Don't Get Taxed: Clever Ways to Save on Your Engagement Ring Purchase

Why Smart Shoppers Want to Avoid Sales Tax on Engagement Ring Purchases

Avoid sales tax on engagement ring purchases and you could save hundreds—or even thousands—of dollars on one of life's most significant purchases. Here's how to do it legally:

Quick Answer: Three Legal Ways to Reduce or Avoid Sales Tax

1. Purchase from a no-sales-tax state (Alaska, Delaware, Montana, New Hampshire, or Oregon) using store pickup
2. Buy online from retailers without nexus (physical presence) in your state—though you may still owe use tax
3. Consider international purchases while factoring in customs duties and VAT

The Reality Check: Most states charge 6% or more in sales tax on jewelry. On a $10,000 engagement ring, that's an extra $600+. In California, with its 7.5% base rate, you'd pay $750 more. These are significant amounts when you're already making a major investment.

The challenge is that sales tax laws have grown more complex since the 2018 South Dakota v. Wayfair Supreme Court decision. Many online retailers now charge sales tax regardless of their location, and your home state may expect you to pay "use tax" on purchases made elsewhere.

Still, legitimate strategies exist to minimize what you pay if you understand how the system works.

I'm Eric Roach Zalori, founder of Zalori. With years of experience in the fine jewelry industry, I've helped many customers steer the complexities of high-value purchases. This guide shares proven, legal strategies for minimizing sales tax on an engagement ring in 2025, along with the crucial legal considerations you need to know.

Understanding the Tax Landscape: Sales Tax vs. Use Tax

To avoid sales tax on an engagement ring, you must understand the two types of taxes that can apply: sales tax and use tax. They are easy to confuse but have different implications for your purchase.

Sales Tax: The Tax You See at Checkout

Sales tax is straightforward: the seller adds it to your purchase price at checkout and sends it to the government. Most states tax jewelry, with rates varying widely. California's base rate is 7.5%, and New York's is 6% or more with local taxes. On a $10,000 ring, that's an extra $750 in California—a significant sum.

Use Tax: The Tax Most People Don't Know About

Use tax exists to close a loophole. If you buy a ring from an out-of-state seller who doesn't charge sales tax, your home state expects you to report and pay use tax yourself. For example, if you live in Texas and buy a ring from tax-free Oregon, Texas still expects you to pay use tax at the local rate.

Who's Responsible for What?

The seller collects sales tax if they have "nexus" (a significant presence) in your state. If not, they won't collect it, but you are still legally required to report and pay use tax on the purchase.

Here's how the two taxes compare:

For a deeper look at how this works in specific locations, check out our guide to jewelry sales tax in New York City and State.

What is 'Nexus' and How Does It Affect Your Online Purchase?

Nexus is the legal link that requires a seller to collect sales tax. It used to mean a physical presence (like a store or warehouse). The 2018 South Dakota v. Wayfair Supreme Court case changed this, creating economic nexus. Now, online retailers must collect sales tax if they exceed a certain sales volume (e.g., $100,000) or number of transactions in your state. This has dramatically changed online shopping for those hoping to avoid sales tax on engagement ring purchases.

Marketplace facilitator laws further complicate things. Platforms like Amazon are now responsible for collecting sales tax for their third-party sellers, making most purchases on these sites taxable. The bottom line is to always check your cart at checkout to see if sales tax has been added.

The Reality of Use Tax

Even if an online seller doesn't charge sales tax, you are legally obligated to pay use tax to your home state. Most people don't realize this, and many don't report it.

States know this, which is why your annual income tax return often has a line to report these purchases, and tax software may prompt you for it. What is use tax? It's your state's way of collecting the revenue it would have received from a local purchase.

For a high-value item like an engagement ring, the risk of ignoring use tax is greater. While enforcement is difficult, states are more likely to notice a failure to report a $10,000 purchase than a small one. The use tax rate is typically the same as your state's sales tax rate. While it may be difficult for states to enforce, you are still legally liable. Understanding your obligations is key to making an informed decision.

