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. Currently, 45 states charge a sales tax so it's fairly hard to avoid. The good news is, by law, you don't have to pay sales tax when you shop in a place that doesn't charge sales taxes. If going out of state is too much trouble, you can take the shortcut option and order your items online.
How Sales Tax Bumps up the Price Tag
Here's an example of how much sales tax can add to the cost of big-ticket items. As of 2018, 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.
Visit a State 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, so you could buy your items in those states. Of these five states, Alaska and Montana allow local taxes to be charged under certain conditions. But, 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. Watch out for "use taxes" though. The 45 states that have a sales tax also have a use tax in place. The use tax covers purchases that were shipped from out of state without charging the applicable sales tax. Generally speaking, states have a difficult time enforcing use tax laws, but purchasers still are legally liable for them.
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No Sales Tax When you Buy Online
By law, 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 2018, Amazon charges sales tax to customers living in 23 states, because that's where it has premises. 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 five 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.