Sales Tax Calculator
Calculate the total cost of your purchase with state, city, and county sales tax. Compare rates across all 50 US states and Washington DC.
Highest Tax States
| # | State | State Rate | On $500 |
|---|---|---|---|
| 1 | California | 7.25% | $36.25 |
| 2 | Indiana | 7% | $35.00 |
| 3 | Mississippi | 7% | $35.00 |
| 4 | Rhode Island | 7% | $35.00 |
| 5 | Tennessee | 7% | $35.00 |
| 6 | Minnesota | 6.875% | $34.38 |
| 7 | Nevada | 6.85% | $34.25 |
| 8 | New Jersey | 6.625% | $33.13 |
| 9 | Arkansas | 6.5% | $32.50 |
| 10 | Kansas | 6.5% | $32.50 |
Lowest Tax States (0%)
| # | State | State Rate | On $500 |
|---|---|---|---|
| 1 | Alaska | 0% | $0.00 |
| 2 | Delaware | 0% | $0.00 |
| 3 | Montana | 0% | $0.00 |
| 4 | New Hampshire | 0% | $0.00 |
| 5 | Oregon | 0% | $0.00 |
Understanding US Sales Tax
US Sales Tax by State
Sales tax rates vary dramatically across the United States, ranging from 0% in five states to over 7% at the state level alone. California has the highest state rate at 7.25%, while states like Indiana, Mississippi, Rhode Island, and Tennessee all have 7% state rates. The effective combined rate including local taxes can exceed 10% in some areas. When you combine state and local taxes, Louisiana, Tennessee, Arkansas, and Washington often top the list with combined rates approaching or exceeding 10%.
States With No Sales Tax
Five states have no statewide sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon. Alaska stands out because while it has no state sales tax, individual municipalities can and do impose local sales taxes, so some areas of Alaska do charge sales tax. Delaware and Oregon have no state or local sales taxes, making them popular destinations for tax-free shopping. These states typically rely more on income taxes, property taxes, or natural resource revenues to fund government services.
Online Shopping Tax Rules
Since the 2018 Supreme Court ruling in South Dakota v. Wayfair, states can require out-of-state sellers to collect sales tax based on economic nexus. Typically, nexus is triggered when a seller exceeds $100,000 in sales or 200 transactions in a state. Marketplace facilitator laws require platforms like Amazon, eBay, Etsy, and Walmart to collect and remit sales tax on behalf of third-party sellers. However, some very small sellers below the threshold may not collect tax, in which case buyers technically owe use tax.
Use Tax Concept
Use tax is the self-assessed counterpart to sales tax. When you purchase taxable goods from a seller who does not collect sales tax (such as an out-of-state retailer without nexus), you are legally required to report and pay use tax to your state at your local sales tax rate. Most individual consumers rarely pay use tax, but states increasingly enforce it through income tax return questionnaires and business audits. Businesses are expected to track all untaxed purchases and remit use tax quarterly or annually. The rates and exemptions for use tax generally mirror those of sales tax.
How US Sales Tax Works
US sales tax is a consumption tax imposed by state and local governments on the sale of goods and certain services. Unlike a value-added tax (VAT) used in most other countries, US sales tax is collected only at the final point of sale to the end consumer. The tax is expressed as a percentage of the purchase price and is added at checkout, so the buyer sees the total cost including tax.
State vs. Local Tax Rates
Every state except the five tax-free states imposes a statewide sales tax. On top of that, counties, cities, and special districts can add their own taxes. For example, in California the state rate is 7.25%, but when you add local taxes in cities like Los Angeles or San Francisco, the combined rate can exceed 10%. This layered system means that the same $500 purchase can cost very different amounts depending on exactly where in the country you buy it.
Exemptions and Variations
Each state defines its own list of tax-exempt items. Common exemptions include groceries (though not always), prescription drugs, and certain medical equipment. Some states like New York and Pennsylvania exempt most clothing from sales tax, while others tax clothing at the full rate. Prepared food and restaurant meals are usually taxable even in states that exempt groceries. These variations make it essential to understand your specific state and local tax rules.
