How to Avoid Paying Sales Tax On Expensive Items Like Diamonds and Jewelry

Diamonds and high-end jewelry can carry steep price tags, and the addition of sales tax can increase the final cost by thousands of dollars. For example, as of 2015 California had the highest state tax rate in the country at 7.5 percent. The addition of local taxes, such as the 1.5 percent charged in Los Angeles County, brings the total sales tax for purchases in that county to 9 percent. This adds $4,500 in sales taxes to a $50,000 purchase of diamonds or jewelry. Consumers have three options to avoid paying sales tax when buying expensive items like diamonds and jewelry.

States Without Sales Taxes

Sales taxes are charged in 45 states as well as Washington DC. Five states -- Alaska, Delaware, Montana, New Hampshire, and Oregon -- do not have a state sales tax. Of these five states, Alaska and Montana allow local taxes to be charged under certain conditions. Even if you don’t live in one of the states that doesn’t charge sales taxes, if the size of the purchase of diamonds or jewelry is large enough, you still may end up saving money after paying for travel and lodging.

Buy Online

According to Robert Wood, a tax attorney with Wood LLP, online purchases are not charged a sales tax if the items are shipped to a state where the online merchant does not have a physical presence. For this reason, shopping at smaller e-commerce sites that have a limited number of physical locations can be advantageous as compared to a large retailer like Amazon. For example, as of 2015, Amazon charges sales tax to customers living in 23 states. Purchases of diamonds and jewelry from Blue Nile, on the other hand, are charged sales tax in only two states.

Ship the Item

Purchasing items from a store and then shipping them to avoid the sales tax works in much the same manner as an online purchase. If the store from which you are making a purchase does not have a physical location in the state where the items will be shipped, the merchant will not charge sales tax. Also similar to online purchases, a large retailer is more likely to charge sales tax on shipped items than a small boutique. For example, Zales Jewelers has stores in every state in the country and will charge applicable sales taxes on all shipments, with the exception of the 5 states that don’t have a sales tax. A single boutique would only charge sales tax on shipments within the state where it is located.