Money Saving Tip: Buy Online to Avoid Sales Tax

Filed under: All, Money Saving Tips, Shopping

As I’ve mentioned before, I live in Chicago, which currently has the honor of having the highest sales tax rate in the United States, at 10.25%.

Let me tell you what a pain that is. While the rate is only 2% for things like food, drugs, and medicine, buying other items like toothpaste, clothing, or even pet food gets us that fabulous 10.25% tax rate.

Most of the time, you just have to eat it and move on, but when it comes to big ticket items, like expensive electronics, the tax can be significant. Luckily, there is a loophole to get around that.

Many online purchases are not subject to sales tax. The only time an online seller has to collect sales tax is when they have a physical location in the same state as the customer. Essentially, as long as I am buying from sellers not physically located in Illinois, I don’t have to pay a sales tax.

This is why I love shopping at Amazon.com. They don’t have a physical presence here in Illinois, so I never pay a sales tax with them. (Read about the specifics in Amazon’s FAQ).

Exactly how much of a difference will this make? Let me give you a recent example. The boyfriend decided to purchase a new video camera and pertinent accessories. After shopping around for the best price and any coupons or rebates (I’ve taught him well), he selected two different sites to order from. As he was checking out he noticed there was no sales tax and was curious how much he was saving. The total he spent was $4620. 10.25% of that equals $473.55. That’s nearly $500 in savings. Isn’t that amazing?

This is a totally legal way to save some serious dough, so in the future when you’re buying big ticket items (or even something smaller) consider doing it online. You may even end up with free shipping anyway.

Posted at 12:05 PM, May 26, 2010 by Tiffany

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