📅 2026 Update: Changes in Sales and Use Tax Regulations

Since the original article was published, there have been important updates to sales and use tax regulations across several states. Key changes include new tax rates and structures that could affect businesses and consumers alike. The earlier article continues further down the page, providing foundational understanding of use tax.

🏷️ New Sales Tax Rate in North Carolina

On July 1, 2026, North Carolina introduced a new sales and use tax rate structure. Businesses operating in the state must register for a sales and use tax permit and file returns according to these new rates. This change may impact pricing and compliance for many businesses.

📊 Changes in Ohio's Sales Tax Rate

Effective October 1, 2025, Brown County, Ohio, reduced its sales and use tax rate from 7.25% to 7.00%. This reduction may provide some relief for consumers and businesses in the area, potentially lowering the cost of goods and services.

💼 Filing Requirements for Businesses

Businesses in both North Carolina and Ohio must file sales and use tax returns. In North Carolina, returns are due on the 20th day of the month following the reporting period. In Ohio, the deadline is the 23rd day of the month.

Each state has its own rules for registration and filing.

🗓️ Processing Times for Returns

Processing times for sales and use tax returns in North Carolina and Ohio are not specified. Businesses should consult their respective state departments for the most current processing information.

📌 Key Takeaways

  • North Carolina's new tax structure took effect on July 1, 2026.
  • Ohio reduced its sales tax rate to 7.00% starting October 1, 2025.
  • Filing deadlines differ: North Carolina (20th) and Ohio (23rd).
  • Processing times for returns are not specified; check with state authorities.
  • Businesses must register for a sales and use tax permit in both states.

💡 Tips for Understanding Use Tax

Review all details of your situation with an attorney.

📑 Understand Your State's Tax Rates

Sales tax rates vary significantly from state to state. As of October 2026, state sales tax rates range from 2.9% in Colorado to 7.25% in California. Knowing your state's rate can help you calculate your tax obligations accurately.

🔍 Keep Track of Local Tax Changes

Local jurisdictions can impose their own tax rates on top of state taxes. For example, Louisiana has the highest combined sales tax rate at 10.13%. Be aware of local rates to ensure compliance.

📅 Know Your Filing Deadlines

Different states have different deadlines for sales and use tax returns. In North Carolina, returns are due on the 20th of the month, while in Ohio, they are due on the 23rd. Missing these deadlines can lead to penalties.

📜 Register for the Correct Permits

Businesses must register for a sales and use tax permit in states where they have tax obligations. Ensure you complete this step to avoid compliance issues.

💰 Monitor Changes in Exemptions

Sales tax exemptions can change. For instance, North Carolina exempts certain items from its general 4.75% state rate. Regularly check for updates to these exemptions to ensure you are in compliance.

🏆 Tax Services Ranked by User Reviews (2026)

This section highlights tax services relevant to understanding sales and use tax. The services listed are based on Trustpilot data from October 2026. Star ratings indicate user experiences, but remember that unhappy customers often write more reviews.

🥇 1. H&R Block

H&R Block has been rated 4.2 on Trustpilot. It is known for its tax preparation services and online filing options, helping users navigate their tax obligations. However, some users have noted high fees for in-person services and mixed experiences with customer service responsiveness.

🥈 2. TurboTax

TurboTax holds a 4.0 rating. The service is recognized for its user-friendly interface and online tax filing software, making it accessible for many users. However, it has a limited free version and often upsells additional services, which may not suit everyone's needs.

🥉 3. TaxSlayer

TaxSlayer has a Trustpilot score of 3.8. It is known for affordable tax filing and offers multiple filing options, making it appealing for budget-conscious users. Some customers have reported limited customer support and occasional software glitches.

4️⃣ Jackson Hewitt

Jackson Hewitt has received a rating of 3.5. This service is known for in-person tax preparation and year-round support. Users have noted higher service fees and inconsistent quality across different locations, which may impact overall satisfaction.

5️⃣ Liberty Tax Service

Liberty Tax Service has a Trustpilot rating of 3.2. It is known for its franchise tax preparation and seasonal promotions. However, some customers report variable service quality and aggressive marketing tactics, which can detract from their overall experience.

🆓 Free Government Assistance

Both the North Carolina Department of Revenue and the Ohio Department of Taxation offer resources and assistance for businesses regarding sales and use tax. These governmental bodies can help clarify tax obligations and provide guidance on compliance.

