If you ship products across state lines, you’ve probably asked the same question many of your customers do: are freight charges taxable? The short answer is, sometimes yes, sometimes no—and it depends on the state, the type of product, and how the charges appear on the invoice.
This guide will walk you through when shipping is taxable, when it isn’t, and what to watch for in states like Michigan, California, and Texas.
Do You Pay Sales Tax on Shipping?
The general rule across most states is simple: freight charges usually follow the tax status of the product.
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If the product is taxable, the shipping charges are usually taxable too.
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If the product is exempt, the shipping is typically exempt.
That’s why sales tax and freight charges are often linked together. Many states view delivery as part of the “total price” of the sale.
When Freight Charges Are Taxable
Shipping charges become taxable in common situations like these:
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Bundled charges: If freight is included in the product price instead of being listed separately.
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Seller-arranged delivery: If the seller handles delivery instead of the buyer hiring their own carrier.
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Taxable goods: If the product being shipped is taxable, freight almost always is too.
When Freight Charges May Not Be Taxable
There are a few exceptions where freight can escape sales tax:
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Separately stated freight charges: In some states, shipping is exempt if it’s a clear line item on the invoice.
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Exempt goods: If you’re shipping items that aren’t taxable (for example, groceries in many states), the freight is usually exempt.
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Buyer-arranged shipping: If the buyer contracts directly with the carrier, those delivery costs are not part of the sale.
State Rules: Shipping and Sales Tax
Because every state handles sales tax on freight differently, here are some examples businesses ask about most:
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Is shipping taxable in Michigan? Yes, if the seller arranges delivery on a taxable product. If the buyer hires the carrier themselves, it’s not taxable.
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Is shipping taxable in California? Delivery charges can be exempt if separately stated and reflect the actual cost of delivery. Handling charges, though, are taxable.
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Is shipping taxable in Texas? Yes, when tied to the sale of taxable items.
Why Businesses Should Pay Attention
Getting freight charges wrong on sales tax can create compliance issues, upset customers, and lead to unexpected costs. To avoid this:
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Always separate freight from product charges on invoices.
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Know the tax rules for the states you ship to.
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Work with a logistics partner that understands both shipping and compliance.
Let’s Sum This All Up
So, are freight charges taxable? Yes, often—but not always. The key factors are:
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What’s being shipped.
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How the invoice is structured.
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The state’s sales tax laws.
If you’re not sure whether shipping should be taxed on your invoices, check the rules in the destination state or consult a tax professional.
At Firehouse Freight, we don’t just move freight—we help businesses navigate the details that impact their bottom line. From freight compliance to customized shipping solutions, our team keeps you covered.