Amazon Prime provides a number of benefits to customers, such as unlimited photo storage, access to Amazon Prime Video, free shipping, and a variety of other perks for a small fee per month.
However, some customers who have purchased Amazon Prime may wonder if Amazon charges tax in addition to the price. If you’d like to find out, keep reading this article to learn the information I gathered!
Does Amazon Prime Charge Tax In 2022?
Amazon charges tax in select states for an Amazon Prime Membership as of 2022. Additionally, Amazon will charge tax according to customers’ local tax laws and amounts and will calculate the difference from the regular price at checkout. Not all areas are required to charge tax for a Prime membership, as Amazon only charges tax in 34 of 50 states.
If you’d like to learn more about which states Amazon Prime charges tax in, how Amazon calculates tax, how much the Prime membership costs with tax, and more, keep reading for more facts and tips!
Does Amazon Prime Charge Tax In All States?
Amazon Prime does not charge tax in all states. Currently, 34 states in the US have to pay tax for an Amazon Prime membership, while the other 16 do not have local taxes added to their total.
The states that have to pay tax for Amazon Prime and their tax rates are listed as follows:
- Alabama- 4%
- Arizona- 5.60%
- Arkansas- 6.50%
- California- 7.25%
- Colorado- 2.90%
- District of Columbia- 6%
- Florida- 6%
- Hawaii- 4%
- Idaho- 6%
- Iowa- 6%
- Kentucky- 6%
- Louisiana- 4.45%
- Maryland- 6%
- Michigan- 6%
- Minnesota- 6.875%
- Mississippi- 7%
- Missouri- 4.225%
- Nebraska- 5.50%
- New Jersey- 6.625%
- New Mexico- 5.125%
- New York- 4%
- North Carolina- 4.75%
- Ohio- 5.75%
- Pennsylvania- 6%
- Puerto Rico- 10.5%
- Rhode Island- 7%
- South Carolina- 6%
- South Dakota- 4.50%
- Tennessee- 7%
- Texas- 6.25%
- Utah- 6.10%
- Vermont- 6%
- Washinton- 6.50%
- West Virginia- 6%
- Wisconsin- 5%
- Wyoming- 4%
Customers who would like to purchase an Amazon Prime membership are recommended to check this list to see if their state is among those that are required to pay tax on their membership fee.
How Does Amazon Prime Calculate Tax?
When Amazon charges tax for a purchase, they calculate the amount based on the following factors:
- The identity of the seller
- The type of item or service purchased
- The time and location of fulfillment
- The shipment or delivery address of the order
When Amazon fulfills an order, they calculate the tax based on the state and local laws of where the order was fulfilled.
However, because Amazon Prime is a service, Amazon may calculate the tax differently than they would normally if they live in a state that requires them to pay tax.
Therefore, customers who purchase from Amazon regularly and are aware of the tax amount they have to pay generally should be aware they may have to pay a different amount when buying an Amazon Prime membership.
How Much Is Amazon Prime After Tax?
When customers purchase Amazon Prime, the total will vary slightly depending on whether customers live in a state that requires them to pay taxes or not.
If customers are not required to pay taxes, Amazon Prime will cost $119 per year or $12.99 per month. However, customers who have to pay tax may end up paying up to $130 per year depending on the tax rates per state.
For example, customers who live in California have to pay 7.25% on sales tax, amounting to about $8.60 more than the initial price for Amazon Prime.
Additionally, customers will have to account for local tax prices in addition to state taxes, which will add somewhat to the final total they pay.
Overall, Amazon Prime will amount to a different price for different states after tax, while the base price is $119 universally.
If customers are curious as to the exact amount they will have to pay, they are encouraged to calculate their state and local taxes with the Amazon Prime base price to ensure they aren’t blindsided when charged for their Prime membership.
Why Does Amazon Prime Charge Tax?
Amazon charges tax for Amazon Prime memberships because it is required by The State Department of Revenue. While not every state is charged tax for a Prime membership, those that do pay tax are required to by law.
Some Amazon Prime customers have expressed irritation about having to pay tax on their Prime membership, as historically retail memberships don’t usually require taxes.
However, the RCW states that if component products or services are subject to retail tax, then the membership as a whole is a bundle transaction subject to retail tax.
In other words, because Amazon Prime provides a number of different services such as shipping and handling, which are usually subject to retail tax, the membership as a whole is subject to tax as well.
How Can I Avoid Paying Taxes on Amazon?
Unfortunately, there are very few ways for customers to avoid paying taxes on their Amazon Prime membership. Currently, the only way to purchase Amazon Prime without tax is if customers live in one of the 16 states that are not required to pay taxes for Prime.
However, customers can purchase other things from Amazon free from tax by having an out-of-state friend or family member order their items for them, as long as they live in a state that doesn’t have to pay tax on Amazon.
Amazon Prime charges tax in 34 of the 50 US states. The base price for an Amazon Prime membership is $119 per year, but it can cost up to $130 per year depending on the amount of tax that customers are charged in each individual state.
Amazon calculates tax based on the state and local tax laws where the order was fulfilled. However, there may be a slight difference in tax charges for Amazon Prime, as it’s a service instead of a physical order that has to be shipped.