Sales Tax Calculator

US Sales Tax Rates by State (state + avg local)

Combined rates include state sales tax plus the average local tax. Actual local rate varies by city/county. Five states have no statewide sales tax.

How Sales Tax Works in the US

Unlike VAT in most other countries, US sales tax is added at checkout — not included in the listed price. Rates vary widely by state, county, and city. Some states have no sales tax at all, while others combine state and local rates of over 9%.

States with no sales tax

Five states ("NOMAD") have no statewide sales tax: New Hampshire, Oregon, Montana, Alaska, and Delaware. Alaska allows local sales taxes (some cities charge 1–7%), and Montana has limited local resort taxes.

How to calculate sales tax

Tax = Price × (Rate ÷ 100)

Total = Price + Tax

For reverse calculation (finding the pre-tax price from a total that already includes tax):

Pre-Tax = Total ÷ (1 + Rate ÷ 100)

What's typically taxed?

• Tangible goods — most retail merchandise
• Prepared food — restaurant meals, often at higher rates
• Some services — varies dramatically by state
• Digital goods — increasingly taxed (software, streaming)

Common exemptions

• Groceries — exempt or reduced rate in most states
• Prescription medication — exempt nationwide
• Clothing — exempt in some states (PA, NJ, MN, etc.)
• Sales tax holidays — back-to-school events in many states

Online purchases

Since the 2018 South Dakota v. Wayfair ruling, most online retailers must collect sales tax in any state where they have economic nexus (typically over $100,000 in sales or 200 transactions). You'll see sales tax added at checkout based on your shipping address.

Use tax

If you buy something out of state (or online) and don't pay sales tax, you may technically owe a "use tax" to your state at the same rate. Most consumers don't pay this on small items, but enforcement is increasing for big-ticket purchases.

Sales Tax in Practice: Real-World Scenarios

The textbook formula is straightforward, but day-to-day situations introduce wrinkles. Here are common scenarios and how they actually play out at checkout.

Buying Online: Where Is Tax Calculated?

Since the 2018 South Dakota v. Wayfair Supreme Court decision, states can require online retailers without physical presence to collect sales tax once they meet "economic nexus" thresholds — typically $100,000 in sales or 200 transactions per year. Practical effect: nearly every major online retailer collects sales tax based on your shipping address, not the seller's location.

Edge cases: digital goods (e-books, software downloads, streaming) are taxable in roughly half of states. Marketplaces (Etsy, eBay, Amazon third-party) collect tax at checkout in most states regardless of the individual seller's volume, thanks to "marketplace facilitator" laws.

Cross-Border Purchases: Driving to a No-Tax State

If you live in Washington (sales tax) and drive to Oregon (no sales tax) to make a large purchase, you might think you've avoided sales tax. Legally, you owe Washington use tax on the item at the same rate you would have paid for sales tax. Practically, no one collects use tax on a microwave, but vehicles, boats, and other registered property are caught when you register them in your home state.

Restaurant Meals and Prepared Food

Many states tax prepared food at higher rates than groceries — sometimes adding "meals tax" or "prepared food surcharges" on top of regular sales tax. In some cities, restaurant bills carry combined taxes of 9%–11%, including alcohol surcharges. The line between "groceries" (often exempt or reduced) and "prepared food" (taxed) varies. A whole rotisserie chicken from the deli counter might be taxed; a raw chicken from the meat case isn't.

Clothing and Apparel

Several states exempt clothing entirely (Pennsylvania, New Jersey, Minnesota, Vermont, Massachusetts up to a price threshold). Others apply tax only to clothing above a certain price ($110 in New York, $175 in Massachusetts). Shoes, accessories, and "occasional use" items (formalwear, athletic gear) are sometimes treated differently than everyday clothing.

Vehicles, Boats, and Big-Ticket Items

Vehicle sales tax is typically based on your home state's rate, not where you bought the car. The DMV at registration calculates and collects this when you transfer the title. A car bought in tax-free Oregon and registered in California incurs California sales tax (or use tax) at registration. Trade-in values usually reduce the taxable amount in most states — a real benefit if you're trading a car worth $15,000 toward a $40,000 purchase.

Sales Tax Holidays

About 15 states run "sales tax holidays" — limited-time exemptions on specific categories like back-to-school clothing, hurricane preparedness supplies, energy-efficient appliances, or firearms. These typically last 2–3 days and have item-by-item price caps. Plan timing if you're making major purchases in qualifying categories.

Sales Tax for Small Businesses and Sellers

If you sell goods or certain services, you may need to collect sales tax from customers and remit it to state and local governments. The rules are state-specific, but here's the general framework.

Step 1: Determine Where You Have Nexus

Nexus is the connection that obligates you to collect sales tax in a state. There are two main types:

• Physical nexus: You have a store, warehouse, employees, inventory, or significant business activity in the state. Nearly always creates a collection obligation.
• Economic nexus: Post-Wayfair, exceeding a threshold of remote sales (typically $100,000 or 200 transactions) in a state creates nexus even without physical presence.

Sellers using fulfillment services like Amazon FBA can create physical nexus in every state where their inventory is stored — often a surprise.

