginia are the usual examples, and their taxes reach most services by default.

Most states tax specific enumerated services instead: things like landscaping, pest control, security, telecoms, some repair work. Professional and creative services — design, writing, consulting, software development — are commonly not on those lists.

And several states tax essentially no services at all.

The direction of travel matters: states have been steadily adding services to their tax base as the economy shifts away from goods. A category that was untaxed five years ago may not be today.

2. What exactly are you selling?

This is where freelancers most often get it wrong, because the distinction is not intuitive.

A service — you were paid for your time and expertise, and the result is bespoke work for that client. Usually untaxed.

A digital product — a template, a font, a preset, a stock photo, an ebook, a course. Frequently taxable, in a growing number of states, and taxed at the buyer’s location rather than yours.

Software — treated inconsistently. Custom software developed for one client is often untaxed; prewritten or “canned” software is often taxable; SaaS sits somewhere in between and states genuinely disagree about where.

So the same person can have untaxed and taxable revenue in the same month. A designer doing client work is likely providing an untaxed service; the same designer selling a Figma template is likely selling a taxable digital product.

3. Where is the customer?

Since the 2018 South Dakota v. Wayfair decision, states can require sellers with no physical presence to collect their sales tax once the seller crosses an economic nexus threshold — commonly around $100,000 of sales into that state, or a transaction count.

For a freelancer selling services to a handful of clients, those thresholds are not close. For someone selling digital products at volume across many states, they matter, and the obligation is per-state.

You also have nexus wherever you have a physical presence: an office, employees, inventory, sometimes even significant time spent working in a state.

The practical position for most freelancers

If you provide bespoke professional services to clients, in a state that does not tax services, you almost certainly do not need to charge or collect sales tax.

That covers a large share of freelance work — writing, design, consulting, development, photography services, marketing.

Where you should actually check:

• You sell digital products — templates, courses, presets, ebooks, stock assets
• You sell prewritten software or SaaS
• You are in Hawaii, New Mexico, South Dakota or West Virginia
• Your work includes anything physical: printed deliverables, merchandise, hardware
• You bill for something plausibly on an enumerated list — some IT support, data processing and telecoms services are taxable in more states than people expect

If you do have to collect

The mechanics, briefly:

1. Register with the state’s revenue department for a sales tax permit. Collecting without registering is itself a problem.
2. Charge the correct rate — which in most states means the destination rate, based on where the customer is, not where you are.
3. Show it separately on the invoice. Sales tax is money you hold on the state’s behalf; it is not your revenue.
4. File and remit on the state’s schedule — monthly, quarterly or annually depending on volume.

That last point is worth internalising: collected sales tax is not income and should not be treated as available cash. Set it aside like you set aside income tax.

It is not income tax

Different tax, different rules, different agency. Sales tax collected is not part of your profit, does not appear as income on Schedule C, and has nothing to do with self-employment tax.

If you collected it and remitted it, it passes straight through you. Reporting it as revenue and deducting the remittance produces the same answer but invites confusion.

Get this one checked

Sales tax is the area of freelance tax where general advice is least reliable, because the answer depends on your state, your specific deliverable, and where your buyers are — and all three are moving targets.

If you sell anything digital, or you are in a state that taxes services broadly, it is worth a short conversation with an accountant who knows your state. It is a small fee against a liability that compounds quietly, since uncollected sales tax generally becomes your liability rather than the customer’s.

Your income tax position is separate and more predictable — the calculator below covers that side.