What Are Duties and Taxes? Rates, De Minimis, and Entry Types

Duties and taxes on imports are the charges the federal government collects when goods enter the United States: a customs duty (tariff) on the merchandise itself, processing fees paid to U.S. Customs and Border Protection, federal excise tax on certain products like alcohol and tobacco, and — in most states — a state use tax owed by the buyer after the goods arrive. The duty rate depends on what the product is and where it was made. As of February 24, 2026, the $800 duty-free threshold that used to cover small shipments has been suspended, so almost every import now faces some customs assessment regardless of value.¹

What You Actually Pay on an Import

The total bill on an imported shipment is built from several separate charges, each calculated independently.

The customs duty is the main one. It’s set as a percentage of the declared value (or occasionally a flat amount per unit) based on the product’s ten-digit code in the Harmonized Tariff Schedule of the United States.² Rates run from zero on many raw materials and components to well above 20% on finished consumer goods and protected categories.

On top of the duty, formal entries owe a merchandise processing fee of 0.3464% of the goods’ value, with a floor of $33.58 and a ceiling of $651.50 per entry for fiscal year 2026. A $4.03 surcharge applies if the entry is filed on paper.³ The MPF applies even when the duty rate is zero, unless a trade agreement like the USMCA specifically exempts it.

Goods arriving by ocean vessel also owe a harbor maintenance fee of 0.125% of the appraised value.⁴ Air and land shipments don’t pay this fee.

Certain product categories owe federal excise tax collected by CBP at the border on behalf of the IRS. Alcoholic beverages and tobacco are the main examples, and the excise can be substantial regardless of the country of origin.⁵

Finally, most states impose a use tax on goods bought from outside the state (including from foreign sellers) when no sales tax was collected. Use tax rates match the state’s sales tax rate, which runs from zero in the five states that don’t have one up to 7.25% at the state level alone, with local surcharges added on top. The buyer reports and pays it, usually on a line item of the annual state income tax return. This one gets overlooked constantly, particularly by individuals buying from foreign online retailers.

How the Duty Rate Is Set

Product Classification

Every product entering the country needs a ten-digit HTS code assigned based on its material, function, and physical characteristics. The rate attached to that code is what CBP charges. You can look up codes through the International Trade Commission’s search tool at hts.usitc.gov.² Assigning the wrong code is one of the most common and expensive import mistakes: CBP will reclassify a misfiled shipment at the correct rate, the importer owes the difference immediately, and repeat or deliberate errors trigger penalties. If you need certainty on a code before shipping, CBP issues binding advance rulings on request.

Country of Origin

Where the product was made moves the rate as much as what it is. Under the United States-Mexico-Canada Agreement, qualifying goods from Canada, Mexico, or the U.S. get preferential treatment and an exemption from the MPF, provided the importer has a valid certification of origin.⁶ At the other end, goods from countries subject to anti-dumping orders, countervailing duties, or special tariff actions can face rates well above the standard HTS rate. Products from China have carried multiple layers of additional tariffs since 2018 under Section 301 and executive-order actions, with rates that have moved repeatedly.

Reciprocal Tariffs Added in 2025 and 2026

Beginning in 2025, the federal government imposed reciprocal tariffs meant to match or offset what other countries charge on American exports. These layer on top of the HTS rate. As of February 24, 2026, a baseline 10% tariff applies to all imports under Section 122 authority, with higher country-specific rates for certain trading partners.¹ The United Kingdom, Japan, and the European Union have negotiated bilateral agreements that reduced their rates below the original proposals. Because these rates move by executive order, check the current rate at the time of entry rather than relying on figures published months earlier.

The De Minimis Threshold Is Suspended

The statutory $800 de minimis exemption at 19 U.S.C. § 1321 still exists on paper — but executive action has switched it off.⁷

Starting May 2, 2025, the exemption was eliminated for shipments originating in China and Hong Kong. Those packages now owe full customs duties, and postal shipments face either a flat $200-per-item fee or a 120% ad valorem duty, at the carrier’s election.⁸

Then, effective February 24, 2026, a broader executive order suspended de minimis treatment for shipments from every country. Non-postal shipments are now subject to applicable duties, taxes, and fees regardless of value, and international postal shipments face separate duty rates set out in the order.¹ Small orders from foreign retailers that used to arrive with no customs charge now owe duties like any commercial shipment. The threshold could be reinstated by later action, but for planning purposes assume every import faces assessment.

Travelers Bringing Goods Back in Person

The de minimis suspension applies to shipments. If you’re returning to the United States yourself, you still have a personal exemption on goods you bring with you. The standard exemption is $800 once every 31 days, available if you were outside the country at least 48 hours; the 48-hour requirement doesn’t apply when returning from Mexico or the U.S. Virgin Islands. Depending on where you traveled, the applicable exemption may be $200, $800, or $1,600.⁹¹⁰

Alcohol and tobacco carry their own caps within that exemption: up to 1 liter of alcoholic beverages and either 200 cigarettes, 50 cigars, or 2 kilograms of smoking tobacco, provided the total value stays within the dollar limit.¹¹ Anything over these amounts owes duty at the standard rate. Gifts mailed from individuals abroad had a separate $100 exemption under the statute; the broader de minimis suspension may affect mailed gifts differently than goods you carry with you, so verify with CBP before relying on the mail exemption.

Informal Entry vs. Formal Entry

Shipment value drives how the goods clear customs. Shipments valued at $2,500 or less generally qualify for informal entry, a simplified process with less paperwork and no bond requirement.¹² Most personal imports and small commercial orders fall here.

