For new immigrants and travelers, shopping becomes an essential part of daily life after arriving in the United States. Worldway’s immigration experts will guide you through the tax-free states and refundable tax states in the United States.
Travelers typically enjoy tax refunds when shopping abroad, but in the United States, only a few states offer tax refunds for tourists. Notably, states with highly developed tourism industries like California do not have provisions for tax refunds on tourist consumption taxes. Only Texas and Louisiana allow foreign visitors to claim refunds on purchased goods.
The consumption tax paid while shopping in the United States consists of two parts: the federal government’s customs duties on imported and exported goods, and the sales tax levied by individual states. The customs duty, typically referred to as a tax exemption in airport duty-free shops, varies based on the product and its place of origin. Therefore, purchasing domestically produced goods in U.S. duty-free shops can yield significant savings on customs duties.
The second component of the consumption tax is the sales tax, which varies by state. California, for example, has one of the highest sales tax rates in the country. Currently, only tax refund locations in Texas and Louisiana airports allow visitors holding a foreign passport and flight ticket for travel to and from the United States within 90 days to claim refunds on sales tax.
There are five states in the U.S. where shopping is exempt from consumption tax, namely Alaska, Delaware, Montana, New Hampshire, and Oregon. If tourists are planning to purchase large items and happen to visit these states, they may consider shopping there to avoid consumption tax.
Highly developed tourist states such as California, New York, Florida, and Hawaii do not refund sales tax to visitors from overseas or other states. This means that goods purchased in these states are ineligible for tourist tax refunds. According to accountants, sales tax contributes significantly to state government revenue, and this portion of tax collected from tourists is not refunded by the government.
