Sales tax is a percentage added to the price of goods at checkout, calculated by your state and sometimes your city or county
When you buy something in a store or online, sales tax is a percentage of the purchase price that gets added at the register. The rate depends on where you live and what you are buying. Most states charge between 4% and 7.25%, but some cities and counties add their own tax on top of that. A few states do not charge sales tax at all.
The seller collects the tax from you and sends it to the state revenue department. You do not pay it separately — it is included in your final bill. The amount you owe changes based on three things: the base price of the item, your state's tax rate, and whether your city or county adds extra tax.
Key Takeaways
- Sales tax rates vary by state, ranging from 0% in five states to 7.25% in California, plus any local additions.
- Some items are taxed differently depending on the state — groceries, clothing, and medicine are often exempt or taxed at lower rates.
- When you buy something online, you may or may not owe sales tax depending on where the seller is located and where you live.
- To find your exact rate, you need to know your state, city, and sometimes your county, because local taxes stack on top of the state rate.
How to find your state and local sales tax rate
Your sales tax rate is the combination of your state rate plus any city or county rate that applies to your address. Start by finding your state rate on your state's revenue or taxation website — search "[your state] sales tax rate" to find the official page. Write down that number.
Then check whether your city or county adds tax on top of the state rate. Some places do not; others add 1% to 3%. Your city or county assessor's office or tax collector's website will list the local rate. Once you have both numbers, add them together to get your total rate.
If you live in Alaska, Delaware, Montana, New Hampshire, or Oregon, your state has no sales tax. You may still owe local tax in some cities, so check your city or county website even if your state has no tax.
What gets taxed and what does not
Most states tax clothing, electronics, furniture, and household goods at the full rate. But many states exempt or reduce tax on certain items. Groceries and food are often taxed at a lower rate or not at all in states that want to reduce the tax burden on basic needs. Medicine and medical equipment are frequently exempt.
The rules vary widely by state. Some states tax all clothing; others exempt clothing under a certain price. Some tax prepared food but not raw ingredients. A few states do not tax services like haircuts or repairs, while others do. If you are unsure whether something is taxed in your state, check your state revenue department's website or call their customer service line.
Online purchases follow the same rules as in-store purchases in your state. If an item would be taxed in a physical store in your area, it is taxed the same way online.
How to calculate the tax on a purchase
The math is straightforward. Multiply the item price by your tax rate as a decimal. If something costs $100 and your tax rate is 8%, multiply $100 by 0.08 to get $8 in tax. Your total is $108.
For multiple items, add up all the prices first, then multiply by the tax rate. If you buy three items for $50, $30, and $20, your subtotal is $100. At 8% tax, you owe $8 in tax and pay $108 total.
Most registers do this automatically and show you the tax amount on your receipt. If you want to check the math yourself, divide the tax amount shown by the subtotal and multiply by 100 to see the percentage rate the store used.
Sales tax on online purchases
Whether you owe sales tax on an online purchase depends on where the seller is located and the laws in your state. If the seller has a physical location or warehouse in your state, they must collect sales tax from you. If they do not have a presence in your state, they may not collect tax at the checkout.
If tax was not collected at checkout, you may owe it anyway — this is called "use tax" and it is your responsibility to pay it to your state. In practice, most people do not pay use tax unless they make very large purchases. Check your state revenue department's website if you want to know the exact rule for your state.
Large online retailers like Amazon now collect sales tax in all states where it is required, so you will see tax added at checkout in most cases. Smaller sellers may not, especially if they operate from outside your state.
Why sales tax rates differ between cities and counties
States allow cities and counties to add their own sales tax on top of the state rate to fund local services like schools, roads, and public safety. This is why two towns 20 miles apart can have different total tax rates. A state might have a 6% rate, but one city adds 1% and another adds 0.5%, creating rates of 7% and 6.5%.
Some states cap how much local tax can be added; others do not. A few states do not allow local sales tax at all. This is why your exact rate depends on your specific address, not just your state.
What to do if you think the tax charged is wrong
Check your receipt first. The tax amount should match your local rate multiplied by the subtotal. If it does not, ask the cashier or store manager to explain the difference. Sometimes items are taxed at different rates — for example, if you bought both taxed and untaxed items, the tax should only apply to the taxed ones.
If the store charged you the wrong rate, ask for a correction at the register. Keep your receipt. If you believe a store is systematically overcharging tax, contact your state revenue department and provide the receipt and the store location.
Frequently Asked Questions
Do I have to pay sales tax on everything I buy?
No. Most states exempt groceries, prescription medicine, and medical equipment. Some exempt clothing or have lower rates on certain items. The rules vary by state, so check what is exempt where you live. Items that are taxed in one state may be exempt in another.
Why is my sales tax different from the state rate I looked up?
Your city or county adds tax on top of the state rate. If your state is 6% and your city adds 1%, your total is 7%. Make sure you looked up both your state and local rates and added them together.
Do I owe sales tax on things I buy out of state?
If you buy something in another state and bring it home, you owe use tax to your home state at your home state's rate. Most people do not pay this unless the purchase is very large. Check your state revenue department's website for the exact rule.
How do I know if an online seller will charge me sales tax?
Large retailers collect tax in all states where required. Smaller sellers may not if they have no physical location in your state. At checkout, you will see whether tax is being added. If it is not and you think it should be, check your state revenue department's website or contact the seller.
Can sales tax rates change during the year?
Yes. States and cities can change their rates, though it does not happen often. Most changes take effect on a specific date announced in advance. Check your state revenue department's website if you want to know when the next rate change is scheduled.