U.S. Sales Tax Rules for U.S. Travel Agents: A Comprehensive Guide to Compliance in 2025

Not based in the U.S.? See our blog - U.S. Sales Tax Rules for International Travel Agents

At Antravia, we empower U.S.-based travel agents, advisors, Destination Management Companies (DMCs), and small hotels to thrive in a complex tax landscape. With the U.S. travel industry projected to hit $1.2 trillion in spending by 2026, travel agents are busier than ever, crafting unforgettable experiences from coast to coast. But one question looms large: Do I need to collect and remit sales tax? For U.S. travel agents, so whether you’re an independent advisor in Arizona, a DMC in Florida, or a hosted agent in California, the answer hinges on what you sell, where you sell it, and how your business operates. Get it wrong, and you risk audits, penalties, and unexpected costs that can derail your growth.

This guide dives deep into U.S. sales tax rules for travel agents based in the United States, selling travel services domestically or across state lines. We’ll break down nexus triggers, taxable vs. exempt services, compliance steps, and penalties, with granular examples from three high-tourism states: Florida, California, and New York.

Whether you’re bundling theme park packages, booking hotels, or arranging guided tours, we’ll equip you with the knowledge to stay compliant and avoid overpaying. At Antravia, we’re building a full-time future as your trusted partner in travel tax compliance, offering services from nexus analysis ($2,500+) to full sales tax management ($500/month). Let’s ensure your business soars without tax headaches.

Understanding U.S. Sales Tax for Travel Agents

Unlike centralized VAT systems in other countries, U.S. sales tax is imposed at the state and local level, with no federal sales tax. Of the 50 states, 45 plus the District of Columbia levy sales tax, with rates ranging from 4% (e.g., New York state base) to over 10% when local surcharges apply. Five states, Alaska, Delaware, Montana, New Hampshire, and Oregon, have no statewide sales tax, though local taxes may exist (e.g., Alaska boroughs). For travel agents, sales tax applies to specific services and products, and your obligation to collect it depends on nexus, which is a legal connection to a state.

Why Sales Tax Matters for U.S. Travel Agents

• Complexity: Each state has unique rates, exemptions, and filing schedules. Travel services like lodging or tours can trigger additional taxes (e.g., occupancy or tourist taxes).

• Post-Wayfair Reality: The 2018 South Dakota v. Wayfair, Inc. Supreme Court decision expanded economic nexus, meaning you may owe tax in states where you have no physical presence, based solely on sales volume.

• Penalties for Non-Compliance: Audits can assess back taxes (3-8 years), interest (1-1.5% monthly), and penalties (10-100% of unpaid tax), plus legal costs or liens.

• Travel-Specific Challenges: Services like hotel bookings, tour packages, and event tickets vary in taxability, and multi-state sales (common for travel agents) multiply complexity.

Our goal at Antravia is to simplify this for you, whether you’re a solo agent or a growing DMC. Let’s start with the cornerstone: nexus.

Nexus: When and Where you’re Liable

Nexus determines whether you must register, collect, and remit sales tax in a state. For U.S. travel agents, both physical and economic nexus are critical, especially since you may sell services performed in multiple states (e.g., a New York agent booking a Florida tour).

Types of Nexus

1. Physical Nexus:

   • Office/Employees: A business address, home office, or staff in a state (e.g., your Arizona LLC creates Arizona nexus).

   • Trade Shows/Events: Attending events like ASTA Global Convention in Florida can trigger nexus, even for a few days.

   • Inventory: Storing promotional materials or merchandise in a state (e.g., via a fulfillment center).

   • Affiliates/Contractors: Using U.S.-based hosted agencies, booking agents, or marketers can create nexus if they’re deemed your representatives.

2. Economic Nexus:

   • Triggered by sales volume or transaction count in a state, measured over the current or prior calendar year (often trailing 12 months).

   • Common Thresholds (2025):

     • $100,000 in sales or 200 transactions: Most states, including Florida.

     • $500,000 in sales: California.

     • $500,000 and 100 transactions: New York.

   • Note: Some states (e.g., Kansas, Tennessee) dropped transaction counts in 2025, focusing only on sales dollars. For travel agents, a “transaction” is typically each booking or package sold.

   • Marketplace Facilitator Laws: If you sell via platforms like Viator, Expedia, or Booking.com, they may collect tax on your behalf for those sales. However, direct sales (e.g., via your website or phone) are your responsibility.