Shipments valued above $2,500 require formal entry: specific CBP forms (5106, 7501, and a release document) plus a customs bond or cash surety.¹³ The bond remains in force until CBP liquidates the entry, which can take up to a year after release. Regular commercial importers usually buy a continuous bond calculated at 10% of annual duties paid rather than a single-entry bond each time.¹⁴ Annual premiums on continuous bonds typically run between $500 and $2,000.

Documentation and Penalties for Errors

The paperwork baseline is a commercial invoice listing every item, its country of origin, and its declared value, plus the correct HTS classification code for each product. The declared value drives every percentage-based calculation — duty, MPF, HMF.

Misrepresenting a shipment’s value, classification, or origin triggers penalties under 19 U.S.C. § 1592. A fraudulent entry can carry a civil penalty equal to the full domestic value of the merchandise; gross negligence caps at four times the duties owed or the domestic value (whichever is less); simple negligence caps at two times the duties owed. In severe cases, CBP can seize and forfeit the goods.¹⁵

Paying and Clearing the Shipment

Once CBP calculates what’s owed, the importer of record must deposit the estimated amount at entry or within 12 working days of entry or release, whichever comes first.¹⁶ For individual buyers, the shipping carrier normally handles this. A “Delivery Duty Paid” (DDP) checkout means the seller has already included duties and fees in the price. With “Delivery Duty Unpaid” (DDU), you pay the carrier at delivery, often with a brokerage fee added.

Commercial importers commonly hire a licensed customs broker. Brokerage fees vary by complexity, running from around $50 to several hundred dollars per entry for routine goods. The broker handles classification, filing, duty payment, and communication with CBP.

Merchandise that nobody claims doesn’t sit at the port. Unclaimed goods go to a general order warehouse, sometimes as soon as one day after entry, and storage fees accrue at the consignee’s expense.¹⁷ Goods left long enough are sold at auction or destroyed. Storage charges alone can exceed the value of the shipment.

Fixing Mistakes After the Fact

Before CBP liquidates an entry — the final duty calculation — importers can file a Post-Summary Correction electronically. The window closes at 300 days from the date of entry or 15 days before the scheduled liquidation date, whichever comes first.¹⁸ Filing outside that window gets an automatic rejection.

After liquidation, the remedy is a formal protest. Protests must be filed within 180 days of the liquidation date for entries made on or after December 18, 2004.¹⁹ Miss it and you lose the right to challenge the assessment. If you overpaid because of a bad classification or valuation, this is how you get a refund, so track your liquidation dates.

Recordkeeping

Importing creates an obligation to keep records for up to five years from the date of entry — entry documents, commercial invoices, shipping records, and anything else you’d normally maintain in the course of importing.²⁰

CBP can demand them at any point in that window. Negligent failure to produce requested records carries a penalty of up to $10,000 per entry or 40% of the appraised value, whichever is less. Willful failure raises the ceiling to $100,000 per entry or 75% of the appraised value.²¹ Audits often catch importers who did the entry itself correctly but can’t produce documentation years later.

Paying Duty Isn’t a Guarantee of Admission

Some goods are prohibited outright regardless of what duty you’re willing to pay: products from endangered wildlife species, counterfeit or unapproved pharmaceuticals, items containing dog or cat fur, Iraqi cultural property removed after August 1990, most foreign meat products, and goods from countries under comprehensive U.S. sanctions such as Cuba and Iran.²²

A separate group of items is restricted rather than prohibited: they can enter but only with the right federal permit. Agricultural goods may need USDA clearance, firearms need ATF approval, certain chemicals and pesticides fall under EPA, and wildlife goes through the U.S. Fish and Wildlife Service. Importing a restricted item without the required agency authorization results in seizure at the border, and getting the permits is the importer’s responsibility, not the shipper’s.

1
The White House. Continuing the Suspension of Duty-Free De Minimis Treatment for All Countries
2
U.S. International Trade Commission. Harmonized Tariff Schedule
3
Federal Register. Customs User Fees To Be Adjusted for Inflation in Fiscal Year 2026
4
eCFR. 19 CFR 24.24 – Harbor Maintenance Fee
5
U.S. Customs and Border Protection. Duty, Taxes and Other Fees Required to Import Goods into the United States
6
eCFR. 19 CFR Part 182 – United States-Mexico-Canada Agreement
7
Office of the Law Revision Counsel. 19 USC 1321 – Administrative Exemptions
8
Federal Register. Notice of Implementation of Additional Duties on Products of the People’s Republic of China
9
U.S. Customs and Border Protection. Duty-Free Exemption
10
U.S. Customs and Border Protection. Customs Duty Information
11
eCFR. 19 CFR 148.43 – Tobacco Products and Alcoholic Beverages
12
eCFR. 19 CFR 128.24 – Informal Entry Procedures
13
U.S. Customs and Border Protection. Filing a Formal Entry (for Goods Valued at $2500 or More)
14
U.S. Customs and Border Protection. Bonds – How Are Continuous and Single Entry Bond Amounts Determined
15
Office of the Law Revision Counsel. 19 USC 1592 – Penalties for Fraud, Gross Negligence, and Negligence
16
Office of the Law Revision Counsel. 19 USC 1505 – Payment of Duties and Fees
17
eCFR. 19 CFR 4.37 – General Order
18
U.S. Customs and Border Protection. Post Summary Corrections
19
eCFR. 19 CFR 174.12 – Filing of Protests
20
Office of the Law Revision Counsel. 19 USC 1508 – Recordkeeping
21
Office of the Law Revision Counsel. 19 USC 1509 – Examination of Books and Witnesses
22
U.S. Customs and Border Protection. Prohibited and Restricted Items