How sales tax is calculated
Sales tax is a percentage added to the price of goods and many services at the point of sale. The calculator works in both directions: enter a pre-tax price and a rate to get the tax amount and total, or enter a price that already includes tax to back out how much of it was tax. The second mode is useful for expense claims and bookkeeping, where receipts show only the final figure.
Adding tax: Tax = Price × Rate Total = Price × (1 + Rate)
Removing tax: Price = Total ÷ (1 + Rate) Tax = Total − PriceA frequent mistake when removing tax is to multiply the total by the rate. A $107 receipt at 7% did not include $7.49 of tax — it included 107 ÷ 1.07 = $100 of goods and $7 of tax.
Worked examples
Adding tax: a $249.99 item at a combined rate of 8.25%.
Tax = 249.99 × 0.0825 = $20.62
Total = 249.99 + 20.62 = $270.61Removing tax: a restaurant bill of $86.40 in a city with 8% tax.
Pre-tax = 86.40 ÷ 1.08 = $80.00
Tax = 86.40 − 80.00 = $6.40Why US rates vary so much
The United States has no national sales tax. Each state sets its own rate, and most allow counties, cities and special districts to add their own on top, so the rate you pay depends on the exact delivery or store address. Five states — Alaska, Delaware, Montana, New Hampshire and Oregon — have no state sales tax, though some Alaskan municipalities levy a local one.
| State | State rate | Typical combined rate |
|---|---|---|
| California | 7.25% | 8.5–10.75% |
| Texas | 6.25% | 8.25% |
| New York | 4.00% | 8.0–8.875% |
| Florida | 6.00% | 6.5–7.5% |
| Illinois | 6.25% | 8.0–10.25% |
| Washington | 6.50% | 8.0–10.5% |
| Colorado | 2.90% | 4.0–9.0% |
| Oregon / Delaware / Montana / NH | 0% | 0% |
Rates change frequently. Use the calculator with the rate printed on a recent receipt from the same location, or check the state revenue department for the current combined rate at a specific address.
What is and isn't taxed
- Groceries are exempt or taxed at a reduced rate in most states, but prepared food (restaurant meals, hot deli items) is usually taxed in full.
- Clothing is exempt in a handful of states (for example Pennsylvania and Minnesota) and taxed in most others.
- Prescription medicines are exempt almost everywhere; over-the-counter products vary.
- Digital goods and services (streaming, software downloads, SaaS) are increasingly taxed, but the rules differ widely by state.
- Sales-tax holidays — short windows, often before the school year, where certain items are temporarily exempt — exist in around 20 states.
Online purchases and marketplace sellers
Since the 2018 Wayfair decision, online retailers must collect sales tax in states where their sales exceed an economic threshold (commonly $100,000 or 200 transactions per year), even without a physical presence there. Marketplaces such as Amazon and Etsy now collect on behalf of their sellers in nearly every state. If you buy from a small out-of-state seller who does not collect, you technically owe an equivalent “use tax” to your own state — most states include a line for it on the income-tax return.
Sales tax vs VAT
Sales tax is charged once, to the final consumer, and is typically shown separately from the shelf price. Value-added tax, used in most countries outside the US, is charged at every stage of production with businesses reclaiming what they paid, and the advertised price almost always includes it. If you need to add or strip VAT from a price, use the dedicated VAT calculator, which handles the common European and international rates.