Step 2: Register for a Sales Tax Permit

You must register before collecting sales tax. Each state's revenue department handles registration online (search "[State] sales tax permit"). Most states issue permits within 1–4 weeks. There's typically no fee.

Step 3: Collect at the Right Rate

States divide into "origin-based" and "destination-based" sourcing:

• Origin-based (about 12 states): For in-state sales, you charge the rate at your business location.
• Destination-based (most states): You charge the rate at the customer's location.

For interstate sales, destination-based rules apply almost universally. E-commerce platforms typically calculate the right rate automatically when configured correctly.

Step 4: File Returns and Remit

Filing frequency depends on volume — typically monthly for high-volume sellers, quarterly or annually for smaller ones. Most states require electronic filing through their revenue department's portal. Late filings carry penalties and interest, even if you owe nothing.

Common Pitfalls for Small Sellers

• Forgetting to file zero returns: Even months with no sales typically require a return.
• Not tracking exempt sales: Wholesale customers, government, and nonprofits can be exempt with the right paperwork. Keep their resale or exemption certificates.
• Mixing tax rates: Different products may be taxed at different rates within the same state. Software helps; manual tracking gets messy fast.
• Out-of-state shipping confusion: Even if your home state has no tax, you might owe collection in customer states where you have nexus.

What's Exempt from Sales Tax (Usually)

Exemptions are state-specific, but a handful of categories are exempt or reduced in most states.

Groceries and Unprepared Food

About 35 states exempt groceries entirely. Roughly 13 states tax groceries at the full rate, sometimes with a refund or credit for low-income residents. Some apply a reduced rate (Illinois, Missouri, Tennessee, Utah, Virginia historically). The definition of "grocery" excludes alcohol, prepared food, candy, and soda in most jurisdictions.

Prescription Drugs

Prescription medication is exempt nationwide. Over-the-counter (OTC) drugs are taxed in most states unless prescribed by a doctor.

Medical Devices and Supplies

Wheelchairs, crutches, prosthetics, hearing aids, and other prescribed durable medical equipment are typically exempt. Diapers, however, are taxed in most states (a recurring legislative target for repeal).

Newspapers and Periodicals

Many states exempt newspapers and magazines, treating them as protected speech or as informational rather than commercial goods. Digital editions sometimes follow the same exemption.

Manufacturing Inputs and Wholesale

Goods purchased for resale, raw materials used in manufacturing, and machinery used in production are typically exempt. Buyers must provide a resale or exemption certificate to the seller, who keeps it on file as proof.

Nonprofit and Government Purchases

Sales to qualifying 501(c)(3) nonprofits, schools, and government agencies are exempt in most states with proper documentation. Sales by nonprofits to the public are usually still taxable.

States with No Statewide Sales Tax (and the Catches)

Five states — sometimes called "NOMAD" — have no statewide sales tax: New Hampshire, Oregon, Montana, Alaska, Delaware. But each has nuances.

Alaska

No state sales tax, but local sales taxes are common. Many municipalities (Juneau, Kodiak, Wasilla, etc.) charge 1%–7%. Anchorage, the largest city, has no sales tax. Combined average across the state is roughly 1.8%.

Delaware

True no-sales-tax. The state runs on personal income tax, corporate franchise taxes (Delaware is famously the legal home of half of US corporations), and a "gross receipts" tax on businesses. Cross-border shopping from Pennsylvania, Maryland, and New Jersey is significant.

Montana

No state sales tax, but a few resort communities (Big Sky, West Yellowstone, Whitefish) charge limited "resort taxes" of 3% on goods primarily aimed at tourists.

New Hampshire

No general sales tax. There's a 9% meals and rooms tax, electricity tax, and tobacco tax. Cross-border shopping from Massachusetts is a constant — particularly for cars, alcohol, and big-ticket retail.

Oregon

True no-sales-tax. Funded primarily by a high state income tax. The Oregon-Washington border has visible economic effects: Portland-area shoppers cross the bridge to avoid Washington's tax; Vancouver, WA residents commute to Portland for tax-free shopping.

Sales Tax Audit Risks and Compliance

Sales tax compliance is a leading cause of state tax audits for small businesses. Most audits don't end in major liability, but the process is time-consuming.

What Triggers an Audit

• Significant gap between reported sales and industry benchmarks for your size/type
• Frequent late filings or amended returns
• Customer complaints to the state revenue department
• Random selection (states audit a percentage of filers each year)
• Cross-referencing data from other agencies (e.g., 1099-K data from payment processors)

How to Reduce Audit Risk

• File on time, every period, including zero returns
• Reconcile sales tax collected against sales tax remitted monthly
• Keep exemption certificates organized and up to date
• Document any rate changes or product taxability decisions
• Use sales tax software for any non-trivial volume

If You're Audited

Cooperate, but don't volunteer information beyond what's requested. State auditors typically work from a sample of months or transactions; clean documentation for those samples is your best defense. Consider hiring a CPA or sales tax specialist if the audit covers multiple years or thousands of transactions.

Frequently Asked Questions