What is a resale certificate?
A resale certificate lets you buy inventory without paying sales tax, because tax gets charged when you sell to the final customer. You usually need a sales tax permit first. Give the certificate to your supplier, and use it only for goods you'll resell, never for items your business uses itself.
Updated November 2026 · By Pankil Kumar, Managing Partner
Quick facts
- Use it for. Goods you'll resell
- Don't use for. Items your business uses
- You need. Usually a sales tax permit
How does a resale certificate work?
Sales tax is meant to be paid once, by the final customer. If a wholesaler charged you tax and you then charged your customer, the same item would be taxed twice. So you give your supplier a certificate saying you're buying to resell, and they skip the tax.
When you sell the item, you collect tax from your customer. If your customer is another reseller, they give you a certificate, and you keep it on file.
How do you get one?
Most states let you fill in a form yourself, using your sales tax permit number. Some issue the certificate directly. Each state has its own form. The Multistate Tax Commission has a uniform certificate many states accept, and the Streamlined Sales Tax group has its own, but not every state takes them.
What can you buy tax-free?
| Purchase | Certificate OK? |
|---|---|
| T-shirts you'll sell | Yes |
| Parts that go into a product you sell | Generally yes |
| Packaging that goes with the product | Often yes, depends on the state |
| A laptop for your office | No |
| Cleaning supplies for your shop | No |
If you pull something from inventory for your own use, you typically owe use tax on it.
What are the risks?
Using a certificate for personal or business-use purchases is misuse. It can bring back tax, penalties and, in serious cases, more. If you're selling, the risk is different. If you skip tax on a customer's sale and don't have a valid certificate on file, an auditor can bill you the tax.
How should you manage certificates you receive?
- Collect one before the first tax-free sale
- Check that it's complete, signed and uses the right state's form
- Verify the number on the state's website, if it has a lookup tool
- Note expiry dates, since some certificates expire
- Keep them where you can find them for an audit
Selling across states? Read how nexus works. It helps to know where certificates matter before an auditor asks for them.
Sources
- Multistate Tax Commission
- Streamlined Sales Tax: Exemptions
- Federation of Tax Administrators: State tax agencies
General information, not tax advice for your situation.
Selling in more than one state?
We check where you owe and file the returns.
See our sales tax serviceIs a resale certificate the same as a sales tax permit?
No. The permit lets you collect tax, and the certificate lets you buy for resale without paying it.
Can I use a resale certificate in another state?
Sometimes. Many states accept out-of-state or uniform certificates, but others want their own form.
Do I need a certificate from wholesale customers?
Yes. Keep one on file for each tax-free sale, or you may owe the tax yourself if you're audited.
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