Sales Tax and ZIP Codes

ZIP code based tax tables: free for a reason

What’s with the map?

The map to the left serves as a reference to the thousands of individual taxing jurisdictions in the United States. Each colored tile represents a jurisdictional boundary with an aggregate sales tax rate based on tax authorities: states, cities, counties, and other special jurisdictions, such as transit authorities.

The problem with ZIP codes

The problem with ZIP codes is that they have nothing to do with sales tax. ZIP codes are used by the US Postal Service to map the most efficient routes for mail carriers to follow. Efficient mail routes, however, don’t care about political boundaries. That means ZIP codes will often straddle multiple cities, counties, and in some cases even states. Close to urban centers, ZIP codes are likely to nest comfortably inside a single city’s boundaries. But around the edges, things get very messy.

One ZIP code, many rates

To illustrate how messy it can get, here is an example from Alabama. Within one ZIP code, there are nine unique tax areas, and five unique rates ranging from 5% to 9%. Without a complete address, it is impossible to know which rate to apply.

So why use ZIP codes at all?

We wish you wouldn’t, but you probably will anyway. The least we can do is help you be informed. Because tax jurisdictions and ZIP code areas both deal with geography, there is often overlap – especially near urban cores. This is why many businesses assume that ZIP codes will tell them what tax is owed on individual transactions. But if you don’t know that ZIP codes only provide a geographical estimate, you can get yourself into serious trouble as your business grows and becomes more interesting to auditors.

Try our interactive map

Avalara Sales Tax, our free interactive tax map and sales tax calculator, lets you look up precise tax rates by street address.

Explore the map