Am I Required to Collect Sales Tax?

Sales tax rules can feel confusing, especially when your business includes a mix of services, retail products, online courses, and one-on-one sessions. The answer often depends on what you’re selling, where your client is located, and how that product or service is delivered.

Let’s break it down.

1. Services — Most of the Time, They’re Not Taxable

In many states, professional services — like chiropractic care, physical therapy, or massage therapy — are not subject to sales tax. The same is often true for one-on-one coaching, counseling, or consultation services, especially if they’re delivered virtually.

However, there are exceptions. Some states (like New Mexico, Hawaii, and parts of South Dakota) tax all services unless specifically exempt. Others, like New York, only tax certain wellness-related services (for example, some spa services or fitness classes).

The takeaway: service-based businesses should confirm their state’s specific rules, because “services” doesn’t always mean “sales tax–free.”

2. Retail Products and Merchandise — Usually Taxable

If you sell physical products, you’re almost always required to collect sales tax. That includes things like:

• Supplements or health products sold in your studio or online

• Apparel, yoga mats, or merchandise

• Gift cards (depending on your state)

If you sell in person, you typically charge your local sales tax rate. For online sales, many states now require you to collect tax based on where your customer lives — even if your business isn’t physically located there (this is called economic nexus).

If you sell across state lines, platforms like Shopify or Etsy can help manage sales tax collection automatically — but you still need to register for sales tax permits where you have a presence or meet sales thresholds.

3. Online Courses, Guides, and Digital Products — It Depends

This is where things get tricky.

Some states tax digital products (like eBooks, downloadable guides, and online courses), while others don’t.

For example:

• New York does not tax digital courses that include live instruction or personal interaction, but may tax purely self-paced content.

• California generally does not tax digital goods if they’re delivered electronically, but physical copies (like USBs or printed guides) could be taxable.

If your business sells both in-person and online offerings, check whether your digital products fall under your state’s definition of “tangible goods.”

4. Gyms, Yoga Studios, and Fitness Businesses

This category varies widely by state.

Some states — including New York — require sales tax on fitness services such as gym memberships, yoga classes, and Pilates sessions. Others only tax certain types of fitness facilities or memberships.

If you operate a studio, it’s important to know whether your class fees, personal training packages, or wellness programs are taxable under your state’s rules. Even within one state, there can be differences between how “instructional” vs. “recreational” fitness services are treated.

5. The Big Picture

Sales tax is not one-size-fits-all. What’s taxable in one state may be completely exempt in another.

The key is understanding:

• What you sell (service, product, or digital good)

• Where your clients are located

• How the state defines that transaction

If you’re unsure, it’s always best to confirm with your CPA or state tax authority before assuming something is exempt.

Collecting and remitting sales tax correctly protects your business — and keeps you from facing interest, penalties, or audit issues later.

In short: Sales tax depends on what you sell and where you sell it. Services are often exempt, products are usually taxable, and digital goods fall somewhere in between. The safest approach is to understand your state’s rules and set up systems to stay compliant from the start.