3. Click-Through Nexus:

   • In states like New York, referrals from in-state affiliates (e.g., a blogger linking to your site) can trigger nexus if commissions exceed $10,000 annually.

Key for Travel Agents: Sales count toward nexus if the service is “sourced” to the state where it’s performed (e.g., a California wine tour is California-sourced, even if sold from Texas). Exempt sales (e.g., airline tickets) don’t count toward thresholds.

Example: A Colorado-based travel agent sells $120,000 in Florida cruise packages via their website. This exceeds Florida’s $100,000 threshold, triggering nexus. They must register and collect tax on taxable Florida sales, even without a physical presence.

Taxable vs. Exempt Travel Services

Not all travel services are taxable, so it depends on the state and the nature of the transaction. Here’s a breakdown:

Taxable Services

• Lodging: Hotel rooms, short-term rentals (e.g., Airbnb <30-180 days, varies by state), and vacation homes are taxable, often with added occupancy or tourist development taxes (5-15% extra).

• Tour Packages: Taxable components include admissions (e.g., theme parks, museums), meals, ground transportation (e.g., shuttles, car rentals), and equipment rentals (e.g., bikes, kayaks).

• Tangible Items: Merchandise sold as part of a package (e.g., branded tote bags, souvenirs).

• In-State Experiences: Guided tours, attraction tickets, or events performed in the state.

Exempt Services

• Commissions/Fees: Pure agency fees (e.g., 10% markup for arranging travel) are typically exempt as “professional services.”

• Interstate/International Transportation: Air, rail, or bus travel crossing state lines is federally exempt under the Airline Deregulation Act.

• Consulting/Itineraries: Custom planning or advisory services without tangible deliverables.

• Resale Exemptions: If you purchase taxable items (e.g., hotel rooms) for resale, use a resale certificate to avoid paying tax upfront, then collect from the customer.

Bundling Rules

• True Object Test: If the “primary purpose” of a package is taxable (e.g., a theme park ticket bundled with a commission), the entire amount may be taxed unless you separate charges on invoices.

• Sourcing: Tax applies where the service is performed (e.g., a New York Broadway show is NY-taxed, even if sold from California).

Marketplace Facilitators

Platforms like Expedia or Viator may collect tax for you, but you must still:

• Track direct sales for nexus thresholds.

• Register in states with physical nexus (e.g., an office) and file “zero returns” if the platform handles all taxes.

State-Specific Examples: Florida, California, and New York

Below, we detail sales tax rules for U.S. travel agents in three high-tourism states, including rates, thresholds, taxability, and compliance nuances as of October 2025.

Florida: The Sunshine State’s Tourism Hub

Florida taxes admissions and many tangible items, but it has a specific statutory relief for travel-agent packages sold for one lump sum. When a travel agent sells a “vacation package” that includes two or more components such as admissions, transient rentals (hotel), transportation, or meals, and the agent bought those components and any due tax was paid at purchase, and the customer is charged one lump sum with no separate itemization, then no additional tax is due on the package sale by the agent. This language is in §212.04(1)(d), Florida Statutes.

Florida’s Department of Revenue has also confirmed this treatment in Technical Assistance Advisements, including TAA 22A-014 where a travel agent’s bundle of an admission plus a restaurant gift card qualified as an exempt “vacation package” under §212.04.

What this means in practice

• If you sell a Florida vacation package like “2 hotel nights + 2 theme-park admissions + airport transfer” as one lump-sum price, and you purchased each component properly and tax was handled at the supplier level, you do not collect additional tax on the package sale. Do not itemize the components on the customer invoice if you want this treatment.

• If you itemize hotel, tickets, or transport on the invoice, or sell a single component rather than a package, normal tax rules for that component can apply.

In summary:

• Sales Tax Rates: 6% state + local discretionary surcharges (0.5-1.5%) + tourist development taxes (up to 6% for lodging). Effective rates: 7-13% for travel services.

• Economic Nexus Threshold: $100,000 in taxable sales (transaction count eliminated in 2025).

• Physical Nexus Triggers: Office, employees, or attending trade shows (e.g., IPW in Orlando). Florida’s Seller of Travel Law requires registration (Form DR-1S, $300-500 fee) if selling Florida travel, even with minimal presence.

• Taxable Travel Services:

  • Lodging: Hotels, Airbnbs (<6 months) are taxable, plus county-specific tourist taxes (e.g., 5% in Miami-Dade).