How to Legally Avoid Sales Tax on an Engagement Ring

Now that you understand the tax landscape, let's explore legitimate strategies to avoid sales tax on engagement ring purchases. While tax rules have tightened since 2018, legal pathways to savings still exist if you know where to look.

Strategy 1: Purchase from a No-Sales-Tax State

The most straightforward way to avoid sales tax on engagement ring purchases is to buy in a state that doesn't charge it. Five states have no statewide sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon.

If you live near one of these states or plan a trip there, you could purchase your ring without paying sales tax at the point of sale. Jewelers in these states often arrange in-person purchases or store pickups for out-of-state customers.

The important caveat is that when you bring the ring back to your home state, you are technically liable for use tax. While enforcement on individual purchases is difficult for states to monitor, the legal obligation exists. We always recommend knowing where you stand legally.

While Zalori doesn't currently have locations in these no-sales-tax states, this strategy remains a reliable way to avoid sales tax at the point of purchase.

Strategy 2: The Truth About Buying an Engagement Ring Online

Buying an engagement ring online used to be the easiest way to bypass sales tax, but those days are mostly gone due to the South Dakota v. Wayfair decision. Most major online retailers now collect sales tax in nearly all states where they have economic nexus.

However, some opportunities remain:

• Smaller online sellers who haven't yet reached the economic nexus thresholds in your state might not charge you sales tax.
• The shipping address can also affect whether tax is charged. Shipping to a state where the retailer has no nexus might avoid tax at checkout, but the use tax obligation follows you if you bring the ring to your home state.

Your best approach is to check your cart carefully at checkout. The final price breakdown will show if sales tax is being applied. Even if you successfully avoid sales tax at the point of sale, remember you are still legally responsible for use tax in your home state.

Strategy 3: Considering an Overseas Purchase

Purchasing an engagement ring from an international jeweler might seem attractive, but the tax implications can turn a deal into an expensive headache.

When you import jewelry into the U.S., you'll face customs duties. If buying from the EU, you'll also pay Value-Added Tax (VAT). While you might get a VAT refund, you'll still face U.S. customs duties and potentially use tax at home. The paperwork can be daunting.

Add in import fees from couriers and unpredictable currency exchange rates, and the savings often disappear. For most people, the complexity isn't worth it. At Zalori, we take pride in our handcrafted diamond rings that offer exceptional quality without international purchasing hassles.

If you do explore this option, work with a reputable international jeweler and calculate all associated costs before committing to ensure the "deal" remains a deal.

Other Smart Strategies to Reduce Your Overall Ring Cost

Beyond trying to avoid sales tax on an engagement ring, other smart approaches can dramatically reduce the total cost without sacrificing quality. Strategic choices about the diamond and setting can lead to significant savings that are often invisible to the naked eye.

For more comprehensive guidance on smart jewelry purchases, our ultimate guide to buying fine jewelry online covers everything from quality assessment to timing your purchase.

Tip 1: Choose Your Diamond and Setting Wisely

The diamond is usually the biggest expense, offering the most opportunity to save. You can make strategic choices that dramatically reduce the price without a noticeable difference.

• Buy just below full-carat weights: Diamond prices jump at whole and half-carat marks. A 0.98-carat diamond costs significantly less than a 1.0-carat diamond, but the size difference is visually imperceptible. This strategy alone can save you $1,500 or more on a stone around two carats.
• Consider lab-grown diamonds: These are chemically, physically, and optically identical to mined diamonds but can cost 40% less. For couples concerned with ethics or environmental impact, they offer a perfect blend of beauty, authenticity, and value. Learn more in our guide to lab-grown vs. natural diamonds explained.
• Choose 14K gold: While 18K gold and platinum are luxurious, 14K gold offers excellent durability and beauty at a more accessible price. It's the most popular choice for engagement rings in the U.S. for its ability to withstand daily wear. When you choose the right setting, the metal choice is a key factor in both price and aesthetic.
• Explore other gemstones: Diamonds aren't your only option. Sapphires, emeralds, and other precious stones can create stunning rings at a fraction of the cost. Our guide to choosing the perfect gemstone can help you explore these alternatives.