The Deeper Mechanics of US Sales Tax
The US sales tax system is one of the most fragmented consumption tax regimes in the world. Unlike the 170+ countries that use a Value-Added Tax (VAT), the United States relies on 45 states (plus Washington DC) and thousands of local jurisdictions each setting their own rates, rules, and exemptions. Understanding the underlying structure helps consumers, small business owners, and online sellers navigate compliance and avoid costly mistakes.
Origin-Based vs. Destination-Based Sourcing
States use two different sourcing rules to determine which rate applies to a sale. Origin-based states (including California, Illinois, Mississippi, and others — though California uses origin for some local taxes and destination for others) charge the rate in effect at the seller's location. Destination-based states (the majority, including New York, Texas, Florida, and Washington) charge the rate at the buyer's shipping address. For online sales, this means the buyer's location typically determines the rate in most states.
This distinction creates significant compliance complexity for multi-state sellers. A business in Illinois shipping to a customer in New York must calculate New York state plus county plus city rates, then remit the collected tax to New York. Software tools like TaxJar, Avalara, and Shopify Tax automate this calculation by referencing the destination address against databases of more than 13,000 taxing jurisdictions in the US. Manual calculation is no longer practical for businesses with significant out-of-state sales.
Economic Nexus After South Dakota v. Wayfair
The 2018 Supreme Court decision in South Dakota v. Wayfair overturned the physical presence rule that had limited states' ability to require out-of-state sellers to collect sales tax. Now, economic nexus — based on sales volume or transaction count in a state — triggers collection obligations. South Dakota's thresholds were $100,000 in annual sales or 200 separate transactions; most states that followed adopted similar thresholds, though some (like California and Texas) use $500,000.
As of 2024, 46 states plus DC have economic nexus laws. Sellers meeting thresholds in multiple states face registration, collection, and remittance obligations in each. Marketplace facilitator laws in 40+ states shift collection responsibility to platforms like Amazon, Etsy, and eBay for third-party sales, simplifying compliance for small sellers using these marketplaces. However, sellers with their own websites or direct sales channels must still handle nexus calculations independently. Penalties for non-collection can include back taxes, interest, and penalties exceeding 25% of the uncollected amount.
Sales Tax vs. Use Tax vs. VAT: A Comparison
Sales tax is collected by the seller from the final consumer at the point of sale. Use tax is the consumer's obligation when sales tax was not collected — for example, when buying from a seller without nexus in the buyer's state. Use tax mirrors the sales tax rate but is self-assessed and paid directly to the state, typically on the annual income tax return. Most consumers ignore use tax, but states increasingly audit businesses for compliance, and some states ask explicit use tax questions on individual returns.
A Value-Added Tax (VAT) — used in the EU, UK, Canada (GST), Australia, and most of the world — is collected at every stage of production, not just the final sale. Each business in the supply chain charges VAT on its output and credits VAT paid on its inputs, remitting only the net difference. This structure makes VAT self-enforcing (each business has an incentive to document its inputs), captures tax on business-to-business transactions, and typically generates more revenue at lower rates than sales tax. The US sales tax system loses significant revenue to evasion and exemption carve-outs that VAT systems avoid.
Sales Tax Holidays and Targeted Exemptions
Many states offer temporary sales tax holidays on specific categories — most commonly back-to-school items (clothing, school supplies, computers under $1,000) in August, and emergency preparedness supplies (generators, batteries, weather radios) in spring. About 18 states held sales tax holidays in 2024. Critics argue these holidays create administrative complexity for retailers and primarily benefit higher-income shoppers who time purchases, while proponents see them as consumer relief and economic stimulus.
Beyond temporary holidays, states maintain permanent exemptions for policy reasons. Most states exempt groceries from sales tax to reduce the regressive impact on low-income households, though some (like Mississippi and Alabama) tax groceries at the full rate — among the highest grocery tax burdens in the country. Prescription drugs are universally exempt, but over-the-counter medications vary. Manufacturing inputs are typically exempt to avoid tax pyramiding (tax-on-tax through the supply chain). Each exemption represents a policy choice with revenue tradeoffs: states forgo approximately $1 trillion annually in sales tax expenditures through exemptions.
Sales Tax Compliance for Small Businesses
For small businesses, sales tax compliance involves four steps: (1) determine nexus in each state where you have customers, (2) register for a sales tax permit in each nexus state before collecting tax (it is illegal to collect without registration in most states), (3) calculate and collect the correct rate at checkout, and (4) file returns and remit collected tax on the schedule determined by each state (monthly, quarterly, or annually based on sales volume). Filing frequency often increases as sales grow.
