America is one of the best places to buy clothes, electronics, etc. You get the best value for your money spent. If you are a tourist from Asia or Europe, you will see prices much cheaper in the US, if you buy in outlet malls. Many are not aware that you may be able to get tax refunds as a tourist if you buy in some states like Texas in the US. In this article, we will cover all the details on how to get tax refunds, what are the requirements and conditions, and address some commonly asked FAQs.
Do you get a Tax Refund for Shopping in the US at Malls or Online Stores?
It totally depends on the state you do shopping in. If you shop in certain states like Texas, you are very likely to get a tax refund for your purchases in the US as a tourist. There is no published list by the US Govt. or US Tourism website that says that you get a Sales Tax Refund if you buy things in a certain state.
It is not very clear if you would get a tax refund if you buy stuff online. You need to check with the online retailer on this as this totally depends on where you ship your goods and how the seller will charge you state tax. Also, even if you get a refund, there are way too many conditions to get a decent refund back to you. We will look at them in later sections.
Tax Refund: State Sales Tax vs. Federal Sales Tax?
In America, there is no Federal Sales Tax (national level sales tax). When you buy goods in the US, the respective State or Local Government charges you State Sales Tax. The US Federal Govt., usually imposes customs duty or tariffs on the federal level and is not charged directly to the end consumer.
The sales tax you pay for shopping in the US goes to the respective state govt. or local govt and does not go to the federal government. So, you usually get the State Sales Tax or Local Govt. Sales tax as a refund, if you are exporting the goods outside of the US.
Below is a reference image from Taxfoundation.org that shows approximate State tax by the state for your reference.
As you would usually get the State Tax as a refund, it is important for you to review the respective tax you paid for you to get an estimate. You can see that in the purchase receipt. There will be a section that clearly tells as Sales Tax. That is nothing but the State Sales Tax.
Below is one of the sample purchases in Houston, Texas done by me for your reference. You can see the Sales Tax highlighted to get an idea.
The US Government does not refund Sales Tax to Visitors
US Customs and Border Protection has clarified on the CBP website that says, “The United States Government does not refund sales tax to foreign visitors. Sales tax charged in the United States is paid to individual states, not the Federal government …”. Check the screenshot of the same and US CBP Website.
Hence, it is important to be clear that the Sales Tax refund completely depends on the US State, where you purchased your goods as a visitor and has nothing do with the US Govt. or Federal Govt. We will look at some states and requirements to get a tax refund in the next section.
Requirements to get Tax Refund in USA as Tourist or Resident
The requirements to get a tax refund varies by the US State. Also, they are slightly tricky to get a decent refund, as they force you to purchase more at a single store. Most of the requirements or conditions are common for foreigners and US Citizens. The only difference is where they can claim a tax refund and when.
Below are the general requirements for Tax Refund for Tourists
- Minimum Amount: Depending on the state, there is a minimum amount of tax you need to have per receipt or purchase from a brand store or outlet store. In Texas, you need to have a minimum of $12 tax per receipt or combined receipts from the same brand stores. Technically, in Texas with an 8.25% sales tax, you need to purchase for at least $150 USD in a single store or brand outlet to be eligible for the refund.
- Original Receipts: You need to submit original receipts at the Tax refund counter. They do not accept duplicate, photo copy, or reprint sales receipts. You need to submit the first original receipt that is printed. No digital or e-mail receipts are accepted unless it is an online purchase item from a brand store and if the receipt has the delivery address of the goods in that state. You need the packaging slip of delivery for online purchases.
- Within 30 days: You need to have the purchase done within 30 days from the day of your international travel or departure date from the US.
- International Travel: You get a refund only if you are traveling outside of the US and the items you are buying will be staying outside of the US. Technically exporting it to another country, that’s why they ask for the original receipt and take it for a refund. It means that the sale is final in the US and there are no returns for the same goods you bought here in the US.
- Physical Inspection: You need to show your item purchased for physical inspection and it has to be in new and unused condition with all the tags.
- Passport, I-94 / Entry Stamp: You need to show your Visa/ Passport, and I-94 with an entry stamp on it, if holding a foreign passport.
- Departure Information / Flight Tickets: You need to show your international departure info or flight ticket itinerary and for US citizens, you need to show the boarding pass to get a tax refund.
- Items should Depart US & State: The items purchased must be taken with you and should depart the state you purchased in and the USA as well.
- Food or Services: No refund for food or services purchased.
- Participating Stores: You get Tax Refund only if you purchase goods from the participating stores. They claim that it is a big list of 6,500+ stores…but watch out for the brands. I purchased from a few brands, that were not eligible for a refund such as Abercrombie & Fitch.
- Processing Fee: There is a processing fee for your tax and it is crazy. Below are the options
- Instant Cash: If you want instant cash it is a 50% processing fee for a tax refund.
- Check / PayPal: If you want a check or can get a refund to PayPal, then it is 35% of the tax refund. Also, you will also be charged $4 USD for every single store or brand purchase.
- Refund Locations: Both US Citizens and non-US citizens can claim tax refunds at all major international airport terminals, they would have a Tax refund desk. Check the airport for the details on the terminal. Also, if you are a non-US citizen, then you can even claim tax refunds at certain mall locations in the state. Check the state website for the exact locations in a state. For example, for Texas, here are the refund locations.
- Tax Refund Policies: Tax refund policies can vary by state and there is no standard sales tax percentage set as well. You should check the Sales Tax and Tax Refund policies in that respective state before you shop to ensure you get a tax refund. For instance, if you shop in Delaware, there is no sales tax, so no refund. For policies in Texas, check out Requirements for Sales Tax Refund in Texas
Tips for Tax Refund as Tourist or Resident in the US
Overall, a Tax refund is definitely a good thing, if you are doing a lot of shopping and taking it home. The only downside is that you have to give the original receipt of purchase. I did shopping for over $900 USD, but could not get a sizable tax refund as I did not know all of these facts and conditions. If you plan it ahead of time, you may be able to get a decent tax refund. Below are some tips
- Duplicate Receipt / re-prints: When you buy your item, request a duplicate receipt or re-print of receipt. This can be used by you for a warranty in your home country or international location.
- Take a Photo of Original Receipt: Take a picture of the original receipt and if requested by the warranty location outside of the US, then you can use the photo and duplicate the receipt.
- Buy maximum at One Brand Store: Make sure you pick a few brands and do shopping in those brands’ outlets so that you meet the minimum requirement of a Tax refund. If not, you will not be eligible for a tax refund as you will miss out on the minimum. I did not get anything as I bought in multiple brands and they were less than $150 purchase per store, so I was not meeting the minimum amount of tax refund in Texas.
- Register for Warranty: If you are buying an electronic item and if there is an option to register online, register for warranty, when you have the original receipt.
We have addressed some of the commonly asked questions below.
The sales tax refunds, if given in a certain state, are paid by the respective State Govt. or local Govt. where you made the purchases. It is a state tax refund and not a Federal govt refund. IRS does not give any sales tax refunds.
Yes, it does not matter. All visa types are eligible. Anyone traveling outside of the US is eligible for a tax refund. All the tax refund conditions described in the above article apply to everyone.
Yes, US Citizens are also eligible for a tax refund, provided they travel outside of the US within 30 days. You can only claim it at airports on the day of your departure. All the conditions and requirements are described in the above article
When you shop in America, you are not subject to Value Added Tax (VAT) or Goods and Services Tax (GST). The concept of VAT and GST exist in many countries, but in the US it is different and you are only subject to Sales Tax when you do shopping.
What are your experiences with Tax Refund as Tourist? Did you get any tax refund as a Resident? Share your thoughts in the comments.