# Does Amazon Charge Tax on Prime Memberships in 2025?

- Canonical: https://33rdsquare.com/does-amazon-charge-tax-on-prime-memberships-in-2023/
- Published: 2023-10-22
- Author: Terry Williams
- Categories: [Amazon](https://33rdsquare.com/category/consumer/amazon/)

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The short answer is: **It depends on where you live.** Amazon collects sales tax on Prime membership fees in 34 states. The other 16 states don‘t require Prime to be taxed at this time.

So whether you‘ll pay taxes on top of the $139 annual or $14.99 monthly Prime cost comes down to your location and local tax laws. Keep reading this guide to learn more!

## A Quick Refresher – What Does Amazon Prime Include?

Before we dive into the taxation side, let‘s recap what benefits you get with an Amazon Prime membership:

- **Free two-day shipping** on over 100 million products. This alone can make Prime worth it if you shop on Amazon a lot.
- **Free same-day delivery** in select areas on qualifying orders over $35.
- **Free release-date delivery** for new movies, games, and books.
- **Prime Video** to stream movies, TV shows, Amazon Originals, and more. Think of it like Netflix included with Prime.
- **Prime Music** for unlimited listening to 2 million songs ad-free. You also get free Pandora stations.
- **Prime Reading** to choose from over a thousand ebooks, magazines, comics, and more to read on any device.
- **Prime Photos** for unlimited full-resolution photo storage on Amazon‘s cloud servers.
- **Twitch Prime** for free games, in-game upgrades, and a Twitch channel subscription every month.
- **Prime Try Before You Buy** to try on clothes before paying so you can find the perfect fit.

The list goes on with benefits like restaurant delivery discounts and early access to Lightning deals. For avid Amazon shoppers, the $139 per year is usually well worth it considering everything included.

But does that $139 rate actually end up being higher based on your location? Let‘s find out.

## In Which States Does Amazon Charge Tax on Prime Memberships?

Here is an up-to-date list of the 34 states where Prime memberships are subject to sales tax as of October 2023:

- Alabama
- Arizona
- Arkansas
- California
- Colorado
- Connecticut
- Florida
- Georgia
- Hawaii
- Idaho
- Illinois
- Indiana
- Iowa
- Kansas
- Kentucky
- Louisiana
- Maryland
- Massachusetts
- Michigan
- Minnesota
- Mississippi
- Missouri
- Nebraska
- Nevada
- New Jersey
- New York
- North Carolina
- Ohio
- Pennsylvania
- Rhode Island
- South Carolina
- Tennessee
- Texas
- Utah
- Vermont
- Washington
- West Virginia
- Wisconsin

As you can see, the majority of states do charge tax on Prime subscriptions. There are just 16 states where Prime fees remain tax-free:

- Alaska
- Delaware
- Montana
- New Hampshire
- Oregon

Plus parts of these states:

- Arkansas
- Hawaii
- Idaho
- Maine
- Mississippi
- New Mexico
- Virginia
- Wyoming

So if you live in one of those areas, you can enjoy Prime without worrying about sales taxes adding to the cost. Everywhere else, expect to pay extra taxes and fees unfortunately.

Next, let‘s look at how much sales tax adds to the cost of Prime in each state.

## How Much Does Sales Tax Increase the Cost of Amazon Prime Memberships?

The amount of sales tax charged on Prime memberships varies based on state and local rates. Some states have higher tax rates than others.

Here is a state-by-state breakdown of how much taxes increase the annual and monthly cost of Amazon Prime:

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| State | Sales Tax Rate | Annual Prime Cost After Tax | Monthly Prime Cost After Tax |
| --- | --- | --- | --- |
| Alabama | 4% | $144.56 | $15.55 |
| Arizona | 5.6% | $146.64 | $15.79 |
| Arkansas | 6.5% | $147.94 | $15.93 |
| California | 7.25% | $149.18 | $16.04 |
| Colorado | 2.9% | $143.11 | $15.39 |
| Connecticut | 6.35% | $147.87 | $15.90 |
| District of Columbia | 6% | $147.34 | $15.84 |
| Florida | 6% | $147.34 | $15.84 |
| Georgia | 4% | $144.56 | $15.55 |
| … | … | … | … |

_*Table shows a sample of sales tax rates and Prime costs for states charging tax on memberships_

As you can see, sales tax typically adds $5 to $10 to the annual cost and around $0.50 to $1 extra per month. It may not seem like much, but it sure adds up over time!

