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U.S. states with special sourcing rules

This article applies to:Avalara AvaTax Update

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. 

Origin sourcing

Origin states apply sales tax on in-state purchases based on where an item is shipped from. AvaTax calculates based on the ship-from address in those states marked by an asterisk (*).

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

Mixed sourcing

States that use mixed sourcing base their rules on the type of product or service or on the specific jurisdiction.

  • California
    • Sales of products in counties and local special jurisdictions are based on where you ship from.
      • The statewide base sales and use tax rate is 7.25% uses the ship-from address. This rate includes 1.25% in local taxes (0.25% goes to county transportation funds, 1% goes to city or county operations).
      • The statewide base sales and use tax rate is made up of both state and local taxes.
        • State: 6%
        • Local Transportation fund (County of place of sale or use): 0.25% (In AvaTax, Jurisdiction Type is “County.”)
        • Local Jurisdiction (City or county of place of sale or use): 1% (In AvaTax, Jurisdiction Type will be “Special.” The Jurisdiction Name includes “Local Tax SL.”)
    • Sales of products in cities and special jurisdictions are based on the destination.
      • District taxes may be levied on a countywide basis and within incorporated city limits.
        • In AvaTax, County District Tax is represented by “Jurisdiction Type: Special, Jurisdiction Name: County District Tax SP.”
        • In AvaTax, City District Tax is represented by “Jurisdiction Type: City.”
    • Sales of services are based on the destination.
  • Texas
    • If local tax rates at the origin address are less than 2%, the ship-to address is used to apply additional tax up to the 2% limit.
    • Some services are based on the ship-to address.
  • Ohio

Home rule

Home rule states allow local jurisdictions to set and collect tax rates. That means you may need to register to collect and pay taxes in each separate city, county, and special jurisdiction.

Differing sales and use rates

Some U.S. states have at least one jurisdiction where sales and use tax rates are different than those in the rest of the state.

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