  • Tours/Packages: Taxable on admissions (e.g., Universal Studios at 6.5%), meals, rentals. Agent commissions exempt if separately invoiced.

  • Exemptions: Interstate transport (e.g., cruises departing Florida); state park admissions (exempt as of 2025).

• Compliance:

  • Register via Florida DOR’s online portal (free permit).

  • File monthly (if >$1,000 tax due) or quarterly; electronic remittance mandatory.

  • Penalties: 10% late fee + 1% monthly interest; up to 50% for willful negligence.

• Example Scenario: A Florida-based travel agent (with physical nexus via their office) sells a $5,000 Orlando package (hotel + theme park tickets) to a Texas client. They collect $650 tax (13% effective rate on lodging/admissions). If they miss filing, an audit could impose a $325 penalty + interest for one return.

Risk controls

• Keep supplier invoices showing tax was paid where required.

• Keep customer invoices as lump-sum package sales if you rely on §212.04(1)(d).

• Note county surtaxes can apply to many transactions in Florida, separate from the state rule above. Check local rules during pricing.

California: Complex Rates and High Thresholds

Services vs. tangible personal property - California generally taxes retail sales of tangible personal property, not pure services. For travel, the California Department of Tax and Fee Administration (CDTFA) has a specific Tax Guide for Destination Management Companies (DMCs). It explains that DMCs are service providers, and when they transfer tangible items as part of their services, they are treated as consumers of that property. The DMC generally pays sales or use tax when purchasing the item from vendors, and does not charge sales tax to the client unless it is making retail sales of tangible goods.

What this means in practice

• If your California tour product is primarily services (itinerary planning, guiding, transportation arrangements) and you hand out minor tangible items incidental to those services, you usually do not collect sales tax from the traveler; you pay the tax on the purchase of those items instead. CDTFA

• If you sell tangible goods at retail (for example, branded merchandise or souvenir packs billed to the guest), that retail sale is taxable and you need a seller’s permit and proper filings

In summary:

• Sales Tax Rates: 7.25% state + local (up to 3%) + Transient Occupancy Tax (TOT, 10-15% in cities like San Francisco). Effective: 8.25-10.25% for travel.

• Economic Nexus Threshold: $500,000 in taxable sales (no transaction count).

• Physical Nexus Triggers: Office, employees, or events (e.g., California Travel Summit in Napa). Storing brochures in-state counts.

• Taxable Travel Services:

  • Lodging: Hotels, short-term rentals (<30 days) are taxable, plus TOT (e.g., 12.5% in San Diego as of May 2025).

  • Tours/Packages: Taxable on tangible components (e.g., wine tastings with bottles included). Use tax applies if you buy taxable items for resale without a certificate.

  • Exemptions: Interstate flights, food in packages (if separate), pure commissions.

• Compliance:

  • Register via CDTFA portal (free permit).

  • File quarterly (monthly if high volume); electronic filing required.

  • Penalties: 10% late + 1.5% monthly interest; up to 25% for negligence.

• Example Scenario: A California-based agent sells $600,000 in Yosemite tours, triggering nexus. For a $2,000 package (hotel + guided hike), they collect $200 tax (10%). Non-compliance risks a $50 penalty per return + back taxes.

Risk controls

• Document clearly that you are providing services and not reselling goods, where that is the case.

• If you do sell goods, register with CDTFA and charge tax on those retail sales

New York: Urban Tourism with Service Exemptions

New York taxes hotel stays, admissions, and tangible items but generally exempts most professional or personal services. Under Tax Law §1105, hotel occupancy (less than 90 days) and admissions to places of amusement are taxable, while itinerary planning or consulting services are not.

When a travel agent sells a package that includes taxable and non-taxable components, such as hotel stays, Broadway tickets, and tours, New York applies the “true object” test. If the primary purpose of the sale is a taxable item, the entire amount can be subject to tax unless the components are separately itemized.

What this means in practice:

If you sell a New York package like “2 hotel nights + Broadway tickets + guided city tour” for one lump-sum price, New York generally treats the whole charge as taxable. To avoid this, itemize the components on the invoice—hotel and admissions will be taxed, but service elements like a guided tour or planning fee remain exempt.

New York’s combined rate in New York City is about 8.875%, plus the Hotel Unit Fee of $1.50 per room per night and a 5.875% occupancy tax. These apply only to the lodging portion.

