How To Avoid Sales Tax

Ways to legally avoid sales tax

Sales taxes are levied on goods and services throughout the United States and Canada. While the United States does not charge a federal sales tax, the Canadian government does; in addition to the federal Goods and Services Tax (GST), most Canadian provinces also apply a Provincial Sales Tax (PST) or a Harmonized Sales Tax (HST) which combines the federal and provincial taxes. In the United States, 45 states charge sales taxes, ranging from 4 percent to over 9 percent.

However, there are strategies for avoiding sales tax that don't require you to move to a state or province where it isn't collected. Knowing how to avoid sales tax can help you save hundreds of dollars per year.

Avoid State Sales Tax

Certain items have sales tax exemptions; typically, these are items that are considered necessities of everyday living, such as staple foods and certain forms of medical care. However, to legally avoid sales tax on other purchases, you will have to shop with a merchant that doesn't charge sales tax to U.S. or Canadian residents. You can find plenty such merchants online. If you're in the United States, you can also travel to a state that doesn't charge sales tax and load up on the items you need to save yourself a significant amount of money.

Another way to avoid paying sales tax is to buy goods and services directly from individual sellers or merchants. While garage sales and sellers working through online classifieds are technically supposed to charge and remit sales tax to the state or province, they seldom do so and this is an excellent way to avoid paying tax on new and used items. You may even get a significant price break to boot!

Finally, many retailers advertise tax free sales during certain times of year, particularly in January as a means of boosting post-Christmas sales and around the beginning of the school year. While these sales technically aren't tax-free, as the merchant is still responsible for paying taxes on the items they sell, they will seem tax-free for you as you won't have to worry about adding state or provincial sales tax to the cost of your purchases.

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