What is a use tax?

A use tax is a type of tax imposed on the purchase of goods or services that are used, stored, or consumed within a jurisdiction, but were not subject to sales tax at the time of purchase. It is typically applied to items bought out-of-state or online where sales tax was not collected. The purpose of the use tax is to ensure that local businesses are not at a disadvantage compared to out-of-state sellers and to maintain revenue for state and local governments. Individuals and businesses are generally responsible for reporting and paying use tax on their purchases.