How Sales Tax Works
Sales tax is a consumption tax charged on the sale of goods and services. In the US, sales tax rates vary by state and locality. The tax is calculated as a percentage of the purchase price.
Tax Amount = Price × Tax Rate / 100
Total = Price + Tax Amount
Total = Price + Tax Amount
Reverse Sales Tax
To find the pre-tax price from a total that includes tax:
Pre-Tax Price = Total / (1 + Tax Rate / 100)
Frequently Asked Questions
Which states have no sales tax? Five US states have no state sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon.
What's the highest sales tax? Tennessee and Louisiana have the highest combined state and local rates, often exceeding 9.5%.
Is sales tax applied to online purchases? Yes, since the 2018 South Dakota v. Wayfair Supreme Court decision, states can require online retailers to collect sales tax.