Updated November 25, 2024
In 2025, many states are beginning to require sales tax on software-as-a-service (SaaS) purchases, including monthly subscriptions to online payroll services, like OnPay.
Does OnPay charge a Sales Tax with my subscription?
While not all states require service providers like OnPay to charge sales tax, yours might. If you’re subscribing to OnPay in a state, county, or city where software services are subject to sales tax, you will see sales tax added to your monthly subscription price.
How much is sales tax?
Sales tax rates are set by state and local governments. These governments also decide what goods and services are taxed when sold within their jurisdictions. Some states have no sales tax at all, but sales tax rates commonly start between 4% and 7%, and can be added upon by local governments within the state.
Sales tax wasn't included in the past, so why am I paying it now?
Each state has criteria and guidance around the qualifications for collecting sales tax. Based on your account’s billing address, OnPay may be required to add sales tax to your subscription fee.
If my business is tax exempt, will OnPay still charge sales tax?
Certain businesses may qualify for sales tax exemption. If your company is tax-exempt, a valid exemption certificate must be provided to enable OnPay to remove sales tax from your invoices.
Can OnPay help my business with sales tax?
OnPay is designed to simplify filing and paying your payroll taxes using wage calculations and deductions made during the payroll process. If your business charges sales tax for goods or services, these transactions occur outside of the payroll process, and cannot be calculated or tracked in OnPay.
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