Is Shipping Taxable in South Carolina? Rules and Exceptions

Yes, shipping is taxable in South Carolina whenever the underlying sale is taxable. The state’s 6% sales tax applies to the “gross proceeds of sales,” and that figure includes delivery charges by default.¹ There is one narrow exception: when goods are shipped by a common carrier and the sale is made F.O.B. origin, so that the buyer owns the goods the moment they leave the seller’s dock, the delivery charge can be excluded from the tax calculation.² Every other delivery arrangement gets taxed.

Why Delivery Charges Are Part of the Taxable Sale

South Carolina defines “gross proceeds of sales” as the total value from a sale of tangible personal property “without any deduction” for transportation costs.³ Delivery is not treated as a separate service tacked onto a purchase. It’s part of the sale itself. Revenue Ruling 19-9 confirms that delivery charges are “includable in the measure of the sales and use tax” for most transactions.²

The Common Carrier and F.O.B. Origin Exception

Two things must both be true for a delivery charge on a taxable sale to escape tax: the goods travel by a common carrier such as UPS, FedEx, or a freight company, and the sale is F.O.B. origin, so the buyer takes legal ownership when the carrier picks up the goods.²

The reasoning is simple. Under F.O.B. origin terms the goods already belong to the buyer when transportation begins, so the carrier is providing a service to the buyer rather than the seller. Regulation 117-310 puts it this way: when a sale is F.O.B. origin, “the delivery of the goods to the carrier is generally construed as equivalent to the delivery of the goods to the buyer,” and any freight charges are treated as a reimbursable expense rather than sale proceeds.⁴

If either piece is missing, the exception fails. A sale that’s F.O.B. destination keeps the seller on the hook for the goods until they arrive, so the delivery charge stays taxable. And delivery by the seller’s own vehicle is always taxable, even with F.O.B. origin terms.

Separately Stated Shipping Is Still Taxable

Listing shipping on its own line of the invoice does not make it non-taxable. Regulation 117-310 is explicit: whether freight charges may be deducted from the selling price “does not depend upon the separate billing thereof, but depends upon whether or not the services rendered by the…transporting agency are rendered to such seller or to the purchaser.”⁴ Revenue Ruling 19-9 backs this up: “the answer is the same whether the delivery charge is separately stated or included in the sales price.”²

South Carolina is not one of the states where separate invoicing alone flips the tax treatment. The controlling factor is who owns the goods during transit.

Delivery Made With the Seller’s Own Vehicle

When a seller uses its own truck, van, or fleet to deliver goods, the delivery charge is always part of the taxable gross proceeds. Regulation 117-310(d) states that “no practice of invoicing or billing will entitle the seller to deduct from gross proceeds of sale any cost or expense, actual or estimated, in cases where the seller, by use of his own means of transportation, effects such delivery.”⁴

This trips up furniture stores, building supply companies, florists, and other local retailers who run their own delivery vehicles. The F.O.B. origin exception is only available when a third-party common carrier moves the goods.

Fuel Surcharges

Fuel surcharges follow the same rules as the delivery charges they attach to. Revenue Ruling 22-12 confirms that fuel surcharges added by a retailer delivering merchandise with its own vehicles are “includable in ‘gross proceeds of sales’ or ‘sales price’ and therefore subject to the sales and use tax.” It doesn’t matter whether the surcharge sits on the same invoice as the merchandise or comes on a separate bill later.⁵

Shipping on Exempt Items

When the item being sold is exempt from sales tax, the delivery charge is exempt too, regardless of how it’s arranged or billed. Revenue Ruling 19-9 provides that any delivery charge tied to an exempt sale is not subject to tax, “whether separately stated or included in the price of the item.”² The same logic applies to wholesale transactions for resale: no tax on the sale means no tax on the shipping.

South Carolina exempts several common categories of tangible personal property, including unprepared grocery food (exempt from the 6% state tax but still subject to local taxes), prescription medications and diabetic supplies, and textbooks used in primary, secondary, and higher education.⁶

Orders Mixing Taxable and Exempt Items

When one shipment contains both taxable and non-taxable items, the delivery charge has to be split. Revenue Ruling 19-9 provides that “if the seller can reasonably prorate the delivery charge between the taxable items and nontaxable items sold based on his books and records, then the tax is only due on that portion of the delivery charge related to the taxable items.”²

The proration has to be reasonable and consistent. Most sellers allocate by the dollar value of each portion of the order. If a customer orders a taxable lamp for $80 and exempt grocery items for $20, the taxable goods make up 80% of the order, so $8 of a $10 delivery charge is taxable and $2 is exempt. A weight-based split can be appropriate when it better reflects the real cost of shipping, like a 50-pound bag of exempt animal feed traveling with a small taxable item.

If the seller can’t produce a reasonable proration from its books and records, the entire delivery charge becomes taxable. Sloppy record-keeping has a direct tax cost here.

Remote Sellers and Marketplaces

Out-of-state sellers shipping into South Carolina are subject to the same rules. Under South Carolina Code Section 12-36-70, a remote seller with no physical presence in the state must register and collect sales tax once its gross revenue from sales delivered into South Carolina exceeds $100,000 in the current or previous calendar year.⁷ There is no separate transaction-count threshold. Once the seller is registered, the shipping rules above apply to every order sent into the state.

Marketplace facilitators such as Amazon, Etsy, and eBay have their own obligation under Section 12-36-71 to collect and remit sales tax on behalf of third-party sellers.⁸ The facilitator normally handles tax on the full transaction, delivery charges included. Sellers on those platforms should confirm the facilitator is taxing shipping correctly, because the seller can still be on the hook if it isn’t.

Local Taxes on Top of the State Rate

South Carolina’s state rate is 6%, and most counties add a local option tax that raises the combined rate to somewhere between 6% and 9%.¹ Local taxes apply to the same base as the state tax, so they apply to taxable shipping charges too. A $15 delivery charge in a county at 9% adds $1.35 in tax, which becomes real money on large or frequent orders.

Unprepared food is exempt from the 6% state tax but still subject to local taxes, which matters for mixed grocery shipments: the food portion of the delivery charge faces only local tax, while the taxable-item portion faces the full combined rate.

1
South Carolina Department of Revenue. Sales and Use Tax Index
2
South Carolina Department of Revenue. SC Revenue Ruling 19-9 – Delivery Charges
3
South Carolina Legislature. South Carolina Code Title 12, Chapter 36 – Section 12-36-90
4
Cornell Law Institute. South Carolina Code Regs 117-310 – Freight and Delivery Charges
5
South Carolina Department of Revenue. SC Revenue Ruling 22-12 – Fuel Surcharges by Retailers Delivering Tangible Personal Property
6
South Carolina Legislature. South Carolina Code Title 12, Chapter 36 – Section 12-36-2120
7
South Carolina Department of Revenue. Chapter 13 – Nexus
8
South Carolina Legislature. South Carolina Code Section 12-36-71 – Marketplace Facilitator