How to Calculate Sales Tax: State-by-State Guide
Sales tax is a consumption tax charged by state and local governments on the sale of goods and certain services. You calculate it by multiplying the purchase price by the applicable tax rate. In the United States, 45 states and the District of Columbia impose a statewide sales tax, with combined rates (state plus local) ranging from 0% to over 10%.
Quick Answer
- 1. Formula: Sales Tax = Price x Tax Rate. A $100 item at 7% tax = $7.00 in tax.
- 2. 5 states have no sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon (NOMAD states).
- 3. Louisiana has the highest combined rate at 10.11% (state + average local), according to the Tax Foundation.
- 4. Since the 2018 Wayfair ruling, most online purchases are subject to sales tax based on the buyer's location.
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Sales Tax Calculator - FreeThe Sales Tax Formula
Calculating sales tax is straightforward once you know the rate. The formula is:
Sales Tax Amount = Purchase Price x Sales Tax Rate
Total Cost = Purchase Price + Sales Tax Amount
For example, if you buy a laptop for $899.99 in Texas, which has a 6.25% state sales tax rate and no local tax in your city, the calculation is: $899.99 x 0.0625 = $56.25 in tax, for a total of $956.24. If your city adds a 2% local tax, the combined rate becomes 8.25%, and the total rises to $974.24.
How to Calculate Sales Tax From a Total
Sometimes you need to work backwards from a receipt total to find the pre-tax price. The reverse formula is:
Pre-Tax Price = Total / (1 + Tax Rate)
If your total was $107.00 and the tax rate is 7%, divide $107.00 by 1.07 to get $100.00 as the pre-tax price, with $7.00 being the tax amount.
State Sales Tax Rates: A Complete Overview
Sales tax rates vary dramatically across the United States. According to the Tax Foundation, state-level rates range from 0% in the five NOMAD states to 7.25% in California, the highest state rate in the nation. But the state rate is only part of the picture. Most states allow cities, counties, and special districts to add local taxes on top.
Highest Combined Sales Tax Rates
When you factor in local taxes, the picture changes significantly. The states with the highest average combined rates as of 2026 are:
| State | State Rate | Avg. Local Rate | Combined Rate |
|---|---|---|---|
| Louisiana | 4.45% | 5.66% | 10.11% |
| Tennessee | 7.00% | 2.55% | 9.55% |
| Arkansas | 6.50% | 2.97% | 9.47% |
| Washington | 6.50% | 2.90% | 9.40% |
| Alabama | 4.00% | 5.29% | 9.29% |
At the other end, among states that do have a sales tax, Colorado has the lowest state rate at 2.90%, though its average local rate of 4.99% pushes the combined rate to 7.89%.
The 5 States With No Sales Tax
Five states charge no general statewide sales tax, often referred to by the acronym NOMAD:
- Alaska: No state tax, but local jurisdictions can levy up to 7.5%. The statewide average local rate is about 1.82%.
- Delaware: No sales tax. Charges a gross receipts tax on businesses instead.
- Montana: No sales tax statewide, though some resort areas charge a resort tax (typically 3%).
- New Hampshire: No sales tax. Relies on property taxes and a business profits tax for revenue.
- Oregon: No sales tax at any level. Funds its government primarily through income taxes.
How Sales Tax Differs by Product Category
Not everything you buy is taxed at the same rate. Most states exempt or reduce rates on certain categories:
- Groceries: 32 states and DC fully exempt unprepared food from sales tax. States like Illinois tax groceries at a reduced 1% rate.
- Clothing: States including New York, New Jersey, Pennsylvania, and Minnesota exempt clothing from sales tax (New York exempts items under $110).
- Prescription drugs: Nearly all states exempt prescription medications. Only Illinois charges a reduced rate of 1%.
- Services: Most states primarily tax tangible goods. However, states like Hawaii, New Mexico, and South Dakota also tax many services.
Sales Tax Holidays: When Rates Drop to Zero
Many states offer temporary sales tax holidays, typically timed before the back-to-school season. During these periods, specific categories of purchases (school supplies, clothing, computers) are exempt from state and sometimes local sales tax. As of 2025, 19 states offered at least one sales tax holiday during the year, according to the Federation of Tax Administrators. Texas, Florida, and Ohio are among the most popular, with holidays covering clothing, school supplies, and energy-efficient appliances.
