Can I invoice clients without charging taxes in the US?

Can I invoice clients without charging taxes in the US?

If you run a small business, freelance, or sell services online, one of the first practical questions that comes up is whether you can send an invoice to a US client without adding “tax” as a line item. The short, helpful answer is: sometimes yes, sometimes no, and it depends on what you sell, where you sell it, and whether you’re required to collect a specific type of tax. In the United States, there isn’t one universal “sales tax” rule like in some countries. Instead, taxes are governed by a patchwork of federal, state, local, and sometimes industry-specific rules.

This article breaks down what “charging taxes” can mean, when you may be allowed to invoice without them, when you must collect them, and how to structure your invoices so they’re clear, professional, and compliant. We’ll also walk through common scenarios for service providers, digital sellers, product-based businesses, and cross-state (and international) invoicing. Along the way, we’ll show practical invoice setups you can use inside invoice24 so you can invoice confidently without confusion.

First, what does “charging taxes” on an invoice actually mean?

When people say “taxes on an invoice,” they often mean one of three different things:

1) Sales tax (and similar transaction taxes)
Sales tax is typically charged to the customer on a taxable sale of goods or certain services. The business collects it and later remits it to the state or local tax authority.

2) Value-added tax (VAT)
VAT exists in many countries, but the US does not have a national VAT. However, US sellers invoicing foreign clients may encounter VAT rules in the client’s country (more on that later). Still, within the US, you’re generally dealing with sales tax, not VAT.

3) Income tax and self-employment tax
These are taxes you pay on your profits. You do not charge these to your customers as a line item on most invoices. Instead, you report income and expenses and pay income taxes yourself.

So if you’re wondering, “Can I invoice without charging taxes?” you likely mean: “Do I have to add sales tax (or a similar tax) to my invoice for this client?” That is the main focus of this guide.

Invoicing without sales tax: when it’s commonly allowed

There are many situations where you can send an invoice in the US with no sales tax line at all. Here are the most common.

You sell services that are not taxable in your state

In many states, most professional services are not subject to sales tax. For example, consulting, coaching, graphic design, writing, software development, and many marketing services are frequently non-taxable. But “frequently” is not “always.” Some states tax certain services, and the definitions can be specific (for example, some states tax certain digital services, telecommunications, or repair/installation services).

Practical takeaway: If your service is not taxable in the state where you’re required to collect tax, you can invoice without adding sales tax. In invoice24, you can simply omit the tax field or set the tax rate to 0% for that invoice or that item.

You do not have sales tax “nexus” that triggers collection duties

Even if something is taxable, you typically only have to collect sales tax if you have a legal connection—called “nexus”—with the state where the customer is located. Nexus can be created in multiple ways, commonly including:

Physical nexus: An office, home office, warehouse, employees, or inventory in the state.
Economic nexus: You exceed a sales threshold into that state (usually based on revenue, number of transactions, or both).
Marketplace nexus: If you sell through certain marketplaces, the marketplace may collect tax on your behalf for those sales.

If you do not have nexus in a customer’s state, you generally do not have to collect that state’s sales tax (though the customer may owe “use tax”). This is one of the most common reasons businesses invoice without sales tax for out-of-state clients.

Practical takeaway: You can often invoice out-of-state clients without sales tax, especially for services, but you should monitor whether your sales volume creates economic nexus over time.

Your customer is tax-exempt and provides valid documentation

Some customers are exempt from sales tax, such as certain nonprofit organizations, government agencies, or resellers purchasing items for resale. Typically, you can invoice them without sales tax if you have the correct exemption certificate or resale certificate on file (the exact document depends on the state and the type of exemption).

Practical takeaway: Tax-exempt does not mean “the customer says they are exempt.” You generally need appropriate documentation. In invoice24, you can store a note in the client profile (for example, “Exemption certificate on file”) and set the client’s default tax status to exempt so invoices automatically reflect that.