🔎 What to Compare When Choosing Tax Services

  • 📊 Trustpilot ratings to gauge user satisfaction.
  • 💰 Fees for services and any hidden costs.
  • 🛠️ Availability of user support and resources.
  • 📅 Filing options and deadlines.
  • 📜 Exemptions and deductions offered.

❓ Frequently Asked Questions

❓ What is the current sales tax rate in North Carolina?

The current general sales tax rate in North Carolina is 4.75%, but local taxes may apply, affecting the total rate.

💰 Are there exemptions for sales tax in Ohio?

Yes, Ohio has specific exemptions for certain items, such as food and prescription drugs. It’s important to consult state tax authorities for a full list.

🔄 How often do sales tax rates change?

Sales tax rates can change frequently. Businesses should regularly check with state and local tax authorities for the most current information.

🚨 What happens if I miss my filing deadline?

Missing your filing deadline can lead to penalties and interest. It's important to file on time to avoid these consequences.

🏢 Do I need to register for a sales tax permit if I sell online?

Yes, if you sell tangible personal property or taxable services in states where you have a tax obligation, you must register for a sales tax permit.

📞 Where can I find help with sales tax compliance?

Both the North Carolina Department of Revenue and the Ohio Department of Taxation offer resources and assistance for businesses to navigate sales tax compliance.

⚖️ Recent Cases Related to Sales and Use Tax

Recent court rulings have addressed various issues surrounding sales and use tax compliance and regulations. These rulings can impact how businesses operate and their tax obligations.

You can browse more rulings on the news page to stay updated on recent legal developments.

End of October 2026 Update





Understanding the Use Tax


When you purchase goods on the Internet from out-of-state vendors or buy big-ticket items in a state with a lower sales tax rate, you may be responsible for paying a use tax. A use tax is a tax that is levied on the use, storage, or consumption of tangible personal property in a state, even if the property was not purchased within the state. The use tax is designed to prevent individuals and businesses from avoiding paying taxes by purchasing goods in a state with no or a lower sales tax rate and not reporting it to their home state. This article aims to help readers understand what use tax is, when and how to pay it, and what are its implications.

The Concept of Use Tax


In the United States, state governments levy a sales tax on the sale or lease of tangible personal property such as clothing, toys, electronics, furniture, and vehicles, among others. The rate of the sales tax varies from state to state and can range from 4% to 10% or higher. The sales tax is collected by the seller and then remitted to the state government. However, if you live in a state that has a sales tax and purchase an item from an out-of-state retailer that has no physical presence, such as a brick-and-mortar store, warehouse, or office, you may owe use tax on the purchase.

The use tax applies to individuals, businesses, and organizations that use, store, or consume tangible personal property in the state and did not pay sales tax on the purchase to the retailer. The use tax is calculated at the same rate as the sales tax and is typically due on the total value of the property, including shipping and handling fees. The uses of tangible personal property that are subject to use tax include:

- purchases made online, by phone, or by mail from out-of-state retailers that have no physical presence in the state;
- purchases made in another state with a lower sales tax rate than the home state;
- items shipped or delivered from out-of-state to the home state for use, storage, or consumption;
- gifts, prizes, or awards received from out-of-state sources that have no sales tax applied.

However, some purchases are exempt from use tax, such as:

- items purchased for resale or as raw materials for manufacturing;

- goods purchased outside the state and used in another state that has a higher sales tax rate;
- purchases made by the federal government, state governments, or their agencies;
- services, such as repairs, maintenance, or installation, that do not involve the transfer of tangible personal property.

The use tax is often confused with the sales tax, but they differ in how they are collected and enforced. Unlike the sales tax, which is collected by the seller and paid to the state government, the use tax is self-assessed by the buyer and remitted directly to the state tax agency. The use tax is enforced in the same manner as the sales tax, through audits, information sharing, and penalties for noncompliance.

How to Pay Use Tax


If you owe use tax to your state government, you may have to report and remit it on your state income tax return, either as a separate line item or as an adjustment to your tax liability. Some states have specific forms or instructions for paying use tax, while others may require you to estimate the amount owed and pay it separately. It is essential to keep accurate records of your out-of-state purchases, including receipts, invoices, and delivery confirmations, to determine whether you owe use tax and how much.

