The sales tax you pay depends on the state where you made your purchase. Use the sales tax calculator below to estimate your sales tax.
What is sales tax?
A sales tax is a tax charged by state and local governments on most goods and services. For example, if you bought a pair of shoes for $100 in California, where the state-level sales tax is just over 7%, you’d owe around $7 in sales tax, making your total purchase around $107. If the city where you bought the shoes also charged a local sales tax, you would need to pay that additional fee as well.
Sales tax is not a uniquely American concept — other countries charge fees on goods and services, too. Internationally, that sales tax is called value-added tax (VAT).
What items need to have sales tax?
Most tangible goods (such as clothing or books) carry a sales tax, except for one very important category: food purchased for use at home. Only 13 states charge sales tax on groceries.
Some states don’t charge sales tax for certain medications, textbooks and clothing. Some states even have a sales tax holiday — typically a weekend when the sales tax is suspended for certain types of items.
States with no sales tax
Currently, there are five states that do not charge sales tax: Alaska, Delaware, Montana, New Hampshire and Oregon.
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Who collects sales tax?
The seller collects the sales tax and then remits it to the state and local tax authority, if applicable.
Is my business required to collect sales tax?
If you’re selling tangible goods that are not exempt from sales tax (such as groceries), you more than likely have to collect sales tax. If you’re selling a service, such as house cleaning or legal work, that will depend on your state’s specific laws.
If you’re selling goods online, you are typically required to collect sales tax from wherever your business is located.
What happens if you don’t collect sales tax?
If you were supposed to collect sales tax and didn’t, you could be looking at high financial penalties and interest. Those rates will depend on your state. You could also potentially face criminal charges or lose your vendor license.