Your sales are handled by a marketplace that collects tax

If you sell through certain marketplaces or platforms, the marketplace may be required to collect and remit sales tax for you on qualifying transactions. In that case, you might not add sales tax on your own invoice, or you may invoice the marketplace rather than the end customer depending on how your business relationship is structured.

Practical takeaway: Make sure your invoices match the actual taxable party and the payment flow. If the marketplace is the merchant of record and collects tax, your invoice to the marketplace typically does not list sales tax the way a direct-to-customer invoice would.

When you generally must charge sales tax on an invoice

Now let’s flip the question. When do you usually have to add taxes to an invoice in the US?

You sell taxable products (tangible goods) in a state where you have nexus

In most states, tangible goods are taxable unless a specific exemption applies. If you have nexus in the customer’s state, you may be required to collect that state’s sales tax on taxable items and show it on the invoice. This is common for e-commerce sellers, makers, and retailers.

Example: You have a home-based business in State A where you’re registered for sales tax. You sell a physical product to a customer in State A. You typically must collect State A’s sales tax. Your invoice should show the taxable subtotal, the tax rate, the tax amount, and the total due.

You sell taxable digital goods or software in a state where those items are taxable

Digital products can be tricky. Some states treat downloaded or streamed content as taxable, while others do not. Software, especially “canned” (prewritten) software and SaaS (software as a service), is taxed in some states and exempt in others. Even within a single state, the rules can depend on how the product is delivered, who uses it, and whether there is a service component.

If you sell digital goods or subscriptions, you should not assume “digital means no sales tax.” Many businesses discover later that they should have been collecting tax in certain states.

You provide taxable services in your state or a state where you have nexus

While many professional services are exempt in many states, some service categories are taxed in certain places. Examples that may be taxable depending on the jurisdiction include: repair services, installation, maintenance, cleaning, personal services, event admissions, and certain information services.

The key is not what you call the service, but how it’s defined under the state’s tax rules. A service bundle can also change taxability—if you bundle taxable items with non-taxable services, the whole package can become taxable in some states unless separately stated.

Understanding the difference between “not charging sales tax” and “not paying taxes”

This point is worth emphasizing: not charging sales tax on an invoice does not mean you don’t owe taxes. Even if every invoice you send is tax-free from a sales tax perspective, you may still owe:

Income tax on your business profits (federal and possibly state).
Self-employment tax (if you’re a sole proprietor, partner, or otherwise subject to it).
Payroll taxes if you have employees.
Other business taxes depending on your structure and location.

Sales tax is a “trust tax” you collect from customers. Income tax is something you pay based on profit. They are separate. Many new business owners confuse them, so it’s helpful to keep your accounting and invoices organized from the start.

Do you have to include tax details on an invoice?

In many cases, you are not legally required to show sales tax as a separate line item (the rules vary), but it is extremely common and usually best practice to do so for transparency. Customers expect to see how you calculated the total.

If you are not charging sales tax, you typically do not need to put “no tax” on the invoice. However, in certain B2B contexts, it can reduce questions to include a brief note like “Sales tax not charged” or “Tax not applicable.” You should be careful with phrasing, though: you don’t want to imply a legal conclusion you haven’t verified. A simple, neutral note is often enough.

Invoice layout best practice in invoice24: include clear columns for quantity, unit price, line subtotal, and (when applicable) tax rate per item or a total tax section. If tax is not being charged, keep the invoice clean by omitting tax columns or setting them to 0% without clutter.

Common scenarios and whether you can invoice without charging taxes

Let’s walk through real-world situations. These examples focus on sales tax collection and invoicing practices, not income tax reporting.

Scenario 1: You’re a freelance consultant billing a US client

Many consulting services are not subject to sales tax in many states. Often, you can invoice without sales tax. However, if you provide a service that is taxable in your state (or your client’s state where you have nexus), you may need to charge it.

How to invoice in invoice24: Create a “Consulting Services” item, set the tax rate to 0% (or mark as non-taxable), and include a clear service description and date range. If your client asks why there’s no tax, you can respond that your services are invoiced without sales tax unless required by applicable state rules.

