Can I invoice clients without collecting sales tax in the US?

Can I invoice clients without collecting sales tax in the US?

If you’re using a free invoicing app like invoice24, one of the first “wait… do I need to add sales tax?” questions tends to show up the moment you send your first professional invoice. The short answer is: sometimes you can invoice without collecting sales tax in the US, and sometimes you can’t. Whether you must collect sales tax depends on what you sell, where your customer is located, where you do business, and whether you have a sales tax obligation (often called “nexus”) in that customer’s state.

This topic can feel intimidating because sales tax rules are set mostly at the state level, not federally, and details vary widely. But the underlying logic is consistent: if a state considers your transaction taxable and you have an obligation to collect and remit sales tax there, you generally must charge it to the customer and send it to the state. If you don’t have that obligation—or what you’re selling is not taxable—you may invoice without sales tax.

This article explains the most common situations where you can invoice without collecting sales tax, when you can’t, and how to structure invoices so you’re clear, professional, and audit-friendly. It’s written for freelancers, agencies, consultants, creators, and small businesses—especially anyone using invoice24 to send clean invoices, track payments, and stay organized.

Sales tax vs. income tax: what invoices have to do with it

Let’s clear up a common confusion: sales tax is not the same as income tax. Income tax is a tax on your profits or earnings. Sales tax is a consumption tax charged to the buyer on certain transactions, usually goods and some services, based on the customer’s location and state rules.

Your invoice is the document that shows what you sold, who you sold it to, the price, and any additional charges—like sales tax. If you are required to collect sales tax, the invoice is where you disclose and calculate it. If you are not required to collect sales tax, your invoice can simply show the total due without any tax line.

In other words, invoicing without sales tax is not “tax avoidance” in itself—it may simply mean the transaction is not taxable, or you are not legally required to collect sales tax in that state.

When you can invoice without collecting sales tax

There are several common scenarios where you can send an invoice without adding sales tax. Some are about your business’s footprint, and others are about what you sell or who you sell to.

You don’t have nexus in the customer’s state

In general, a state can require you to collect sales tax if you have a sufficient connection to that state, called nexus. Nexus can be created in two broad ways:

Physical nexus: You have a physical presence in a state (such as an office, store, warehouse, employees working there, or inventory stored there).

Economic nexus: Your sales into a state exceed a threshold (often based on revenue, transaction count, or both), even without a physical presence.

If you don’t have nexus in the customer’s state, that state typically cannot require you to collect its sales tax. In that case, you can invoice without sales tax for that customer—assuming the transaction isn’t required to be taxed due to special rules and you aren’t using a marketplace that changes collection responsibilities.

However, the customer might still owe “use tax” to their state on taxable purchases where sales tax wasn’t collected. That’s the customer’s responsibility, not yours, but it’s one reason some customers may ask about tax on an invoice.

You sell services that are not taxable in that state

Many freelancers and agencies sell services rather than physical goods. In lots of states, many services are not subject to sales tax—especially professional services like consulting, marketing strategy, writing, design, coaching, and software implementation. But this varies a lot by state, and some services are taxable or partially taxable depending on how they’re delivered or bundled.

If your service is not taxable in the customer’s state, you can invoice without collecting sales tax even if you have nexus there. The key is that the transaction must be considered non-taxable under that state’s rules.

You sell to a customer who is sales-tax-exempt

Some buyers are exempt from paying sales tax in certain situations. Common examples include:

Resellers: Businesses purchasing items for resale often provide a resale certificate, allowing you to sell without charging sales tax.

Nonprofits and government entities: Many states exempt qualified nonprofits and government agencies, though documentation is usually required.

Manufacturing and certain industry exemptions: Some states offer exemptions for specific uses or industries.

In these cases, you may invoice without collecting sales tax, but you typically need proper documentation (such as an exemption certificate) and you must keep it on file. The invoice should also clearly show that the sale was tax-exempt, rather than simply omitting tax with no explanation.

Your customer is located in a state with no statewide sales tax

A small number of states do not impose a statewide sales tax. If your customer is located in one of these states, your invoice may not need a sales tax line. Be careful, though: some local jurisdictions may have their own taxes or special rules for certain goods and services. Also, if you deliver a product into another state, the destination state may govern the taxability.

The broader principle is: sales tax is typically based on where the product or service is delivered or used, not just where your customer’s headquarters happens to be.

You sell through certain platforms that handle tax collection for you

If you sell through a platform that is legally responsible for collecting sales tax (often called a “marketplace facilitator”), the platform may collect and remit sales tax on your behalf. In those cases, you might invoice the platform or invoice the customer in a way that does not include sales tax because it has already been handled at checkout.

