How Sales Tax Works
Sales tax is a consumption tax paid on goods and services. In the US, it varies by state and locality.
Sales Tax Formula
Tax Amount = Price × Tax Rate
Total = Price + Tax Amount
Example
$100 purchase in California (7.25% state rate):
- Tax: $100 × 0.0725 = $7.25
- Total: $107.25
Sales Tax by State
Tax rates vary significantly:
- Highest: Louisiana (9.55%), Tennessee (9.55%), Arkansas (9.51%)
- Lowest: Alaska (1.82%), Hawaii (4.44%), Wyoming (5.34%)
- No state tax: Oregon, Montana, Delaware, New Hampshire
Local Taxes
Many cities and counties add their own sales tax on top of state rates. Always check total combined rates for your area.