Common pitfalls include: collecting tax in a state where you are not registered (creates refund obligations to customers and back-tax liability), failing to track exempt resale certificates from B2B customers, missing the distinction between taxable goods and exempt services, and forgetting to remit "use" tax on inventory pulled from stock for business use. Sales tax automation software becomes cost-effective around $50,000/month in multi-state sales — below that, manual compliance with spreadsheet tracking may suffice. Always document your nexus analysis annually, as both your business and state laws evolve.
International and Cross-Border Considerations
For US-based sellers shipping internationally, sales tax obligations do not apply — foreign shipments are generally zero-rated for sales tax purposes. However, importing goods into the US may trigger customs duties and the importer may owe use tax if the goods are consumed domestically. For foreign sellers shipping to US customers, economic nexus rules apply equally: a UK or Chinese seller exceeding $100,000 in California sales must register and collect California sales tax.
Stateside buyers purchasing from foreign sellers below economic nexus thresholds technically owe use tax on these purchases, though enforcement is minimal. The Streamlined Sales Tax Agreement (SSTA) — adopted by 24 member states — seeks to standardize definitions, rates administration, and exemptions to reduce compliance burden. Full national standardization remains unlikely given states' constitutional authority over tax policy. For now, businesses must navigate the patchwork state by state.
Real-World Case Studies
How to Use This Sales Tax Calculator (5 Steps)
Follow this sequence to calculate sales tax for any U.S. purchase and see combined state + local rates.
Frequently Asked Questions
How is sales tax calculated?
Sales tax is calculated by multiplying the purchase price by the applicable tax rate. For a $500 purchase in California (7.25% state rate), the state tax is $36.25, bringing the total to $536.25. If you add a 2% city tax and 1% county tax, the local tax is $15, making the total tax $51.25 and the final price $551.25.
Which states have the highest sales tax?
When combining state and local taxes, Louisiana, Tennessee, Arkansas, and Washington consistently rank among the highest with combined rates above 9%. California has the highest state-only rate at 7.25%, but its combined average rate is about 8.82%. Indiana, Mississippi, Rhode Island, and Tennessee all have 7% state rates.
Do online purchases have sales tax?
Yes, most online purchases are now subject to sales tax. Following the 2018 Wayfair decision, online retailers with economic nexus in a state must collect sales tax. Major platforms like Amazon, Walmart, and eBay collect sales tax in all 45 states that have it. Small sellers below the nexus threshold may not collect tax, in which case buyers technically owe use tax.
What is the difference between state and local sales tax?
State sales tax is a flat rate applied statewide by the state government. Local sales tax is additional tax charged by cities, counties, or special districts. For example, Texas has a 6.25% state rate, but local taxes can push the combined rate up to 8.25%. Local rates vary significantly, so two cities in the same state can have different total tax rates.
Are there items exempt from sales tax?
Common exemptions vary by state but typically include prescription medications, certain groceries, medical devices, and manufacturing equipment. Some states like New York and Pennsylvania exempt clothing. Many states also exempt agricultural supplies and business-to-business transactions. Always check your state's specific exemption rules.
How does use tax work?
Use tax applies when you purchase taxable goods from a seller who doesn't collect sales tax. You're required to report and pay use tax to your state at your local rate. Businesses track untaxed purchases and remit use tax regularly. Individual consumers are expected to self-report, though enforcement varies by state. Many states now ask about use tax on income tax returns.
Related Calculators
References & Sources
- Internal Revenue Service (IRS) — State tax obligations for small businesses including sales and use tax guidance.
- Streamlined Sales Tax Governing Board — Interstate standardization resources and member state rate tables.
- Tax Foundation — State and Local Sales Tax Rates annual report with combined rate data.
- NerdWallet — Sales tax calculator guide and consumer-facing explanations.
- Federation of Tax Administrators (FTA) — State tax administration resources and sales tax rate data.
- Avalara — Sales tax automation and compliance resources for businesses.
Sales tax rates vary by state, county, and city, and change frequently. Some items are exempt or taxed at reduced rates. Verify current rates with your state Department of Revenue before relying on these calculations for business decisions.