Scenario 2: You design a website and also sell a domain and hosting bundle

Bundles can change tax outcomes. Your design work may be non-taxable, but the hosting or digital services portion might be taxable in some states. If everything is lumped into a single line item (“Website package”), you could inadvertently make the whole package taxable or create confusion for the client.

How to invoice in invoice24: Split the invoice into separate line items—“Web Design,” “Domain Registration,” “Hosting,” and “Maintenance”—and apply the appropriate tax setting to each line. Itemization protects you and makes the invoice more professional.

Scenario 3: You sell physical products online to customers in multiple states

If you have nexus in a state and sell taxable tangible goods to a customer in that state, you generally must charge sales tax. For states where you do not have nexus, you may invoice without sales tax. But you must track sales volumes because economic nexus thresholds can be met faster than many sellers expect.

How to invoice in invoice24: Set up tax profiles by state (or by client location) and assign them automatically based on the shipping/billing address. When a client is in a taxable jurisdiction where you have nexus, the correct rate applies; when not, the invoice shows no sales tax.

Scenario 4: You sell a digital download (template, course, or e-book)

Digital goods are taxed in some states and exempt in others. Also, the customer’s location often determines taxability. If you have nexus in the customer’s state (including economic nexus), you may be required to collect tax on the digital product.

How to invoice in invoice24: Create a product category for digital goods, keep consistent item names, and apply tax rules based on the customer’s state. Include delivery method details in the description (“Digital download delivered via email link”) because taxability can sometimes hinge on whether it’s electronically delivered.

Scenario 5: You invoice a tax-exempt nonprofit

You may invoice without sales tax if you have a valid exemption certificate on file and the purchase qualifies. Not all nonprofit purchases are automatically exempt; the certificate and the nature of the purchase matter.

How to invoice in invoice24: Mark the client as tax-exempt, store the exemption reference in client notes, and include a brief line like “Customer tax-exempt (certificate on file)” if appropriate for your workflow.

Scenario 6: You’re a contractor providing installation or repair services

Installation and repair services are taxable in some states and exempt in others. Sometimes the tax depends on whether you’re improving real property, installing tangible personal property, or providing a mixed service-plus-materials contract.

How to invoice in invoice24: Separate “Labor” and “Materials” line items. Many tax systems treat these differently. Use detailed descriptions that match what actually happened: hours, location, type of work, and materials used. This makes it easier to justify your tax treatment if questions arise.

What about invoicing clients in a different state?

Cross-state invoicing is where many businesses get confused. The most common misunderstanding is: “I’m in State A, my customer is in State B, so I never charge tax.” That can be true in many cases—especially for services—but it isn’t a universal rule.

For product sales, the customer’s destination state often matters. If you have nexus in State B and the product is shipped to State B, State B may expect you to collect its sales tax. If you do not have nexus, you typically do not collect State B sales tax—but you still must consider State A rules about whether any tax is due in your home state. Many states use “destination-based” rules for shipping, but not all rules are identical, and local jurisdictions can add complexity.

Practical invoicing rule of thumb: If you are registered to collect sales tax in a state, your invoices to customers in that state should generally show the applicable sales tax on taxable items. If you are not registered and do not have nexus, you typically invoice without that state’s sales tax—while monitoring your sales to ensure you don’t cross economic nexus thresholds.

Do B2B invoices work differently than B2C invoices?

Yes and no. The tax rules are usually tied to the product/service and jurisdiction, not simply whether the buyer is a business or a consumer. However, B2B sales often involve exemptions that are less common in B2C:

Resale exemptions: If the customer is buying inventory to resell, they may provide a resale certificate and you do not charge sales tax.
Manufacturing exemptions: Some states exempt certain manufacturing inputs when purchased by eligible businesses.
Intercompany or wholesale arrangements: Often structured to avoid double taxation with proper documentation.

Invoicing tip: Always capture the customer’s business name and relevant tax IDs where appropriate, and store their exemption documents. invoice24 makes it easy to keep client records tidy so you can match invoices to documentation quickly.