In Florida, lump-sum packages can be exempt if structured correctly; in New York, lump-sum pricing usually makes the whole sale taxable. Always separate taxable and exempt components on invoices to minimize exposure.

In summary:

• Sales Tax Rates: 4% state + local (up to 4.875%) + MCTD (0.375% in NYC) + NYC hotel occupancy (5.875% + $2/room/night). Effective: 8-8.875% for travel.

• Economic Nexus Threshold: $500,000 and 100 transactions.

• Physical Nexus Triggers: Office, employees, or events (e.g., NY Travel Show). No specific travel seller license.

• Taxable Travel Services:

  • Lodging: Hotels, rentals ($2+/day) are taxable, plus NYC occupancy fees.

  • Tours/Packages: Taxable on admissions (e.g., Broadway tickets at 8.875%). Most services (e.g., guided tours) exempt unless tangible goods included.

  • Exemptions: Commissions, interstate transport, most planning fees.

• Compliance:

  • Register via NYS Tax portal (free permit).

  • File monthly (if >$3,000 tax due) or quarterly; electronic remittance.

  • Penalties: 10% late + 1% monthly interest; up to 50% for intentional errors.

• Example Scenario: A New York agent sells $600,000/150 NYC packages, triggering nexus. For a $1,500 package (hotel + Broadway), they collect $133 tax (8.875% on taxable portions). An audit for non-filing could assess $66.50 penalty + interest.

Risk Controls

• Itemize taxable and non-taxable items on every invoice to avoid the entire package being taxed.

• Keep supplier invoices for hotels and tickets to prove tax was collected at source.

• Monitor nexus thresholds ($500 000 + 100 transactions) and register promptly once triggered.

Compliance Steps for U.S. Travel Agents

To stay compliant and avoid costly audits:

1. Track Sales by State: Use software like Avalara, TaxJar, or QuickBooks (integrates with travel CRMs like Travefy). Monitor direct sales separately from marketplace sales.

2. Determine Taxability: Check state-specific rules for lodging, tours, and exemptions. Use resale certificates for wholesale purchases.

3. Register for Permits: Apply online with state tax authorities (1-4 weeks processing). Costs are minimal ($0-50).

4. Collect Sales Tax: Add tax to invoices based on destination state rates. Use geolocation tools for accuracy.

5. File and Remit: File electronically on schedule (monthly/quarterly). Pay via EFT or ACH.

6. Maintain Records: Keep invoices, resale certificates, and sales data for 3-7 years (state-dependent).

7. Voluntary Disclosure Agreements (VDAs): If you missed past obligations, use VDAs to limit lookback (3-4 years) and waive penalties (Antravia offers VDA services starting at $4,000/state).

8. Monitor Nexus: Review sales annually for new thresholds, especially if expanding to new states.

Common Pitfalls and Penalties

• Pitfalls:

  • Assuming OTAs (e.g., Viator) cover all sales—direct sales are your responsibility.

  • Bundling taxable and exempt items without separating on invoices.

  • Ignoring physical nexus from events or hosted agency agreements.

  • Missing filing deadlines or underreporting sales.

• Penalties:

  • Audits can go back 3-8 years, assessing back taxes, interest (1-1.5% monthly), and penalties (10-100% of unpaid tax).

  • States share data via the Streamlined Sales and Use Tax Agreement (SSUTA), increasing audit risks.

  • Example: A Florida agent missing $10,000 in tax could face $1,000-$5,000 in penalties + $1,200/year interest.

• Best Practices:

  • Automate with software to calculate and file accurately.

  • Disclose tax policies on your website (“Tax added at checkout”).

  • Consult experts for complex scenarios or audits.

How Antravia can help U.S. Travel Agents

At Antravia, we’re on a mission to become the premier tax compliance partner for U.S. travel agents. We offer tailored services inspired by industry leaders, designed specifically for the travel industry:

• Sales Tax Management: Full-service filing, nexus monitoring, notice handling, and custom reports for all U.S. jurisdictions.

• Nexus Risk Analysis: Assess your liability with a detailed review of sales and physical presence, plus a compliance roadmap.

• Registrations: Fast, accurate registration for any state, with setup of online accounts.

• Voluntary Disclosure Agreements: Resolve past liabilities with limited lookback and penalty waivers.

• Free “What’s Next” Call: Get personalized insights on compliance, audits, or tax planning. Schedule at antravia.com.

Why choose Antravia?

• Travel Expertise: We understand the nuances of travel taxes, e.g. lodging, tours, exemptions, and Seller of Travel laws.