To calculate your use tax liability, you can use the same tax rate that applies to your state's sales tax. For example, if your home state has a 6% sales tax rate and you purchased a laptop from an out-of-state vendor for $1000, you would owe $60 in use tax (6% of $1000). However, if the vendor charged you a sales tax of 3%, you would only owe $30 in use tax (the difference between the sales tax and the state rate).

Most state tax agencies provide online tools or calculators to help taxpayers estimate their use tax liability and file their returns. Some states also offer amnesty or voluntary disclosure programs for taxpayers who have not paid use tax in the past or underreported it. These programs allow taxpayers to pay their overdue taxes without penalty or interest and avoid audits and other enforcement actions.

Implications of Use Tax


The use tax is an important source of revenue for state governments, especially as more and more commerce is conducted online and across state borders. Failure to pay use tax can result in penalties, interest, and even criminal charges, depending on the amount owed and the level of noncompliance. In addition, noncompliance with use tax laws can lead to unintended consequences, such as:

- damage to local businesses: When consumers choose to buy from out-of-state vendors to avoid paying sales tax, they may hurt local businesses that have to charge sales tax and compete on price. Local businesses also have to pay property taxes, payroll taxes, and other fees that out-of-state vendors do not, putting them at a disadvantage and reducing the tax revenue for the state.

- loss of public services: The revenue from use tax, like sales tax, goes to fund essential public services such as roads, schools, public safety, and healthcare. When individuals or businesses evade use tax, they are depriving themselves and others of these services and contributing to the weakening of the state's infrastructure and economy.

- exposure to audits and fines: The state tax agencies have the authority to audit and investigate taxpayers who do not report and pay use tax properly. Audits can be time-consuming, stressful, and expensive, particularly for small businesses or individuals who lack the resources to hire professional help. Fines, interest, and other penalties can also add up quickly, making noncompliance with use tax laws a costly mistake.

Conclusion


Use tax is an important concept that all individuals, businesses, and organizations should understand and comply with. By paying use tax, taxpayers can contribute to the stability and growth of the state's economy and infrastructure, support local businesses, and avoid the risks of noncompliance. State tax agencies have the obligation to enforce use tax laws and ensure that all taxpayers pay their fair share of taxes. By following the rules, keeping accurate records, and reporting use tax honestly, taxpayers can create a level playing field and promote a healthy and prosperous society.

The use tax is one type of excise tax. The use tax is based on items purchased from another state, that are used by a resident in their state of residence. If the product was purchased within the state of residence, it would have incurred a sales tax. Since the product was purchased in another state, the state where the product is used, or the state of residence of the purchaser, would expect the buyer to pay use taxes on that item.

Generally, the use tax can be assessed on any items purchased out of state, or on the Internet. However, items that are to be resold, would not be subject to use taxes.  The use tax is a sale tax imposed on items that would have incurred a sales tax had the item been purchased in the state of residence. In other words, taxpayers are not responsible for use tax if the items does not incur as sales tax in their state.

Use taxes are often imposed on items used, stored or consumed in the taxpayers state of residence, when they were purchased outside of the jurisdiction. Currently, almost a third of the states include a voluntary use tax line on their tax forms. Use taxes are expected to be paid in certain circumstance  on specific items. When voluntarily paying use taxes, tax payers must disclose all items purchased outside of their tax jurisdiction.

In contrast, some states assume that each taxpayer shoulders certain use taxes, based on their salary. In those states, taxpayers simply locate their salary on the use taxes table and add that amount to their tax liability. However, taxpayers that purchase an item or items above a certain threshold, must list all items and calculate the use tax on those items.  The Streamlined Sales Tax Project was an effort in which merchants register and disclose all purchases made by out of state residents.

Use taxes have been the subject of many lawsuits. Many Internet retailers have been forced to turn over their records so that the government can begin to enforce the use tax on a more equal level. Most taxpayers have not been willing to volunteer their use tax responsibility amount. Many taxpayers view the use tax as unfair taxation because it often involves paying double tax on an item when an individual purchase that item in a state other than the one in which they reside. However, many taxes are imposed on more than one level, but the consumer simply does not realize it.

Certain taxes, like excise taxes on gasoline, are already included in the price. Most taxpayers are not even aware that they are paying taxes on certain items. The use tax is likely to be increasingly enforced as states struggle to decrease large deficits in their budgets. Taxpayers may find that they are responsible for past use taxes as well as late fees and interest on those taxes.