Do you need a sales tax permit to invoice with tax?

In general, you should only collect sales tax if you’re registered and authorized to do so in the jurisdiction that requires it. Collecting sales tax without proper registration can create compliance issues. Conversely, failing to collect when required can lead to back taxes, penalties, and interest.

If you determine you must collect sales tax in a state, the typical workflow looks like:

1) Register for a sales tax permit in that state (and any local registrations if required).
2) Configure your invoicing system to apply the correct tax rates and taxability rules.
3) Collect tax on taxable invoices.
4) File sales tax returns and remit tax on the required schedule.

invoice24 supports the practical invoicing side of this: tax rates, item-level taxes, client tax settings, consistent invoice numbering, and exports that help keep your records aligned with filings.

What if you’re invoicing a US client but you’re located outside the US?

Non-US businesses invoicing US clients often do not charge US sales tax unless they have nexus in a US state. Nexus can exist for foreign businesses too, especially through economic nexus thresholds or physical presence (like a warehouse, employees, or inventory). Many foreign digital sellers also use platforms that handle tax collection in certain situations.

From an invoice presentation standpoint, it’s common to invoice a US business client with no sales tax line. But the correct approach depends on your exact presence and sales footprint in the US. If you do not have a requirement to collect, your invoice can simply show the subtotal and total due.

Tip: If you operate internationally, keep your invoice currency, payment terms, and client address details consistent. invoice24 helps you standardize invoice templates so you can bill US clients with US-friendly formatting (dates, addresses, payment methods) while still maintaining your own business records.

What if you’re a US business invoicing an international client?

When you invoice clients outside the US, US sales tax may or may not apply depending on the state, the type of product or service, and where it is “delivered” or used. Some sales shipped outside the US can be treated differently than domestic sales. Additionally, your client’s country may have VAT or similar rules that affect them. That doesn’t automatically mean you add VAT to your US invoice, but it may influence the documentation your client needs.

Practical invoicing approach: Clearly show the client’s billing address country, describe what was delivered and how, and use consistent incoterms or delivery terms if you ship goods. For services, include a description that indicates the service is performed remotely or delivered electronically when appropriate.

How to decide whether to charge tax: a practical checklist

Here’s a structured way to think about it. Before you decide to add or omit sales tax, consider these questions:

1) What are you selling?
Is it a physical product, a digital product, SaaS, or a service? Some items are almost always taxable in many states (physical goods), while services vary widely.

2) Where is the customer located?
Sales tax is state-based and often destination-based. The customer’s ship-to location matters for goods, and the customer’s location can matter for digital goods and services.

3) Do you have nexus in the customer’s state?
If yes, you may need to collect tax on taxable items. If no, you often can invoice without that state’s tax, but you must monitor thresholds.

4) Is the customer exempt?
If they have valid documentation (exemption or resale certificate) and the purchase qualifies, you may invoice without sales tax.

5) Are you properly registered to collect?
If you must collect, register first and then invoice with tax. Avoid collecting tax “just in case” without proper registration.

This checklist keeps the decision grounded in real factors rather than guesswork.

Invoice formatting: how to show “no tax” without raising red flags

If you aren’t charging sales tax, your invoice should still look complete and professional. The goal is not to draw attention to what’s missing, but to make the charges and terms unambiguous.

Strong invoice elements to include (whether tax applies or not):

Seller details: Business name, address, and contact email.
Client details: Client name, billing address, and optionally a purchase order reference.
Invoice number and date: Use sequential numbering for clean bookkeeping.
Payment terms: Due on receipt, Net 7, Net 15, Net 30, etc.
Itemized line items: Description, quantity, rate, and line total.
Subtotal and total: Even when there is no tax, show subtotal and total for clarity.
Notes: Brief scope notes, service period, or deliverable details.

Optional but helpful: A small “Tax” line set to $0.00 can reduce questions in some industries. In invoice24, you can choose a clean template that either hides the tax section entirely when tax is 0 or displays it as $0.00 depending on your preference.