• Transparent Pricing: No long-term contracts, flexible cancellations, and customized plans.

• Proactive Support: Annual nexus reviews and unlimited email/chat support keep you ahead of changes.

Example Success Story: A Delaware-based travel agent with $200,000 in Florida sales used our nexus analysis to register and file correctly, avoiding a $15,000 audit penalty. We’re ready to do the same for you.

Get Started Today

Sales tax compliance doesn’t have to slow your growth. With Antravia’s expert guidance, you can focus on crafting dream vacations while we handle the tax complexities. Book your free “What’s Next” call at antravia.com or email info@antravia.com to start your compliance journey. Let’s turn tax challenges into opportunities for your travel business to shine.

References

General U.S. Sales Tax, Nexus, and Wayfair Decision

• Sales Tax Institute. "Economic Nexus State by State Chart." https://www.salestaxinstitute.com/resources/economic-nexus-state-guide

• TaxCloud. "Sales Tax Nexus by State Chart 2025: Rules & Thresholds." https://taxcloud.com/blog/ecommerce-sales-tax-nexus-by-state-what-you-need-to-know/

• Avalara. "Economic Nexus by State Guide." https://www.avalara.com/us/en/learn/guides/state-by-state-guide-economic-nexus-laws.html

• Avalara. "States Eliminating Economic Nexus Transaction Thresholds in 2025." https://www.avalara.com/blog/en/north-america/2025/06/states-eliminating-economic-nexus-transaction-thresholds.html

• Stripe. "Introduction to US Sales Tax and Economic Nexus." https://stripe.com/guides/introduction-to-us-sales-tax-and-economic-nexus

• Tax Foundation. "South Dakota v. Wayfair | Tax Glossary." https://taxfoundation.org/taxedu/glossary/south-dakota-v-wayfair/

• Avalara. "Economic Nexus and South Dakota v. Wayfair, Inc." https://www.avalara.com/us/en/learn/sales-tax/south-dakota-wayfair.html

Travel Industry: Taxable vs. Exempt Services

• Avalara. "Understanding Tax Obligations for Online Travel Agencies." https://www.avalara.com/blog/en/north-america/2023/07/understanding-tax-obligations-online-travel-agency.html

• TaxConnex. "Are Travel Related Services Taxable? | Tax on Travel." https://www.taxconnex.com/blog-/are-travel-services-taxable

• Avalara. "State-by-State Guide to Charging Sales Tax on Services." https://www.avalara.com/us/en/learn/whitepapers/service-taxability-by-state.html

Florida-Specific

• Florida Department of Revenue. "Florida Sales and Use Tax." https://floridarevenue.com/taxes/taxesfees/Pages/sales_tax.aspx

• Avalara. "2025 Florida Sales Tax Calculator & Rates." https://www.avalara.com/taxrates/en/state-rates/florida.html

• TaxCloud. "Florida (FL) Sales Tax 2025: Rates, Nexus, Thresholds." https://taxcloud.com/sales-tax/florida/

California-Specific

• California Department of Tax and Fee Administration (CDTFA). "Tax Guide for Destination Management Companies." https://cdtfa.ca.gov/industry/destination-management-companies/

• CDTFA. "New Sales and Use Tax Rates Effective April 1, 2025." https://cdtfa.ca.gov/formspubs/L974.pdf

New York-Specific

• New York State Department of Taxation and Finance. "Quick Reference Guide for Taxable and Exempt Property and Services." https://www.tax.ny.gov/pubs_and_bulls/tg_bulletins/st/quick_reference_guide_for_taxable_and_exempt_property_and_services.htm

• TaxCloud. "Sales Tax in New York (NY) 2025: Rates, Compliance, Thresholds." https://taxcloud.com/sales-tax/new-york/

• New York State Department of Taxation and Finance. "Sales and Use Tax." https://www.tax.ny.gov/bus/st/stidx.htm

⚠️ DISCLAIMER: The information in this article reflects the complex landscape of U.S. Federal Tax Law as of October 2025, including recently proposed and enacted legislative changes affecting the 2025 tax year. This fact-check is a high-level overview based on publicly available IRS and FinCEN guidance as of October 2025. Tax laws are subject to frequent change. This is not legal, financial, or tax advice. Always consult with your qualified CPA or tax professional knowledgeable in hospitality real estate before making any tax-related decisions. See also our Disclaimer page