Sales tax is a percentage added to the price of goods at checkout, set by your state and sometimes your city or county
Sales tax is money collected at the point of sale and sent to the government. The rate varies by location — your state sets a base rate, and your city or county may add to it. When you buy something, the cashier or checkout system adds this percentage to the price you see on the shelf. You pay the total, and the business sends the tax portion to the state or local tax authority.
The rate you pay depends on where you are when you make the purchase, not where you live. If you buy something in a state with 7% sales tax, you pay 7% even if you live in a state with no sales tax. Online purchases follow different rules depending on the seller's location and your state's laws, which have changed significantly in recent years.
Key Takeaways
- Sales tax rates range from 0% (in five states) to over 10% in some cities, and the rate that applies is determined by where the purchase happens.
- To calculate sales tax, multiply the pre-tax price by the tax rate as a decimal — for example, a $100 item in a 6% tax area costs $100 × 0.06 = $6 in tax.
- Most states tax goods but not services, though some states tax specific services like haircuts or repairs.
- Online sellers are now required to collect sales tax in most states, even if they don't have a physical location there.
The basic math: multiplying price by the tax rate
To find the sales tax on any purchase, convert the tax rate to a decimal and multiply it by the pre-tax price. If the tax rate is 8%, write it as 0.08. A $50 item with 8% tax costs $50 × 0.08 = $4 in tax, for a total of $54.
To find the total price directly, multiply the pre-tax price by 1 plus the tax rate as a decimal. For that same $50 item at 8% tax: $50 × 1.08 = $54. This second method is faster if you want the final price without calculating tax separately.
Most checkout systems do this automatically, but the math matters when you are comparing prices across locations, budgeting for a large purchase, or checking a receipt. Keep the pre-tax price and the tax rate separate in your head — they are two different numbers.
Where to find the tax rate for your location
Your state's tax rate is public information, posted on the state revenue or taxation department website. Search "[your state] sales tax rate" and you will find the base rate immediately. However, the rate you actually pay may be higher because cities and counties add their own tax on top of the state rate.
The easiest way to know your exact local rate is to look at a recent receipt from a store in your area, or call a local business and ask. Tax Foundation and TaxJar both have searchable databases by ZIP code, though these are not official sources and may lag behind rate changes. Your city or county assessor's office can also tell you the combined rate for your address.
Rates change throughout the year as cities and counties vote on new taxes. If you are planning a large purchase, check the current rate a few days before you buy — it may have shifted since you last looked.
What is taxed and what is not
Most states tax physical goods — clothing, food, electronics, furniture — but not services. A haircut is usually not taxed, but hair dye you buy at a store is. A plumber's labor is not taxed, but the parts they install are. This rule has exceptions: some states tax certain services like repairs, alterations, or pest control.
Groceries are taxed in some states and not in others. A few states tax groceries at a lower rate than other goods. Prepared food — anything hot or served on a plate — is almost always taxed even in states that don't tax raw groceries. Prescription medications are not taxed in any state, but over-the-counter drugs and vitamins are taxed in most states.
The safest approach is to assume an item will be taxed unless you know otherwise. If you are buying something expensive and want to confirm, ask the cashier or check the store's website before you go.
How online purchases are taxed
Online sellers are now required to collect and send sales tax to your state in most cases, even if the seller has no warehouse or office in your state. This changed gradually between 2018 and 2021 as states updated their laws. A few small sellers (those with very low annual sales) may still be exempt, but most major retailers collect tax on all orders shipped to your address.
The tax rate applied is based on your shipping address, not the seller's location. If you order something online to be shipped to an address in a 7% tax state, you pay 7% tax even if the seller is in a 5% tax state. Some sellers show tax at checkout; others add it after you enter your address.
If you buy from a seller outside the United States or from a very small business that does not collect tax, you may owe sales tax yourself when the item arrives — though most people do not pay it and enforcement is rare. This is called use tax, and it is technically your responsibility in most states.
Sales tax on specific situations
Tax rates for the same item can differ based on context. Alcohol is taxed at a higher rate in some states. Gasoline has its own tax structure separate from sales tax in every state. Vehicles are often taxed at purchase but the rate may differ from the standard sales tax rate.
Some states offer temporary tax-free periods for back-to-school shopping or other categories. These are announced in advance and apply to specific items during specific dates. If your state has one coming up and you are planning a large purchase, the savings can be significant — a $500 purchase with no tax instead of 7% tax saves $35.
Resale certificates allow businesses to buy goods without paying sales tax if they plan to resell them. This is not available to individual consumers. If you are buying for personal use, you pay tax regardless of whether you might sell the item later.
How to check your receipt for accuracy
Look at your receipt and find three numbers: the subtotal (before tax), the tax amount, and the total. Multiply the subtotal by your local tax rate and check if it matches the tax shown. If the difference is more than a few cents (rounding can account for small differences), ask the cashier or store manager to review it.
Some items on the same receipt may have different tax rates or no tax at all. Groceries and taxable goods on one receipt might show different tax amounts for different line items. This is correct if your state taxes some items and not others.
Errors are uncommon but happen. If you spot a mistake, keep the receipt and contact the store. Most will refund the overcharge immediately if you show them the math.
Frequently Asked Questions
Do I pay sales tax on used items?
Usually yes, if you buy from a business. Used goods sold by a store are taxed the same way new goods are. Private sales between individuals are generally not taxed, though some states require the buyer to pay use tax. Check your state's rules if you are buying a used car or other high-value item from a private seller.
What states have no sales tax?
Five states have no sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon. However, some of these states have other taxes (Alaska has no state sales tax but some cities add local tax; New Hampshire taxes meals and rooms). If you live in one of these states and buy something in a state with sales tax, you still pay that state's rate.
Can I get a refund of sales tax I already paid?
Not usually. Sales tax is final once you pay it. If you return an item and get a refund, the store refunds the tax as part of the total. If you overpaid due to a store error, you can ask for a correction, but you cannot reclaim tax on items you chose to keep.
Is sales tax the same everywhere in my state?
No. The state sets a base rate, but cities and counties add their own tax on top. Two towns 10 miles apart may have different combined rates. This is why the rate on your receipt might differ from the state rate you found online.
Do I owe sales tax on items I buy out of state and bring home?
Technically, yes — this is called use tax and you owe it to your home state. In practice, it is rarely enforced for personal purchases. However, if you buy a car or other registered item out of state, you will owe tax when you register it in your home state.