How to invoice a tax-exempt customer
Some customers do not pay sales tax: resellers, many nonprofits and government agencies. You may sell to them without tax, but only if you hold the right paperwork.
Resale and exemption certificates
A resale certificate shows that the customer buys the goods to resell them. An exemption certificate shows another exemption, for example for a qualifying nonprofit. The customer fills it out and signs it, and you keep it. Many states accept a multistate form, others require their own. A complete, valid certificate is what protects you if your state audits you: without it, you may owe the tax yourself.
How to invoice
- Get the certificate before you invoice and check that it is complete: customer name, address, reason for the exemption, state, signature and date.
- Mark the lines non-taxable so no tax is charged.
- Add a note such as “Exempt: resale (certificate on file)” and print the customer’s certificate number.
- Keep the certificate with your records for the same period you keep the invoices. See how long to keep invoices.
Who is usually exempt
- Resellers buying inventory to resell.
- Nonprofits in many states, but not automatically: federal tax-exempt status does not always mean a state sales tax exemption.
- Government agencies: federal agencies are generally exempt from state sales tax, and many states exempt their own agencies. Ask for the form your state requires.
For the basics on tax rates and what is taxable, see sales tax on invoices.
Frequently asked questions
What do I put on an invoice for a tax-exempt sale?
Mark the lines non-taxable, add the reason (for example “Exempt: resale”) and the customer’s certificate number.
What if the customer has no certificate?
Then charge the tax, or ask for the certificate before you deliver. Without one you may owe the tax yourself.
Are nonprofits always exempt?
No. It depends on the state and the type of purchase. Ask for the state’s exemption certificate.
Related
- Sales tax on invoicesSales tax on invoices: what small businesses need to know
- What an invoice needsWhat to include on an invoice (U.S. checklist)
- Keeping invoicesHow long to keep invoices and business records
- Step-by-step guideHow to create an invoice in 10 steps
This page is general information as of October 2026. Rules differ by state and industry; check your situation with a tax professional or your state’s revenue department.