Your business location
Origin-Based States
Origin-based sourcing means you collect sales tax based on where the transaction originates, typically your business’s physical storefront, office, or fulfillment warehouse. For local sellers operating in an origin-based state, this makes your calculations more straightforward.
For example, if your business is located in Phoenix, Arizona, you must apply the city’s 9.10% combined sales tax rate in your sales tax calculation. Here’s the summarized breakdown:
Arizona5.60%
Maricopa County0.70%
Phoenix City2.80%
Total Combined Sales Tax Rate9.10%
This combined rate applies to every order shipped to an address within Arizona. Whether your customer is down the street or all the way in Tucson, the sales tax rate remains uniform because it’s anchored entirely to your business location.
The following states impose origin-based sales tax rules for local, in-state sellers:
- Arizona
- California*
- Illinois
- Mississippi
- Missouri
- Ohio*
- Tennessee
- Texas*
- Utah*
- Virginia
* However, a few of these states follow a mixed or hybrid setup.
California applies local district taxes based on the buyer’s location.
Ohio and Utah’s sales tax follows a destination-based sourcing rule for sales of taxable services.
Texas primarily enforces the origin-based sourcing rule for in-state sellers. Out-of-state businesses selling to customers in Texas must follow a destination-based sourcing rule.
Former Origin-Based States
New Mexico and Pennsylvania were formerly included among the states that enforce origin-based sourcing rules. New Mexico permanently switched to destination-based sourcing for tangible goods and general services.
Pennsylvania’s point-of-sale origin sourcing rule for local taxes was eliminated under legislation effective in 2026. Businesses delivering to customers in Philadelphia and Allegheny Counties must comply with the destination-based sourcing rule.
