How Sales Tax Works
Sales tax is a consumption tax added at the point of purchase in the US. Unlike many countries, the US does not include sales tax in listed prices — it's added at checkout.
Sales Tax Formulas
- Tax Amount: Price × Tax Rate
- Total Price: Price × (1 + Tax Rate)
- Pre-tax Price from Total: Total ÷ (1 + Tax Rate)
Example
$100 purchase at 8.25% combined rate:
- Tax: $100 × 0.0825 = $8.25
- Total: $108.25
- Reverse: $108.25 ÷ 1.0825 = $100 (original price)
Sales Tax Rates by State
The following table shows state-level sales tax rates and the maximum combined rate when local/city taxes are included.
| State | State Tax | Max Combined Rate |
|---|---|---|
| Alabama | 4% | 13.50% |
| Alaska | 0% | 7% |
| Arizona | 5.60% | 10.725% |
| Arkansas | 6.50% | 11.625% |
| California | 7.25% | 10.50% |
| Colorado | 2.90% | 10% |
| Connecticut | 6.35% | 6.35% |
| Delaware | 0% | 0% |
| District of Columbia | 6% | 6% |
| Florida | 6% | 7.50% |
| Georgia | 4% | 8% |
| Hawaii | 4.166% | 4.712% |
| Idaho | 6% | 8.50% |
| Illinois | 6.25% | 10.25% |
| Indiana | 7% | 7% |
| Iowa | 6% | 7% |
| Kansas | 6.50% | 11.60% |
| Kentucky | 6% | 6% |
| Louisiana | 4.45% | 11.45% |
| Maine | 5.50% | 5.50% |
| Maryland | 6% | 6% |
| Massachusetts | 6.25% | 6.25% |
| Michigan | 6% | 6% |
| Minnesota | 6.875% | 7.875% |
| Mississippi | 7% | 7.25% |
| Missouri | 4.225% | 10.85% |
| Montana | 0% | 0% |
| Nebraska | 5.50% | 7.50% |
| Nevada | 6.85% | 8.375% |
| New Hampshire | 0% | 0% |
| New Jersey | 6.625% | 12.625% |
| New Mexico | 5.125% | 8.688% |
| New York | 4% | 8.875% |
| North Carolina | 4.75% | 7.50% |
| North Dakota | 5% | 8% |
| Ohio | 5.75% | 8% |
| Oklahoma | 4.50% | 11% |
| Oregon | 0% | 0% |
| Pennsylvania | 6% | 8% |
| Rhode Island | 7% | 7% |
| South Carolina | 6% | 9% |
| South Dakota | 4.20% | 6.20% |
| Tennessee | 7% | 9.75% |
| Texas | 6.25% | 8.25% |
| Utah | 6.10% | 8.35% |
| Vermont | 6% | 7% |
| Virginia | 5.30% | 7% |
| Washington | 6.50% | 10.25% |
| West Virginia | 6% | 7% |
| Wisconsin | 5% | 5.60% |
| Wyoming | 4% | 6% |
State vs Local Taxes
Many cities and counties add their own tax on top of the state rate. For example, California has a 7.25% state rate, but combined local rates push some areas above 10%. Always check the total combined rate for your specific location.
What's Taxable?
Tax rules vary by state, but general patterns:
- Usually taxed: Electronics, clothing (in most states), furniture, vehicles, prepared food
- Often exempt: Groceries (unprepared food) in most states, prescription medications, medical devices
- Varies by state: Clothing (exempt in PA, NJ, MN; taxed in most others), digital downloads, services
Tax-Free Shopping Periods
Many states hold annual sales tax holidays, typically before the school year, where certain items (school supplies, clothing, computers) can be purchased tax-free. Check your state's department of revenue for dates and qualifying items.