This scenario is common for online marketplaces selling physical products. For service businesses, it depends on the platform model.

When you generally cannot invoice without collecting sales tax

If your transaction is taxable and you have an obligation to collect tax in the customer’s state, you generally must charge sales tax on the invoice. Here are common situations where adding sales tax becomes likely.

You sell taxable goods and deliver them into a state where you have nexus

Physical products are often taxable, and if you deliver them to a customer in a state where you have nexus, you’re usually responsible for collecting and remitting sales tax. Even if you’re invoicing rather than using a shopping cart checkout, the same rules apply. The invoice becomes the record of the taxable transaction.

Examples include shipping merchandise, delivering printed materials, or selling equipment. If you store inventory in a state, ship from a fulfillment center, or have employees there, that can trigger nexus.

You sell taxable digital products or software in states that tax them

Digital products and software can be tricky. Some states tax digital downloads, subscriptions, streaming, or software-as-a-service, while others do not or only tax certain types. If you sell software access or deliver digital products to customers in a state where those items are taxable and you have nexus, you may be required to collect sales tax.

This is one reason it’s important not to assume “digital means tax-free.” State definitions matter.

Your services become taxable because of how they’re packaged

Even if your core service is typically non-taxable, bundling can change the tax treatment. For example:

Design + printed materials: If you design a brochure and also provide printed copies, the physical goods portion may be taxable. Some states may treat the entire transaction as taxable if the taxable component is significant.

Consulting + software license: If you bundle consulting with a taxable software license, the invoice may need to separate the line items to apply tax correctly.

Installation + equipment: Installation labor may be non-taxable in some places, but equipment is taxable, and some states tax the full installed price.

A clean invoice with separate line items can make a major difference here, and invoice24’s itemized invoicing helps you present each component clearly.

You exceeded economic nexus thresholds in that state

Economic nexus rules were created to capture remote sellers who don’t have a physical presence but still do substantial business in a state. If your sales into a state exceed the state’s threshold, you may be required to register, collect, and remit sales tax there.

Thresholds vary. Some are based on total sales revenue, some on number of transactions, and some use both. If your business grows and you start selling into many states, it becomes important to monitor your sales volumes and keep an eye on where you might have triggered economic nexus.

Invoice24 can help by keeping your invoices organized by customer and location so you can export or review totals and spot patterns before they become surprises.

How to know whether your invoice should include sales tax

To decide whether to charge sales tax on an invoice, think in this order:

1) Where is the customer receiving the product or service? For physical goods, this is usually the shipping destination. For some services and digital products, it may be the customer’s location or where the benefit is received.

2) Is what you’re selling taxable there? Determine whether the state taxes the specific goods, services, or digital products you provide.

3) Do you have nexus there? Consider physical presence and economic thresholds.

4) Is the buyer exempt? If yes, obtain documentation and keep it on file.

5) Are you registered and permitted to collect there? If you’re required to collect, you generally need to register for a sales tax permit before charging tax.

If you’re missing any of these pieces, you might still be able to invoice right away, but you should avoid guessing on tax. A wrong tax charge can create customer disputes, compliance issues, or both.

Can you add sales tax later if you forgot?

It depends on your agreement and on customer relationship dynamics, but practically, adding tax later can be difficult. Some customers may refuse to pay additional charges after the fact, especially if the invoice has already been paid or approved. Others may accept a revised invoice if the contract states taxes are the client’s responsibility.

From a compliance perspective, if you were required to collect sales tax, you may still owe it even if you didn’t charge the customer. That’s why it’s better to get the tax setup right early.

Invoice24 makes it easy to send updated invoices, issue credit notes, and keep an audit trail so your records stay consistent if you do need to correct something.

Should you write “sales tax not included” on your invoice?

Adding a short note can reduce confusion, especially for business clients who expect tax treatment to be clear. But the wording matters. You don’t want to imply that you’re refusing to collect tax if you are actually required to collect it. Consider these approaches:

If the transaction is non-taxable: “No sales tax applied (non-taxable service).”

If you don’t have nexus in the customer’s state: “Sales tax not collected.”

If the customer is exempt: “Tax-exempt sale (exemption certificate on file).”

These notes are not a substitute for compliance, but they help your invoice communicate what’s going on. Invoice24 lets you add invoice notes and terms so you can standardize this language across your invoices.

How to structure an invoice when you are not collecting sales tax

Even if you’re not charging sales tax, your invoice should still look complete and professional. A well-structured invoice reduces payment delays and prevents back-and-forth questions.

Here’s what a clean no-sales-tax invoice should include:

Seller details: Your business name, address, and contact information.

Client details: The client’s legal name and billing address, plus shipping address if goods are involved.

Invoice number and dates: A unique invoice number, invoice date, and due date.

