How U.S. sales tax works for Upwork clients

Articles in this section

Disclaimer:

Upwork cannot provide legal or tax advice. This article is for general information only and may not reflect recent changes. We encourage you to consult with a qualified tax advisor for questions about your specific tax obligations.

Does Upwork collect U.S. sales tax?

Yes. Upwork collects U.S. sales tax, including marketplace facilitator sales tax, and sends it to the appropriate government agency. Taxes may apply to specific fees, services, and freelancer payments, and the rate depends on your location and other factors.

What does U.S. sales tax apply to on Upwork?

Sales tax may be charged on purchases and services provided by Upwork or by freelancers. This includes:

Membership and subscription fees
The Contract Initiation Fee
Marketplace fee
Featured Job upgrades
Services provided by freelancers (where required)
Other Upwork service-related charges

What are the U.S. sales tax rates and how are they determined?

Your tax rate depends on several factors, including:

Your state, county, and city of residency
Your freelancer’s location (in some cases)
The type of fee or service you're being charged for
The category of the job
Your tax status (such as being tax-exempt)

We use the tax residency you list in your account's tax information to determine the correct tax. If that’s missing, we’ll base it on the address under My Info in your settings.

Note:

You're required to keep your address and tax residency current, even if you move temporarily. Unexpected tax-related actions may occur if your tax residency setting is not up to date. We recommend you regularly review the tax information in your account settings.

How can I see how much tax I’m being charged?

When you’re setting up a contract or buying a service (like a membership plan or Featured Job), you’ll see an estimated tax during checkout
Final taxes are assessed at the time of payment, not at contract creation, so the final cost may be different than the estimate. This is especially important for contracts with delayed payments or recurring charges like memberships
You’ll find the tax you were charged listed as a separate line item on your invoice and in your transaction history

How can I find out how much sales tax I'll have to pay based on my location in the U.S.?

We recommend referring to your state’s, county’s, and municipality’s tax websites or a tax consultant to find your location's taxes and rates. We can’t list them for all U.S. cities, counties, and states here, since there are so many and tax laws change frequently. To ensure accurate tax collection, we work with a third-party tax partner to monitor and apply any changes across all jurisdictions where we operate.

Where do I enter or edit my address and tax residence?

Make sure your info is accurate in both of these places:

Account settings > Tax information
Account settings > My Info > Company contacts

You’re required to use your real, permanent address and to keep it up to date — even if you're only temporarily in a new location.

What is the marketplace facilitator sales tax?

Most U.S. states require platforms like Upwork (called marketplace facilitators) to collect sales tax on behalf of freelancers. In these states, Upwork adds a tax to the client’s payment to the freelancer and remits it to the government.

You’ll see it labeled as Marketplace Facilitator Sales Tax on your invoices.

What’s the difference between regular sales tax and the marketplace facilitator sales tax?

The marketplace facilitator sales tax is a specific type of sales tax. It's only assessed on the payments you make to your freelancers and only paid by clients.

Both clients and freelancers may be assessed other types of sales taxes.

Who pays the marketplace facilitator sales tax, the client, the freelancer, or both?

Only clients — not freelancers.

When is the marketplace facilitator sales tax charged?

At the time of payment, not when you create the contract. If anything changes before the payment goes through (like your location or the tax rate), the amount may be adjusted.

What if my business or my company’s business is exempt from sales tax?

If you are a tax-exempt business, you can submit a sales tax exemption certification to taxinfo@upwork.com and then make purchases without paying sales tax. Alternatively, you may be able to get a credit for sales tax paid to Upwork directly from your state. You should consult a tax advisor or contact the Department of Revenue in your state for further details, as policies are different for each state.

What if I think I’m already paying for this tax? Why are you charging me again?

Upwork collects only what it’s legally required to. As a result, you should not be paying this tax elsewhere. We recommend speaking to a tax advisor in your area to review your specific situation.

Can I deduct these taxes when I file my tax return?

Possibly. Some taxes may be deductible depending on your location and how you use Upwork (for business vs. personal use). Check with a tax advisor for information about your specific situation.

How can I get a total of all the taxes I paid on Upwork for the year?

Go to Reports > Transaction History, and then filter for expenses and for the date range you want. The taxes you paid will be displayed as line items.