US Invoice Requirements: Sales Tax, 1099-NEC and IRS Records

There is no federal law in the US that says what an invoice must contain. What goes on a US invoice comes from three places: IRS rules that your records must support your income, state rules on how sales tax appears, and Form 1099-NEC, which your business clients file once they pay you $2,000 or more in a year.

Last reviewed: 31 October 2026 against IRS recordkeeping guidance, the Instructions for Forms 1099-MISC and 1099-NEC and state Department of Revenue pages listed at the end.

Is there a legal invoice format in the US?

No. Unlike the UK, Australia or Canada, the US has no national VAT or GST, and no federal list of invoice fields. The IRS says that, except in a few cases, the law does not require any special kind of records: you may use any recordkeeping system that clearly shows your income and expenses (IRS recordkeeping).

Invoices still matter to the IRS. In its list of documents that support gross receipts, it names invoices alongside cash register tapes, deposit information, receipt books and Forms 1099-MISC (What kind of records should I keep). If you are ever asked to show where your income came from, your invoices are the evidence.

The rules that reach the invoice itself are set by states, and they are mostly about sales tax.

What to include on a US invoice

The checklist below is best practice plus the most common state sales tax rules. It is not one federal requirement, and your state may ask for more. For the general walk-through, see how to write an invoice.

You don't need a taxpayer ID on an invoice under federal rules. Business clients collect it separately on Form W-9 (more on that below). If you want an ID on your invoices anyway, use an Employer Identification Number (EIN) rather than your Social Security number.

Sales tax on invoices: when and how to show it

Sales tax in the US is a state and local tax, so the rules depend on where the sale is taxed.

Five states have no statewide general sales tax: Alaska, Delaware, Montana, New Hampshire and Oregon. That doesn't always mean no tax at all. Many Alaska cities and boroughs levy their own local sales taxes. Some Montana resort communities charge a local resort tax. Delaware charges businesses a gross receipts tax, which falls on the seller rather than appearing as a sales tax on the customer's bill (Delaware Division of Revenue).

Several states set rules for how sales tax appears on the invoice. Three examples:

• Texas. You must separately state the sales tax you charge. The only way to include it in the price is to give the customer the written statement "Texas state and local sales and use tax is included in the sales price" and prominently display a sign saying the same. Out-of-state sellers with a Texas permit must label the tax "Texas sales and use tax" on their invoices (Texas Comptroller).
• Washington. Retail sales tax must be stated separately from the selling price on any sales invoice. This applies even when seller and buyer agree the quoted price includes tax (RCW 82.08.050, WAC 458-20-107).
• Iowa. An invoice must either show the tax separately from the price, or state on each invoice that tax is included (Iowa Admin. Code r. 701—203.1).

Goods and services are treated differently. Sales tax generally applies to physical goods, but whether a service is taxable varies widely from state to state, so don't assume either way. For example, Texas treats website creation, website maintenance and web hosting as taxable data processing services, with 20% of the charge exempt (Texas Comptroller, Taxable Services). The same work may be untaxed in another state. Check your own state's guidance for each type of service you sell.

Selling into other states. Since the Supreme Court's 2018 South Dakota v. Wayfair decision, a state can require an out-of-state seller to collect its sales tax once the seller passes an economic threshold, even with no physical presence there. The threshold varies by state. Washington and Iowa use $100,000 of gross receipts or revenue from the state, while Texas uses $500,000 (Washington DOR, Iowa DOR, Texas Comptroller). Check each state you sell into before you start charging its tax.

The rate you enter is usually a combined rate: the state rate plus any city, county or district rates for the place of sale. The Texas Comptroller's own example uses Austin's combined 8.25%.

Worked example: a Texas invoice with a discount and a non-taxable line

A fictional Austin business, Ridgeline Print Co., bills a fictional local client, Example Client LLC. The order is 200 custom printed T-shirts, taxed at Austin's combined 8.25%, plus a $300 design setup fee. We treat the setup fee as non-taxable only to show a mixed invoice; whether a charge like this is taxable depends on the state and how it is billed. The client gets a 10% discount on the whole order. Amounts appear exactly as Invoice Builder prints them.

How the tax is worked out:

1. The $280 discount is shared across the lines in proportion to their value: $250 comes off the T-shirts and $30 off the setup fee.
2. The taxable amount is $2,500 − $250 = $2,250.
3. $2,250 × 8.25% = $185.625. Texas rounds to the cent using the third decimal place, rounding up from 5, so the tax is $185.63.
4. Amount due: $2,800 − $280 + $185.63 = $2,705.63.

To set up Invoice Builder for US invoices once:

• Choose US Dollar ($) as the currency.
• Click each label to rename it: VAT / Tax ID to EIN, Price (excl. VAT) to Price, VAT rate to Tax rate, Subtotal excluding VAT to Subtotal, and VAT to Sales Tax.
• Enter your combined rate on each taxable line, for example 8.25, and 0 on non-taxable lines.
• Rename Terms & conditions to Payment terms and write your terms there, for example "Net 30. Pay by ACH or check."
• Keep Remember my settings switched on, so new invoices start in US dollars with your labels.

Invoices and Form 1099-NEC for freelancers

If you are a freelancer or independent contractor, your business clients may file a Form 1099-NEC about you. It is not an invoice. Form 1099-NEC is an information return the client files with the IRS, with a copy sent to you, reporting what they paid you during the year. Your invoices are the records behind that income.