Itemized line items: Each product or service described clearly with quantities, rates, and line totals.

Subtotal and total: If tax is not collected, you may show a tax line as “$0.00” or omit it, depending on your preference. If you omit it, a short note can prevent confusion.

Payment terms: Net 7, Net 15, Net 30, or your chosen terms, plus late fee policy if applicable.

Payment methods: How the client can pay (bank transfer, card, ACH, etc.).

Notes/terms: Any key statement on tax treatment, scope references, or project terms.

Invoice24 supports templates, saved client profiles, recurring invoices, and automatic invoice numbering, which makes it easy to keep every invoice consistent—whether or not sales tax applies.

How to structure an invoice when only part of it is taxable

Mixed invoices are common. You might sell a non-taxable service and also sell a taxable product. The best practice is to separate the items so the taxable portion is clear and tax is calculated correctly.

For example:

Line item 1: “Brand strategy workshop (non-taxable service)”

Line item 2: “Printed brand guideline booklets (taxable goods)”

Then apply sales tax only to the taxable item. Some states have rules about “bundled transactions,” but itemization is still the safest starting point because it shows intent, improves transparency, and simplifies internal tracking.

With invoice24, you can add multiple items, apply discounts, and keep descriptions detailed so your invoices remain readable and defensible.

What if you’re a freelancer or consultant—do you usually charge sales tax?

Many freelancers and consultants do not charge sales tax because many professional services are non-taxable in many states. However, “usually” is not the same as “always.” Here are situations where freelancers are more likely to run into sales tax:

Creative work delivered as a product: If you sell physical deliverables (like printed posters) or certain digital products, tax may apply.

Website or software projects: Some states treat certain software-related deliverables as taxable, especially if the end product looks like a software license, a digital product, or ongoing access.

Marketing and advertising services: Some jurisdictions tax advertising services or specific components of marketing work.

Training, events, and admissions: Workshops, tickets, and access fees may be taxable in some places.

The safest move is to identify what you actually sell (deliverables, access, licenses, tangible property, or pure labor) and match that to the customer’s state rules.

Do you need a sales tax permit before you can charge sales tax?

In most cases, yes. If you are required to collect sales tax in a state, you typically must register with that state and obtain a sales tax permit (or similar authorization) before collecting tax. Collecting tax without being registered can create compliance problems, and it can also look suspicious to customers.

Once registered, you’ll be required to file sales tax returns on a schedule (monthly, quarterly, or annually) and remit the tax you collected. Even if you collected zero tax in a filing period, some states still require a “zero return.”

This is where good invoicing records become essential. Invoice24 keeps your invoice history organized so you can quickly review totals, track taxable sales, and export records for filing.

What about invoices to out-of-state clients?

Invoicing an out-of-state client doesn’t automatically mean “no sales tax.” For sales tax purposes, what matters most is where the product or service is delivered or used, and whether you have nexus in that destination state.

Examples:

You’re in Florida, client is in Oregon, you provide consulting: Often no sales tax is collected, but details depend on the service and state rules.

You’re in Texas, client is in California, you ship products into California: If you have nexus in California, you may need to collect California sales tax (or district taxes), even though you’re not located there.

You’re in New York, client is in New Jersey, you deliver a digital product: Tax may depend on how the state treats that digital product and whether you have nexus there.

Invoice24 lets you store client billing and shipping addresses so your invoices reflect the correct destination details—important for both tax decisions and professional documentation.

What if you have clients in multiple states?

If you invoice clients in multiple states, it’s normal to have different tax outcomes depending on the state and the type of work. You might charge sales tax for some customers and not others, even for similar work, because taxability rules differ and your nexus footprint may not be the same everywhere.

As you grow, the key challenge is consistency and tracking. Here are practical habits that help:

Keep client addresses accurate: Always confirm billing and delivery locations, especially for product shipments.

Track revenue by state: This helps you monitor economic nexus thresholds.

Separate taxable and non-taxable line items: This keeps invoices clear and supports reporting.

Keep exemption documentation organized: Store certificates and match them to customers.

Standardize your invoice terms: Include a tax statement in your terms where appropriate.

Invoice24 is built for exactly this kind of operational clarity: saved customers, itemized invoices, recurring billing, status tracking, and exports that support your bookkeeping process.

Common mistakes when invoicing without sales tax

Avoid these frequent errors that lead to compliance risk or client confusion:

Assuming “services are never taxed”: Some states tax certain services, and taxability can change depending on the service category.

Ignoring economic nexus: You may have no physical presence but still create a collection obligation if your sales in a state grow.

Failing to collect exemption certificates: If a customer claims exemption, you generally need documentation. Without it, the state may treat the sale as taxable.