If you should charge tax, how to show it clearly on the invoice

When sales tax applies, clarity matters. A customer should be able to see exactly what was taxed and why the total increased. The cleanest method is:

1) Show a taxable subtotal (or item-level tax).
2) Show the tax rate and tax amount.
3) Show the grand total.

If your invoice includes a mix of taxable and non-taxable items, item-level tax handling is often best. For example, “Materials” might be taxable while “Labor” might not. invoice24 supports item-level configuration so your invoice stays accurate without manual math.

What happens if you don’t charge tax when you should have?

This is the risk side of the question. If you fail to collect sales tax when required, the tax authority may still expect the tax to be paid. Depending on the jurisdiction and the situation, you might be responsible for paying it out of pocket if you cannot collect it retroactively from the customer. That can turn a profitable sale into a loss.

To reduce this risk:

Track where your customers are located and how much you sell into each state.
Review nexus thresholds periodically as you grow.
Itemize invoices so taxability is easier to determine.
Keep exemption certificates organized for exempt customers.
Use consistent invoice records so you can prove what was charged and when.

invoice24 helps by keeping your client database, invoice history, and downloadable records in one place, which is useful when you need to check past invoices or reconcile totals.

What happens if you charge tax when you shouldn’t?

Charging sales tax incorrectly can also create problems. Customers may dispute the invoice, demand refunds, or refuse payment until corrected. In some states, if you collect a tax amount from a customer, you may be required to remit it—even if it was collected in error.

That’s why it’s better to follow a consistent rule-based approach rather than “guessing” on tax. If you’re not required to collect, invoice without sales tax and keep the invoice clean. If you are required, register and collect properly.

How invoice24 can help you invoice correctly without hassle

Regardless of whether you charge sales tax, your invoicing system should make it easy to do the right thing consistently. A free invoicing app shouldn’t feel “basic” when it comes to the essentials. invoice24 is designed to make professional invoicing simple while still supporting the features businesses actually need, such as:

Customizable invoice templates that look clean and credible for US clients.
Client profiles with stored billing details and notes (useful for tax-exempt status or special terms).
Itemized line items with descriptions, quantities, rates, and discounts.
Tax settings including 0% tax invoices, item-level tax, and tax summaries where needed.
Automatic totals so you don’t have to manually calculate subtotals, tax, and grand total.
Invoice numbering that stays consistent for recordkeeping and audits.
Payment terms and due dates to reduce late payments and confusion.
Exportable invoice history for bookkeeping and reporting.

The goal is simple: if you’re allowed to invoice without charging taxes, invoice24 lets you do that cleanly and professionally. If you’re required to charge taxes, invoice24 helps you present them clearly so clients understand the calculation.

Simple invoice wording you can use when you’re not charging sales tax

Sometimes clients ask, “Why is there no tax?” A short, neutral note can prevent back-and-forth. Here are a few options you can add to the invoice notes section when appropriate:

Option A: “Sales tax not charged.”

Option B: “No sales tax applied to this invoice.”

Option C: “Tax: Not applicable.”

Keep it short and factual. Avoid overly legal language unless you have professional guidance tailored to your business. Most of the time, a minimal note is enough, and many businesses omit the note entirely unless the client asks.

Key takeaways

You can often invoice clients in the US without charging taxes, especially if you sell non-taxable services, do not have nexus in the client’s state, or the client is tax-exempt with proper documentation. But if you sell taxable products or taxable digital goods/services in a state where you have nexus, you may be required to collect and show sales tax on the invoice.

The safest approach is to treat sales tax decisions as a repeatable process: identify what you sell, where the customer is, whether you have nexus, and whether an exemption applies. Then configure your invoicing workflow so the right invoices consistently show tax and the others don’t.

With invoice24, you can create clean tax-free invoices when tax isn’t applicable, and you can also generate itemized, tax-inclusive invoices when tax is required—without messy spreadsheets, manual math, or inconsistent formatting. That way, your invoices look professional, your records stay organized, and you can focus on getting paid.