Sales tax, GST and HST: when a freelancer has to charge it

Sales tax is the tax most freelancers learn about by accident. A client asks why there is no tax on your invoice, or a state sends a letter. The answer depends on where you are, where your client is, and what you sell.

In the US, sales tax is a state matter, and whether a service is taxed depends on the state. In Canada, the federal GST/HST applies to most services once your revenue passes a threshold, and some provinces add their own tax. This guide covers both, then shows what to put on the invoice.

This is general information, not tax or legal advice. Rules change and depend on your facts, so check with a tax professional or the tax agency before you start or stop charging tax.

United States: sales tax is set by each state

There is no federal sales tax. 45 states and the District of Columbia have a statewide sales tax. Alaska, Delaware, Montana, New Hampshire and Oregon do not, although local governments in Alaska charge their own.

Each state decides what is taxable. Goods are usually taxed. Services are where states differ most, and that is what matters for freelancers.

• Texas taxes data processing services, which can include web and digital work, at the state rate of 6.25% plus local tax, with 20% of the charge exempt.
• Washington taxes digital products and digital automated services, and from October 1, 2025 it also taxes data processing services.
• Professional services delivered electronically are not automatically taxable. Washington, for example, says a professional service is not taxed just because it reaches the client electronically.

Digital products such as templates, downloads, software and online courses get different treatment from state to state, so check each one you sell into.

Nexus and the Wayfair decision

Nexus is a connection with a state strong enough that it can require you to collect its sales tax. Living and working in a state gives you nexus there. Since the Supreme Court decided South Dakota v. Wayfair on June 21, 2018, states can also require sellers with no physical presence to collect tax once their sales into the state pass a threshold. This is called economic nexus.

Thresholds and what counts toward them vary:

Two details catch people out. Some states count only sales of goods, others count services too. And if you sell through a marketplace that collects tax for you, California and Texas still count those sales toward the threshold. In California, Texas and New York, you may not need to register if the marketplace collects on all of your sales there.

In your home state the thresholds do not help. You already have nexus, so if what you sell is taxable there, you generally need a permit to collect tax however small your sales are.

How to check your state

1. Go to your state department of revenue site and search for “taxable services” and for the name of what you sell.
2. If your state is a member of the Streamlined Sales Tax agreement, its taxability matrix lists how it treats specific products, including digital ones.
3. For each state where you have many clients, look up its remote seller threshold and what counts toward it.
4. If the answer is still unclear, ask the state in writing or ask a professional. A written answer is worth more than a forum post.

Canada: GST/HST, plus PST or QST in some provinces

The small supplier threshold

You are a small supplier while your taxable revenue (with that of any associated businesses) is $30,000 or less in a single calendar quarter and over the last four consecutive calendar quarters. Small suppliers do not have to register for GST/HST.

• Over $30,000 in one quarter: you must register within 29 days of the sale that took you over, and you charge GST/HST on that sale even before your registration comes through.
• Over $30,000 across four quarters: you stop being a small supplier at the end of the month after the quarter in which you went over. The CRA’s guide walks through the exact dates.
• Registering voluntarily: you can register before you reach the threshold, which lets you claim input tax credits. You then charge tax to every client, and you must stay registered for at least one year.

Registering and filing

You register with the CRA for a GST/HST account. In Quebec, Revenu Québec administers both the GST and the QST (Quebec sales tax) for most businesses, and the QST has the same $30,000 small supplier test.

If your annual taxable supplies are $1,500,000 or less, the CRA assigns you an annual reporting period. You can choose to file quarterly or monthly instead. All registrants, with a few exceptions such as most charities, must file electronically for reporting periods starting on or after January 1, 2024.

Which provinces use HST and which use GST

HST (harmonized sales tax) combines the 5% federal GST with a provincial part into one tax. Other provinces charge 5% GST and run a separate provincial sales tax, registered and filed with the province.

Provincial sales taxes apply to most goods but only to specific services. British Columbia’s PST covers software and legal services, for example, and Saskatchewan’s applies to a set list of services. British Columbia had planned to extend PST to accounting, bookkeeping, architectural, engineering and some other services on October 1, 2026, then paused that change in September 2026. Check the province’s own pages for your service.

Charging clients in other provinces

The rate depends on where the supply is made, not where you live. For most services, that is the province of the client’s Canadian business or home address that you get in the normal course of business. If you have more than one address for the client, use the one most closely connected with the work.

Say you are a GST/HST registrant in Alberta:

• A client in Toronto: charge 13% HST.
• A client in Halifax: charge 14% HST.
• A client in Calgary or Vancouver: charge 5% GST. Whether BC PST also applies is a separate question under BC’s rules.

Clients outside Canada: many services supplied to non-residents are zero-rated, which means taxable at 0%. You charge no GST/HST but can still claim input tax credits on your costs. There are exceptions, including some advisory, consulting and professional services that have their own conditions, and you need evidence that the client is a non-resident.

Input tax credits

An input tax credit (ITC) is the GST/HST you paid on business purchases, which you subtract from the tax you collected. You send the CRA the difference, or get a refund if you paid more than you collected.

• Only registrants can claim ITCs, and only for the business share of a purchase.
• You need proper documents. For a purchase of $100 or more, the receipt must show the supplier’s GST/HST registration number. Keeping receipts the IRS and CRA will accept covers the full rules.
• You do not send receipts with your return, but you keep them for six years.

Showing tax on an invoice

United States

Show sales tax as its own line, with the rate and the state or local jurisdiction, and keep taxable and nontaxable items on separate lines. Separating them can change the tax. In Texas, if you bundle a taxable service with nontaxable work and do not list the charges separately, the whole charge can be taxable, unless the taxable part is 5% or less of the contract.

Canada

If you are registered, your business clients need certain details on your invoice to claim their ITCs:

Put GST/HST and any PST or QST on separate lines. Payment terms belong on every invoice anyway: Invoice terms that get you paid on time covers the wording.

The tax you collect is not income. Move it out of your operating account as it comes in, the same way you set aside income tax in Quarterly taxes without the April panic.

How Mintas helps

• Mintas invoices support sales tax, VAT or line-item tax, so you can apply a different rate to each line. You can label the tax line, for example as HST, and put your registration number in your business details.
• The Inbox reads the vendor, date, total and tax from each receipt and suggests the bank transaction it belongs to, which keeps the documents behind your ITCs in one place.
• The default categories include Sales & Use Tax Payments and VAT/GST/PST/QST Payments, so remittances do not get mixed up with expenses.
• A tax summary through the assistant or the API shows tax paid and collected by category and tax type for a date range.
• Mintas does not decide whether you need to register, what is taxable or what you owe. That stays with you and your accountant.