Is There Tax on Forever Stamps? Sales & Business Taxes

Forever Stamps are a unique type of postage stamp issued by the United States Postal Service (USPS). Unlike traditional stamps that display a specific monetary value, Forever Stamps are non-denominated, meaning they do not have a price printed on them. Their value is tied to the current first-class postage rate for a one-ounce letter, ensuring they remain valid regardless of future price increases. This offers convenience to consumers, eliminating the need to purchase additional stamps when postage rates change.

Sales Tax on Postage

The purchase of postage stamps, including Forever Stamps, is generally exempt from sales tax. This exemption stems from postage being considered a governmental service provided by the U.S. Postal Service, a federal agency. State and local sales taxes typically apply to the sale of tangible goods, not to services rendered by a federal entity. Consumers do not pay sales tax when buying stamps directly from the USPS or its authorized vendors for postage.

If stamps are sold by a third party as collectible items rather than for their postal value, sales tax might apply depending on state and local regulations governing collectibles. However, for everyday purchases of stamps intended for mailing, the transaction remains sales tax-exempt.

Income Tax Considerations for Businesses

Businesses often use postage for various operational needs, and the costs can be deductible for income tax purposes. While sales tax is not a factor when acquiring stamps, the expense of postage, including Forever Stamps, can reduce a business’s taxable income if considered an ordinary and necessary business expense. This means the postage must be common and accepted in the business’s industry, and helpful and appropriate for its operations.

Deductible uses include mailing invoices to clients, sending marketing materials, distributing business correspondence, or shipping products to customers. It is important to distinguish between business-related postage and personal use; only expenses directly tied to business operations are eligible for deduction. For instance, mailing personal holiday cards would not be deductible.

Accurate record-keeping is important for businesses claiming postage deductions. Maintaining records, such as receipts, invoices, and logs of business mailings, helps substantiate these expenses in case of an audit. The Internal Revenue Service (IRS) advises keeping tax records that support income, deductions, or credits for at least three years from the date the tax return was filed. Proper categorization of postage expenses, whether as operating expenses, cost of goods sold, or marketing expenses, ensures compliance and accurate financial reporting.