Online Sales Tax After the Wayfair Decision
The landscape of online sales tax changed permanently on June 21, 2018, when the Supreme Court decided South Dakota v. Wayfair, Inc. The ruling overturned the previous physical-presence requirement from the 1992 Quill Corp. v. North Dakota decision, allowing states to require out-of-state sellers to collect sales tax if they meet certain economic thresholds.
Most states have since enacted economic nexus laws, typically requiring collection when a seller exceeds $100,000 in sales or 200 transactions in the state. As a result, major online retailers now collect sales tax at checkout in virtually every taxable state. If you buy from a smaller seller that does not collect tax, you still technically owe use tax, which is reported on your state income tax return.
How to Calculate Sales Tax for Business Purchases
If you run a business, sales tax calculations become more complex. You need to consider:
- Resale exemptions: Items purchased for resale are typically exempt. You provide a resale certificate to the seller.
- Use tax on out-of-state purchases: If you buy equipment from a state with no sales tax (or a lower rate), you owe use tax in your home state at the difference.
- Origin vs. destination sourcing: Some states (like Texas and Pennsylvania) use origin-based sourcing where the seller's location determines the rate. Most states use destination-based sourcing where the buyer's location sets the rate.
- Marketplace facilitator laws: If you sell through Amazon, Etsy, or similar platforms, the marketplace typically handles tax collection for you in most states.
Tips for Managing Sales Tax
Whether you are a consumer trying to budget accurately or a small business managing compliance, these tips help:
- Always use the combined rate: The state rate alone underestimates your actual tax. Look up the combined state and local rate for your specific address.
- Watch for rate changes: Local rates change frequently. Cities and counties can adjust rates quarterly in some states.
- Save during tax holidays: Plan large purchases (laptops, appliances, school supplies) around your state's tax-free shopping periods.
- Keep receipts for deductions: If you itemize deductions on your federal return, you can deduct either state income tax or state sales tax (not both). The sales tax deduction is especially valuable in states with no income tax like Texas, Florida, and Washington.
The Bottom Line
Sales tax is one of the simplest taxes to calculate but one of the most complex to manage because rates vary by state, city, county, and even special district. The formula is always the same: multiply the price by the combined tax rate. For a quick answer, use our free sales tax calculator to look up the exact rate for any US location and calculate the tax instantly.
Frequently Asked Questions
How do I calculate sales tax on a purchase?
Multiply the item price by the sales tax rate expressed as a decimal. For example, a $50 item in a state with a 6% sales tax: $50 x 0.06 = $3.00 in tax, for a total of $53.00. If there is also a local tax (say 2%), add that: $50 x 0.08 = $4.00 total tax. Always use the combined state plus local rate for the most accurate result.
Which states have no sales tax?
Five states have no statewide sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon (sometimes called the NOMAD states). However, Alaska allows local jurisdictions to levy their own sales taxes, with some areas charging up to 7.5%. Montana permits resort taxes in certain areas, and Delaware charges a gross receipts tax on businesses that may be passed through to consumers in some cases.
Do I have to pay sales tax on online purchases?
In most cases, yes. Since the 2018 Supreme Court ruling in South Dakota v. Wayfair, states can require online retailers to collect sales tax even if the seller has no physical presence in the state. Most major e-commerce platforms (Amazon, Walmart, eBay) now collect sales tax automatically at checkout based on the shipping address. If a retailer does not collect tax, you may owe use tax on the purchase, which you are supposed to report on your state tax return.
What is the difference between sales tax and use tax?
Sales tax is collected by the seller at the point of sale, while use tax is self-reported by the buyer when sales tax was not collected. Use tax applies when you buy from an out-of-state seller who does not collect your state's tax, or when you buy items for business use that were purchased tax-free. The rate is typically the same as your local sales tax rate. Most states require you to report use tax on your annual income tax return.
Are groceries taxed in every state?
No. Most states exempt unprepared grocery items from sales tax. As of 2026, 32 states and the District of Columbia fully exempt groceries from the general sales tax. A few states tax groceries at a reduced rate (for example, Illinois taxes groceries at 1% versus its standard 6.25% rate). Some states like Alabama, Mississippi, and South Dakota still tax groceries at the full state rate, though local exemptions may apply.
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