Skip to main content
Avalara Help Center

U.S. states with origin sourcing or special sourcing rules

This article applies to:AvaTax

Depending on the tax rules for where you're registered to collect and pay tax, you might have to pay based on where an item is shipped from or where it's shipped to. This is called sourcing. Most in-state and state-to-state sales are taxed based on the destination, but there are some places where the rules are different. 

Watch our "What is Sourcing" video.

clipboard_e2eae8147c091ea2dd4ed0b1209198ae3.png 

Note

These sourcing rules apply only to intrastate transactions, meaning that the origin and destination are located in the same state.

Interstate transactions are taxed based on the destination address.

 

Origin sourcing

Apply sales tax to products based on their point of origin (Ship From address) for intrastate transactions (transactions within the same state).

Example: Product shipped from Springfield to Chicago, both within the state of Illinois. Tax is based on the Springfield address because Illinois is an origin sourcing state.

States with origin sourcing:

  • Arizona
  • Illinois*
  • Missouri
  • New Mexico*
  • Ohio
  • Pennsylvania*
  • Tennessee*
  • Utah
  • Virginia*

Note: For states with an * above, both products and services are taxed at the origin address in AvaTax. For the other states above, services are taxed at the destination address in AvaTax.

Mixed sourcing

The tax rate depends on the product, service, or unique jurisdiction rules. 

States with mixed sourcing:

  • California
    • The sourcing method in California is different 
      • Products (mixed sourcing):
        • District taxes are based on the destination address
          District taxes appear as either a special tax jurisdiction with 'district' in the jurisdiction name, or as a city tax
        • State, county, and local taxes are based on the origin address
          Local taxes appear as a special tax jurisdiction with 'local' in the jurisdiction name
      • Services (destination sourcing):
        • Service are generally taxed based solely on the destination
  • Texas
    • If local tax rates at the origin address are less than 2%, the destination address is used to apply additional tax up to the 2% limit
    • Some services are based on the destination

Home rule

Self-administered local taxing authorities. See What are home rule states?

States:

Differing sales and use rates

States with at least one jurisdiction where the sales and use rates are different. See our compliance video covering tax types.

States with differing rates:

  • Alaska
  • Alabama
  • Arizona
  • Colorado
  • Iowa
  • Illinois
  • Missouri
  • Mississippi
  • New Mexico
  • Oklahoma
  • South Dakota (only the city of Carthage)
  • Was this article helpful?