Of course, keep in mind you‘ll also pay any applicable sales taxes on Amazon purchases with Prime as well. We‘re just looking at taxes on the membership itself here.

Now let‘s look at how Amazon calculates these Prime membership taxes.

## How Does Amazon Calculate the Sales Tax on Prime Memberships?

When you purchase or renew an Amazon Prime membership, Amazon automatically calculates any sales taxes you owe based on:

**Your shipping address** – Amazon charges sales tax according to the rates in place for your specific city and county. The breakdown looks like this:

- State tax – 4-7% in most cases
- County taxes – Usually 0-2% on top of state tax
- City taxes – Possible extra 0-1% depending on the city

Amazon adds up the applicable state, county, and city rates to reach the total sales tax amount. This gets charged on top of the advertised Prime membership fee.

For example, if you lived in Pasadena, CA your 9.5% sales tax on Prime would break down as:

- 7.25% California state sales tax
- 1.25% Los Angeles county tax
- 1% Pasadena city tax

**Tax laws where the sale takes place** – Amazon has to comply with sales tax nexus laws in each state. Most states now require Amazon to collect tax on Prime fees because they exceed certain sales thresholds in the state.

**No calculations required on your part** – You don‘t have to figure out the tax amount yourself. The sales tax appears as a separate calculated line item when you purchase or renew Prime:

![Amazon Prime checkout with tax example](https://specials-images.forbesimg.com/imageserve/5dcc283842395200076e0e8e/960x0.jpg?fit=scale)

As you can see, all you pay is the order total with tax included. This makes paying sales tax on Prime memberships easy and painless (well, besides paying extra!).

Now let‘s discuss why Amazon charges these taxes in the first place.

## Why Does Amazon Charge Tax on Prime Memberships?

There is one simple reason why Amazon now charges sales tax on Prime memberships – state law requires them to in most areas.

Here‘s some background on how we got to this point:

**1. Amazon used to only collect sales tax in certain states**

In the early days of Amazon, they only charged sales tax in states where they had a physical presence like warehouses, offices, or employees.

Having this kind of “nexus” meant they were required to collect tax under state laws at the time.

**2. New laws forced Amazon to collect tax nationwide**

But in 2018, a Supreme Court decision opened the door for states to tax online sales even when the retailer has no physical presence in the state.

Many states quickly moved to enact “economic nexus” laws that require sales tax collection based on doing a certain level of sales volume or transactions in the state.

**3. Amazon now collects tax nationwide on items and Prime memberships**

Because Amazon exceeds those sales thresholds in almost every state, they now have to charge tax on Prime membership fees and other purchases in most areas.

This applies to both first-party sales by Amazon and third-party sales done through Amazon‘s marketplace. Amazon handles collecting and remitting the sales tax.

So in short, Amazon charges tax on Prime because state laws and court rulings require it. They have no choice but to comply to avoid getting penalized.

## How Can You Avoid Paying Sales Tax on Your Prime Membership?

Don’t want to pay tax on Prime? Here are some tips to potentially get around it:

**Use an out-of-state friend or family member’s address** – If you know someone in a state not charging tax on Prime, you may be able to use their address for signup to avoid your home state‘s tax.

Just make sure it‘s an address where you have permission to receive mail or packages. And keep in mind that buying physical goods on Amazon using that address means you‘d have to have purchases shipped to their location.

**Sign up while traveling** – Similarly, you could signup for Prime while traveling in a non-tax state like Oregon to initially avoid tax. Just update the billing address to your real address after the fact.

**Look for special Prime trials or discounted offers** – Amazon sometimes offers special Prime trials for free or heavy discounts where they cover the membership fee. When Amazon pays for Prime, you don‘t pay tax.

**Downgrade to a monthly Prime membership** – While not ideal, paying monthly spreads the sales tax out over 12 smaller charges, rather than one lump sum annual payment.

**Petition state governments** – You could try advocating for state law changes to exempt Prime memberships from sales tax. But odds of success are very slim.