Tip 2: Look for Exemptions and Special Circumstances

While broad tax exemptions for engagement rings are rare, some specific situations might reduce your taxable amount.

• Trade-in value: The value of existing jewelry can often be deducted from the new ring's price before sales tax is calculated, reducing your taxable base. For example, a $1,000 trade-in on a $10,000 ring means you only pay tax on $9,000.
• Resale certificates: These allow businesses to purchase items tax-free for resale and do not apply to individuals buying a ring for personal use.
• Military exemptions: Some states offer sales tax relief for active duty service members, but the rules are highly specific and may not apply to jewelry. It's worth researching if you are a service member in states like California, New York, Texas, Illinois, Utah, or Hawaii.

Researching your local laws is always worthwhile, as regulations vary by location. Your state's department of revenue website is the best place to start.

Frequently Asked Questions about Engagement Ring Taxes

Here are answers to the most common questions we hear from customers about engagement ring taxes.

Is an engagement ring purchase tax-deductible on my income tax?

No. The IRS considers an engagement ring a personal expense, similar to clothing or a vacation. You cannot deduct it, write it off, or claim it on your personal income taxes. While marriage can offer tax benefits, the ring itself does not qualify for any deductions. As H&R Block explains, personal expenses are not eligible for tax write-offs.

Can paying in cash help me avoid sales tax or use tax?

Paying in cash does not change the legal obligations for sales or use tax. A jeweler is required to collect sales tax regardless of payment method. Likewise, your obligation to pay use tax on an out-of-state purchase remains. Relying on cash to avoid sales tax on engagement ring purchases is not a legal strategy—it's tax evasion, which carries serious risks. Furthermore, a cash transaction leaves you with less documentation, which can be problematic for insurance claims or returns.

What happens if I don't pay the use tax on my out-of-state ring purchase?

While states have historically struggled to enforce use tax, they have enforcement tools, and a high-value purchase like an engagement ring is more likely to draw attention.

• State audits: Revenue departments can and do audit individual taxpayers. If they find you owe use tax, they will assess it.
• Penalties and interest: If you're found to owe use tax, you'll pay the original amount plus penalties and interest that accumulate over time.
• Smarter tracking: States are improving their tracking methods by sharing data, analyzing shipping records, and cross-referencing insurance claims for valuable items.

Most states have a statute of limitations (typically 3-6 years) for assessing unpaid taxes, but you are exposed to risk during that window. The peace of mind from handling the purchase legally is invaluable, as potential penalties and headaches far outweigh the initial tax savings.

Your Path to the Perfect, Tax-Savvy Purchase

You now have a comprehensive understanding of how to approach your engagement ring purchase. The strategies covered, from buying in a no-tax state to making smart diamond choices, will help you make an informed decision.

While it's not always straightforward to avoid sales tax on engagement ring purchases in 2025, understanding nexus rules and planning strategically can lead to significant savings. However, we always encourage balancing savings with legal compliance. The temptation to skip use tax reporting isn't worth the risk of penalties and interest on a high-value purchase.

Beyond tax considerations, the true value of an engagement ring is as a symbol of commitment you'll cherish for a lifetime. Choosing a high-quality ring from a jeweler committed to exceptional craftsmanship is just as important as finding the best price.

At Zalori, we understand you're making one of life's most meaningful purchases. Our uncompromising standards for craftsmanship and meticulous selection of authentic materials ensure your ring will be as enduring as the love it represents. We craft each piece with the care and attention it deserves.

We invite you to explore our exquisite collections and find the ring that speaks to your unique love story. With the tax knowledge you've gained and our commitment to quality, you're equipped to make a purchase that's both financially smart and emotionally meaningful.