What changed for 2026:

• The threshold rose from $600 to $2,000. A business must file Form 1099-NEC for each contractor it paid at least $2,000 for services in the course of its trade or business during the calendar year. This applies to payments made after December 31, 2025, so 2025 payments still used $600 (IRS: Form 1099-NEC and independent contractors; Public Law 119-21, section 70433). From 2027 the $2,000 is adjusted for inflation.
• The deadline is January 31. The client files with the IRS and sends your copy by January 31. When that falls on a weekend or legal holiday, the deadline moves to the next business day. For 2026 payments, January 31, 2027 is a Sunday, so the due date is February 1, 2027.

Three points that confuse freelancers:

• The threshold decides who files the form, not what is taxable. The IRS instructions say some payments don't have to be reported on Form 1099-NEC "although they may be taxable to the recipient". Report all your business income, whether or not a 1099 arrives.
• Card and app payments are reported differently. Payments by credit card or through a third-party network such as a payment app are reported on Form 1099-K by the payment processor, not on Form 1099-NEC by your client. For third-party networks, the processor reports when payments to you exceed $20,000 and the number of transactions exceeds 200 (Instructions for Form 1099-K).
• Expect a Form W-9. Clients may ask you for a Form W-9, which gives them your name and taxpayer identification number (About Form W-9). If you don't provide a TIN, the client may have to apply backup withholding at 24% (IRS backup withholding).

Payments to corporations, including LLCs taxed as C or S corporations, are generally not reported on Form 1099-NEC.

Getting paid on time is a separate question from reporting: our guide to payment terms covers how to set a due date and the New York and Illinois freelancer laws that require payment within 30 days when the contract sets no date.

How long to keep invoices

Keep the invoices you issue and receive for as long as they may be needed for a tax return. The IRS periods (How long should I keep records):

Can Invoice Builder do this?

Each point below was tested in the editor and in the exported PDF, using an invoice with a discount, a taxed line and a 0% line.

Supported:

• Sales tax stated separately. Each line shows its rate, and the totals show the tax amount for each rate.
• Tax worked out after discounts. A discount reduces the taxable amount before tax is calculated, as in the example above.
• Taxable and non-taxable lines on one invoice. Set non-taxable lines to 0%. The PDF shows 0% on those lines and adds a "Sales Tax 0%" row of $0.00 to the totals.
• Combined state and local rates. Enter one combined rate with decimals, such as 8.25.
• US dollar formatting, with thousands separators: $ 2,705.63.
• Your labels are remembered. With Remember my settings on, "Sales Tax", "EIN" and your other labels carry over to new invoices.
• Payment terms. A due date (30 days ahead by default) and a payment terms section.

Not supported:

• Tax-included prices. Prices are entered before tax, so the tool can't print a tax-included price with the statement Texas or Iowa requires. Show the tax separately instead.
• State and local tax as separate lines. Each line carries one rate, so you can't show, say, a state rate and a city rate as two taxes. Enter the combined rate.
• Taxed shipping. The shipping field is added after tax and is never taxed. If your state taxes delivery charges, add delivery as a normal line with your rate instead of using the shipping field.

A note from Mohamed, who builds Invoice Builder: This is the first guide in this series where I couldn't point to a single invoice law, because the US doesn't have one, so I built it around the three things that actually shape a US invoice: IRS records, state sales tax, and 1099 reporting. Before publishing, I checked every claim in the "Can Invoice Builder do this?" section against a real test invoice and its exported PDF. That test turned up a gap I hadn't noticed: shipping is added after tax and is never taxed, even though some states, such as Texas and Washington, tax delivery charges, which is why this guide suggests adding delivery as a normal line item. The tool also can't yet show state and local tax as two separate lines, or handle tax-included prices, and I'd rather say that plainly than let you find out from a customer. If your state has a rule I've missed, tell me through the contact page and I'll update this guide.

Common US invoice mistakes

• Calling a 1099 an invoice. A 1099-NEC is a tax form your client files. You still need to send invoices to get paid.
• Folding sales tax into the price. In Texas and Washington, tax must be shown separately unless a specific exception applies.
• Assuming services are never taxable. Some states tax certain services. Check before you send the first invoice.
• Using the state rate alone. City, county and district rates add to the state rate, so enter the combined rate for the place of sale.
• Putting your Social Security number on invoices. Give your TIN to clients on Form W-9; use an EIN if you want an ID on the invoice.

How other countries compare: see UK VAT invoice requirements, Australian tax invoice requirements and Canadian GST/HST invoice requirements.

This guide is general information, not tax or legal advice. Sales tax rules vary by state and change; check your state's Department of Revenue or a tax professional.

Sources

• IRS: Recordkeeping, What kind of records should I keep, How long should I keep records
• IRS: Instructions for Forms 1099-MISC and 1099-NEC, Form 1099-NEC and independent contractors, Instructions for Form 1099-K, About Form W-9, Backup withholding
• Public Law 119-21, section 70433
• Texas Comptroller: Sales tax collection FAQ, Taxable Services, Remote sellers
• Washington: RCW 82.08.050, WAC 458-20-107, DOR remote sellers
• Iowa: Iowa Admin. Code r. 701—203.1, DOR remote sellers
• States without a general sales tax: Oregon DOR, Montana DOR, New Hampshire DRA, Delaware Division of Revenue, Alaska Office of the State Assessor