What is Sales Tax?
Sales tax is a consumption tax imposed by state and local governments on the sale of goods and services. Unlike income tax which is progressive, sales tax is a flat percentage applied uniformly to purchases. The United States doesn't have a federal sales tax - each state sets its own rate, and local jurisdictions may add additional taxes.
Some items are exempt from sales tax, such as groceries, prescription medications, and clothing below a certain threshold (varies by state). This calculator shows you the tax and total for taxable purchases. Note that displayed state rates are base rates; local taxes may increase the actual rate at the point of sale.
Examples
Example 1 - California: Price: $500, CA rate: 7.25%. Subtotal: $500. Tax: $36.25. Total: $536.25. Actual rate may be 8-10% with local taxes.
Example 2 - Oregon (No Tax): Price: $200, OR rate: 0%. Subtotal: $200. Tax: $0. Total: $200. Oregon has no sales tax on any purchases.
Example 3 - New York: Price: $150, NY rate: 4%, Quantity: 3. Subtotal: $450. Tax: $18. Total: $468. NYC adds 4.5% local tax = 8.875% total.
FAQ
Which states have no sales tax?
Five states have no state sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon. However, Alaska allows local jurisdictions to impose sales taxes, so you may still pay tax in certain Alaskan cities. Montana, New Hampshire, and Oregon have essentially no sales tax statewide. Delaware is popular for tax-free shopping.
What's the difference between sales tax and use tax?
Sales tax is collected by the seller at the point of purchase. Use tax is paid by the buyer directly to the state for items purchased out-of-state or online where sales tax wasn't collected. Technically, if you buy something tax-free online and bring it to your state, you owe use tax. Most states include a use tax line on income tax returns, though enforcement varies.
Do I pay sales tax on online purchases?
Since the 2018 Wayfair Supreme Court decision, online retailers must collect sales tax if they have "economic nexus" in your state (typically $100,000 in sales or 200 transactions). Most major online retailers now collect sales tax. Marketplace facilitators like Amazon, eBay, and Etsy are required to collect tax on behalf of third-party sellers in most states.
What's included/excluded from sales tax?
Common exemptions vary by state: Groceries (most states exempt), prescription drugs (universally exempt), clothing (NY exempts under $110), textbooks, medical devices, agricultural supplies. Luxury items, alcohol, tobacco, and prepared food often have additional or higher taxes. Each state has unique rules.
What are the highest and lowest sales tax rates?
Highest combined rates: Tennessee (9.55% average), Louisiana (9.52%), Arkansas (9.46%). California has highest state rate at 7.25% but locals can push it to 10.75%. Lowest: 0% in the five no-tax states. Colorado has lowest state rate at 2.9%. Local taxes significantly impact the total rate you actually pay.
What is a sales tax holiday?
Sales tax holidays are designated periods when specific items are exempt from sales tax, typically back-to-school clothing and supplies in August, or emergency preparedness items before hurricane season, or Energy Star appliances. 17+ states offer these holidays. Check your state's revenue department for dates and qualifying items.
How do I calculate tax-inclusive vs tax-exclusive prices?
Tax-exclusive: Price shown does NOT include tax. Tax added at checkout. US standard. Formula: Tax = Price × Rate, Total = Price + Tax. Tax-inclusive (VAT style): Price shown includes tax. To find pre-tax: Pre-tax = Total ÷ (1 + Rate), Tax = Total - Pre-tax. Most countries outside US use tax-inclusive pricing.