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October 18, 2026 · Wendland Services Weekly · Issue five

Wendland Services Weekly — issue five: sales tax and where a business locates

Welcome back to the weekly briefing. This issue covers sales tax: how it differs from European value-added tax, why location matters, how total state tax burdens compare, and when to register. You can sign up at wendlandservices.com/insights to get each issue by email.

Issue four covered year-end gifts and household payroll. This week turns from the household to the business.

1. Sales tax versus value-added tax

The United States has no federal sales tax. Sales tax is set by states and localities and, in principle, collected once, from the final buyer at retail. Purchases for resale are generally exempt, but there is no input credit: tax on a company's own equipment and supplies is a cost. Value-added tax is collected at each stage of the supply chain, with registered businesses deducting the tax paid to suppliers from the tax they charge, so the final consumer bears the full amount. A European Union directive sets the framework, and each member state sets its own rates within it. The standard rate must be at least fifteen percent, with no maximum. Germany's is nineteen percent.

2. Thousands of rate-setters

Forty-five states levy a statewide sales tax, and thirty-eight allow local sales taxes. Counties, cities, and special districts each add a layer, so combined rates vary widely. One tax software provider counted more than twelve thousand five hundred sales and use tax jurisdictions as of June 30, 2026.

3. Location strategy: Oregon is not a sales tax shelter

Five states have no statewide sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon. Only Alaska lets localities impose one. At the other end, the Tax Foundation's July 1, 2026 ranking puts Louisiana first, with a combined state and average local rate of ten point one three percent, followed by Tennessee and Washington, both above nine and a half percent. Los Angeles also stands out: the city's rate rose to ten and one quarter percent on October 1, 2026, and some neighboring cities exceed eleven percent.

Since South Dakota versus Wayfair in 2018, a state can require a seller with no physical presence to collect once sales there pass a threshold, and tax generally follows where the customer receives the goods. A branch in Oregon does not spare a business from collecting on sales shipped into New York or Louisiana. What branch location does drive is physical presence, which creates a collection duty in that state; tax on the business's own purchases, including use tax when a seller does not collect; and, in states such as Texas that source local tax to the seller's place of business, which local rate applies to in-state sales.

No-sales-tax states also raise money elsewhere. Oregon's corporate activity tax is two hundred fifty dollars plus fifty-seven hundredths of one percent of taxable Oregon commercial activity above one million dollars, on top of high income taxes. A location decision should weigh the whole tax picture.

4. The whole tax picture, state by state

WalletHub's 2026 estimates add up property, individual income, and sales and excise taxes as a share of residents' personal income, leaving out federal taxes. Hawaii ranks highest at thirteen point three percent and Alaska lowest at four point nine two percent, against a national average of eight point four three percent reported by Visual Capitalist. New York is second at twelve point three nine percent, with property, income, and sales taxes each above three and a half percent of income.

The rankings bear out section three. Oregon, with no sales tax, ranks ninth at nine point four six percent, because its income tax burden is the nation's highest. Louisiana, with the highest combined sales tax rate, sits in the middle at eight point eight two percent. Washington, with almost no income tax, leans on sales and excise taxes. Hawaii's general excise tax falls on gross business receipts, and wholesalers and retailers can both owe it, so a product can be taxed at several stages, as under a value-added tax but without the credit for tax paid to suppliers.

The Tax Foundation, using a broader method, also ranks New York highest, at fifteen point nine percent for 2022. Both studies measure household burden, not a business's tax cost, so a branch decision still needs its own modeling.

5. Registering before collecting

A business must hold a state's sales tax permit before collecting its tax. The South Dakota law upheld in Wayfair reached sellers with more than one hundred thousand dollars of annual sales or two hundred transactions, but the transaction test is fading: South Dakota dropped it on July 1, 2023, and Illinois on January 1, 2026. New York requires a seller without physical presence to register only if, over the preceding four sales tax quarters, it delivered more than five hundred thousand dollars of goods into the state and made more than one hundred sales.

The Streamlined Sales Tax Registration System lets a seller register in any of twenty-four participating states through one free application. Registering creates a duty to file in each state selected, even without sales, and does not cure past liability. A business that finds past exposure can consider a voluntary disclosure agreement. Under New York's program, an eligible business that pays the tax and interest has penalties waived, and one that failed to collect through a mistake may qualify for a three-year look-back. Businesses already under audit or billed are not eligible.

6. A practical checklist

Calendar watch

If any of this touches your household, your trusts, or your family office, a second look before year end can be worthwhile. You are welcome to write to marcel@wendlandservices.com.

Wendland Services is an independent practice in Bellmore, New York, focused on accounting, bookkeeping, tax, and consulting for high-net-worth households and family offices.

This note is educational, not advice for your facts, and not an offer of legal services.

— Wendland Services marcel@wendlandservices.com