Guide · Tax
US Sales Tax: How Rates Work and Why They Vary by State
Unlike VAT or GST in most other countries, US sales tax is a patchwork of state, county, and city rates layered on top of each other. Here's how to make sense of it.
State + local = combined rate
Most of what you pay at checkout is the state rate plus any local add-ons. Combined rates among the states that levy sales tax range from under 2% to over 9.5%:
States with no sales tax
| State | Local Sales Tax Allowed? |
|---|---|
| Alaska | Yes — some localities levy their own |
| Delaware | No |
| Montana | No (resort areas excepted) |
| New Hampshire | No |
| Oregon | No |
Backing tax out of a total
If you know the final price but not the pre-tax amount — useful for expense reports — divide by (1 + tax rate) rather than simply subtracting the percentage. A $107.25 total at a 7.25% rate has a pre-tax price of $100, not $99.49.
Frequently asked questions
Is sales tax the same everywhere in a state?
No — most states allow cities, counties, and special districts to add their own sales tax on top of the state rate. That's why the same state can have noticeably different rates between, say, a state capital and a small rural town.
Who actually pays sales tax — the buyer or the seller?
Legally, sales tax is usually a 'consumer tax' that the buyer pays, with the seller acting as a collection agent who remits it to the state. Some states use a 'seller's privilege' tax structure instead, but the practical effect at checkout is the same.
Are groceries and clothing taxed the same as everything else?
Often not — many states exempt or apply reduced rates to groceries, prescription drugs, and sometimes clothing. This calculator uses a general average rate; always check local exemptions for specific categories.
What is use tax, and why does it matter for online purchases?
Use tax is the counterpart to sales tax, owed when you buy something without paying sales tax (often from an out-of-state seller) but use it in a state that taxes it. Most online retailers now collect sales tax automatically at checkout following the 2018 Wayfair Supreme Court decision, but use tax can still apply in some cases.