What is a tax charged on goods purchased from out-of-state and used within the state called?

The tax charged on goods purchased from out-of-state and used within the state is called a use tax. This tax is designed to complement sales tax, which is charged on goods purchased within a particular state. When residents buy goods from outside their state, they often do not pay sales tax at the time of purchase. To ensure that local businesses are not disadvantaged, the use tax mandates that residents pay tax on those out-of-state purchases when they use the goods within their home state.

The purpose of the use tax is to create a level playing field for in-state sellers who must collect sales tax on their sales, while also ensuring that the state collects revenue from out-of-state purchases. It applies to a variety of goods, including tangible personal property and certain services, and is crucial for maintaining state revenue in a way that supports local economic activity.