America is one of the best places to buy clothes, electronics, etc. You get the best value for the money spent. If you are a tourist from Asia or Europe, you will find the prices much cheaper when you buy things in the US at 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, 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 depends on the US state you do shopping in. If you shop in certain states like Texas, you will likely get a tax refund for your purchases in the US as a tourist. The US Government or US Tourism websites do not have a published list that says that you get a Sales Tax Refund when you buy things in a certain US state.
It is unclear if you would get a tax refund if you buy stuff online. You need to check with the online retailer on this, as this 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. We will look at these details in later sections of the article.
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 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 below:
“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 …”.– US Customs and Border Protection(CBP) Website
It means that the US Federal Government on a country level does not refund any sales tax and you need to check with the respective US State, where you made the purchase from.
Check the below screenshot from the US CBP Website that clarifies the tax refund status from the US Govt. side.
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 to 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, photocopy, 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 buy will stay 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. For US citizens, you need to show the boarding pass to get a tax refund.
- Items should Depart US & State: The items purchased in the US must be taken with you and should depart the state you purchased in and America.
- 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. This depends on the state as well. In Texas, they claim the stores’ list is over 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 can be a processing fee for your tax refund depending on the state. Below are the options they may offer:
- 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 may 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 usually would have a Tax refund desk at these locations. 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 a 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 the receipt. You can use this duplicate receipt 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 are paid by the respective State Govt. or local Govt. where you made the purchases. It is a state sales tax refund and not a Federal govt refund. IRS does not give any sales tax refunds.
Yes, your visa status does not matter for tax refunds. All visa types are eligible, including H1B, L1, F1, etc. 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 the US within 30 days after the purchase of the goods. 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.
This depends on the state and if they offer the tax refund. In certain states, if they charge sales tax and have a policy in place to refund sales tax, then you would likely get the tax refund. It is best to check with the online vendor and then the state policy for the same.
What are your experiences with tax refunds as tourists? Did you get any tax refund as a Resident? Share your thoughts in the comments.