Bundling everything into one vague line: “Project work” doesn’t explain what was delivered. Itemization is your friend, especially when taxability differs by component.

Charging the wrong rate or jurisdiction: For taxable invoices, sales tax rates can depend on destination, and rules can vary by city/county.

Collecting tax without being registered: If you’re charging tax, make sure you’re authorized to collect and you know your filing schedule.

Using an invoicing system like invoice24 helps reduce these mistakes by encouraging consistent templates, clear line items, and reliable invoice records.

How invoice24 helps you handle sales tax decisions cleanly

Even though sales tax rules are complex, your invoicing workflow doesn’t have to be. Here are features in invoice24 that make the process smoother whether you collect sales tax or not:

Customizable invoice templates: Show tax lines when needed, hide them or display “$0.00” when not.

Itemized billing: Create clear line items to separate taxable products from non-taxable services.

Saved client profiles: Store billing and shipping addresses, tax IDs, and notes like “exempt certificate on file.”

Recurring invoices: Ideal for retainers and subscriptions, with consistent totals and terms.

Automatic invoice numbering: Keeps your records organized and audit-friendly.

Status tracking: Know what’s sent, viewed, paid, or overdue, which helps you manage cash flow.

Exportable records: Quickly share totals with your bookkeeper or use them for tax filing support.

Invoice24 is designed to feel simple while still being robust enough for real business operations—so your invoices stay professional and your records stay clean.

Practical invoice wording for taxes and terms

Below are examples of plain-language terms you can adapt. Keep them short and consistent, and place them in your invoice “Terms” or “Notes” section.

Option A (general tax responsibility statement): “Applicable taxes will be added where required by law.”

Option B (non-taxable service statement): “No sales tax applied to this invoice (service is non-taxable).”

Option C (tax-exempt customer): “Tax-exempt sale. Exemption documentation on file.”

Option D (shipping destination clarity): “Tax calculated based on delivery location.”

These statements won’t replace compliance, but they reduce misunderstanding and make your invoices feel polished and intentional.

Frequently asked questions

Can I send an invoice with no sales tax if I’m not registered?

If you are not required to collect sales tax in the customer’s state (no nexus or non-taxable transaction), you can invoice with no sales tax even if you’re not registered. If you are required to collect, you typically should register first. If you’re unsure, it’s better to pause and verify rather than guess.

What if my client demands I remove sales tax?

If you are legally required to collect sales tax, you generally should not remove it just because a client asks. If the client believes they are exempt, request an exemption certificate or appropriate documentation. If the client is a reseller, they can typically provide a resale certificate. Without documentation, you risk owing the tax yourself.

Do I charge sales tax on late fees, deposits, or shipping?

It depends on the state and the type of charge. Some states tax shipping or delivery charges if they are part of a taxable sale. Deposits may be taxable depending on whether they are applied to taxable goods or services. Late fees and finance charges may or may not be taxable. If you use invoice24 to itemize these charges separately, it’s easier to apply the correct treatment and explain it to the customer.

If I don’t collect sales tax, does that mean I’m doing something wrong?

No. Many legitimate businesses do not collect sales tax on many invoices because their services are not taxable, they sell only in limited areas, or they have not triggered nexus in other states. The key is to make a conscious, informed decision and keep good records that support it.

Is it okay to show a tax line as $0.00?

Yes, many businesses do this for clarity. It signals that tax was considered and that the amount is zero. If your clients often expect tax, showing “Sales Tax: $0.00” along with a short note can reduce questions.

A simple checklist before sending an invoice without sales tax

Use this quick checklist each time you’re about to invoice a US client with no sales tax:

1) Is the customer’s delivery/use location known and correctly listed?

2) Is the item/service you’re selling taxable in that state?

3) Do you have nexus in that state (physical or economic)?

4) Is the buyer exempt—and do you have documentation?

5) Does your invoice clearly show the items, totals, and a brief tax note if needed?

If you can confidently answer these, you can invoice without sales tax when appropriate and still look professional.

Bottom line

Yes—you can invoice clients without collecting sales tax in the US in many situations, especially when you sell non-taxable services or when you don’t have a sales tax obligation in the customer’s state. But if your transaction is taxable and you have nexus in the destination state, you generally must register, charge the correct tax, and remit it on time.

The best approach is to treat sales tax as a business process, not a guessing game. Keep invoices itemized, store client details accurately, maintain exemption documentation when needed, and use consistent invoice terms.

With invoice24, you can create professional invoices in minutes, customize tax displays, track payments, and keep clean records—whether you’re charging sales tax, charging $0.00, or invoicing tax-exempt clients. That combination of simplicity and structure makes it easier to stay confident as your client list grows across the US.