Outside of those options, there aren‘t many ways to avoid paying Prime taxes these days without resorting to elaborate schemes. Sales tax is simply a reality for most members now.

On the bright side, remember that the sales tax revenue helps fund public services in your state. So paying taxes on Prime gives back to your community in a sense.

## How Much Has Amazon Prime Membership Grown Despite Taxation?

Even with sales tax charged in most states now, Amazon Prime membership continues to grow at an impressive rate each year:

- As of April 2021, Amazon had **over 200 million** Prime members worldwide
- From 2018 to 2021, Prime membership grew by **50%**
- During the pandemic lockdowns in 2020 alone, Amazon added approximately **50 million new Prime signups**

Here is a chart showing the rapid growth in total Prime members over the past decade:

![Amazon prime member growth chart](https://dmn-dallas-news-prod.cdn.arcpublishing.com/resizer/mj1mCushQVUGvF8S7gfvFvUMefY=/1660x0/smart/filters:no_upscale()/arc-anglerfish-arc2-prod-dmn.s3.amazonaws.com/public/SGNIX2KD4B3H2GPFGCWTVMYGOA.png)

_*Chart via Business Insider showing Amazon Prime membership subscriber numbers from 2011 to 2020._

Despite the sales tax, Prime remains hugely popular thanks to the convenience, entertainment, and other benefits included.

And keep in mind – even with taxes, the $139 annual fee can easily pay for itself if you use Prime perks like free shipping regularly throughout the year.

For frequent Amazon shoppers, Prime provides incredible value that outweighs the small tax amount for most members.

## Should You Buy Amazon Prime If You Have to Pay Sales Tax?

Even with sales tax on top, Prime can still be well worth it for frequent Amazon users.

Here’s a simple formula to decide:

**1. Calculate your estimated annual Prime tax amount**

Use the tax table above to determine how much extra sales tax would cost based on your state. For most states, it will be $5 to $10 annually.

**2. Estimate your annual Amazon order value**

Based on past spending habits, estimate how much you‘ll likely spend on Amazon purchases in a year with Prime shipping benefits.

**3. Compare costs**

If your estimated order total exceeds the cost of Prime and taxes, the membership could save you money overall through free shipping alone. And that ignores all the other Prime benefits beyond shipping!

Let‘s say you live in New Jersey where you‘ll pay $148.27 annually for Prime with tax included. If you estimate you‘ll spend over $148 on Amazon purchases this year, Prime will likely pay for itself through shipping savings and be worth it even with tax.

So run the numbers based on your situation, but don’t rule out Prime automatically because of taxes. For most frequent Amazon shoppers, it still provides big savings and convenience despite the sales tax cost.

## Should You Buy Amazon Prime as a Gift to Avoid Tax?

One creative idea you may have is buying Prime as a gift for someone to avoid paying the sales tax yourself.

Unfortunately, this loophole no longer works as Amazon anticipated people trying it!

When you purchase a Prime gift membership, **you now pay sales tax** based on **your** shipping address, not the recipient‘s.

So buying Prime as a gift means you still have to pay any applicable taxes required by your state. The idea of gifting Prime to sales-tax-free states no longer works as a tax avoidance strategy.

## The Bottom Line – Is Amazon Prime Taxable in Your State?

The short answer: **Most likely, yes.**

As of 2024, Amazon charges sales tax on Prime memberships in 34 of the 50 U.S. states. Only Alaska, Delaware, Montana, New Hampshire, and Oregon are completely tax-free states for Prime at this time.

You‘ll pay between 4-7% above the standard $139 annual fee based on your state and local tax rates. But for avid Amazon users, Prime remains a good value despite the sales tax cost.

The reason Prime is taxed comes down to state economic nexus laws and court rulings requiring it. So unfortunately, there is no way around the Prime tax unless you live in a state that doesn‘t require it.

Hopefully this guide gave you a thorough understanding of Amazon Prime taxes, including how much tax costs where you live, how it’s calculated, why Amazon charges it, and if Prime still makes sense for you despite the taxes. Let me know if you have any other Prime-related questions!

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Source: [Does Amazon Charge Tax on Prime Memberships in 2025?](https://33rdsquare.com/does-amazon-charge-tax-on-prime-memberships-in-2023/)