What tax is imposed on purchases made outside the state for use within the state?

The tax imposed on purchases made outside the state for use within the state is known as use tax. This tax is designed to complement sales tax, ensuring that consumers pay tax on purchases they make from out-of-state sellers that are brought back into their home state for personal use.

Use tax applies to tangible personal property and certain services that are purchased without paying sales tax. It helps maintain fairness in the tax system by preventing out-of-state purchases from being a tax-free loophole. When residents buy items online or from other states without paying sales tax at the point of sale, they are typically required to self-report and pay the use tax owed to their home state. This system encourages compliance and helps fund state activities and services similarly to sales tax.

In contrast, other types of taxes mentioned such as income tax, surtax, and luxury tax do not apply in the same context. Income tax is based on earned income, surtax is an additional tax levied on top of existing taxes typically for high earners or specific purposes, and luxury tax is specific to certain high-end goods, not general purchases made out of state.