Sales Tax in the US: A State-by-State Guide

Sales tax in the US is a state-level tax on retail purchases — and unlike income tax, the rate you pay depends entirely on where you shop. There's no federal sales tax; instead, every state except Alaska, Delaware, Montana, New Hampshire, and Oregon sets its own rate, ranging from 2.9% to 7.6%. Add county and city taxes on top, and your total rate can easily exceed 10%. This state-by-state guide breaks down how sales tax works, which items are taxable, and how to calculate the total you'll pay at checkout.

What Is Sales Tax?

Sales tax is a consumption tax you pay when you buy goods or services. It's collected at the point of sale — the cashier adds it to your total, and the retailer forwards it to the state revenue department. Unlike income tax, which is based on what you earn, sales tax is based on what you spend.

The key thing to understand: sales tax is single-stage at the retail level. Manufacturers don't pay sales tax when they buy materials, wholesalers don't pay when they buy from manufacturers, but you do pay when you buy the finished product. This avoids a cascading tax effect where the same item gets taxed multiple times.

Here's how it works in practice. If you buy a £100 item in a state with 6% sales tax, you pay $6 tax. If that same item costs $100 in a state with 8% tax, you pay $8. The difference between states adds up — especially for big-ticket items like cars, electronics, and furniture.

Our sales tax calculator does this automatically, but the math is straightforward: multiply the pre-tax price by the tax rate and add it to the total.

How Sales Tax Rates Vary by State

Five states — Alaska, Delaware, Montana, New Hampshire, and Oregon — have no state-level sales tax. (Note: Alaska allows local sales taxes, so some cities still collect tax even though the state doesn't.) For everyone else, state rates range from 2.9% in Colorado and Wyoming to 7.6% in California.

The federal reality is simple: there's no uniform US sales tax. Each state legislated its own rate, and they're not harmonized. You need to know your state's rate — and if you're buying online from another state, things get complicated (see the next section).

Common state rates include California at 7.25% base (but plus county tax often reaches 8%–8.625%), Texas at 6.25% (plus local, usually 7.25%–8.25%), Florida at 6% (plus county, usually 6.5%–7.5%), and New York at 4% state (plus county and local, typically 7.875%–8.875%). Washington state sits at 6.5% (plus local, often 8%–10.7%). The list continues across all 45 tax-collecting states, each with its own rates and exemptions.

Your state's Department of Revenue publishes the exact combined rates for every county and city. The IRS provides links to each state's tax authority, where you can find precise rates for your location.

What's Taxable and What Isn't?

Not everything you buy is subject to sales tax. Most states exempt groceries (unprepared food), prescription medications, and medical equipment. Some exempt utilities. A few exempt clothing. Services are often tax-free — haircuts, repairs, consulting — though this varies wildly by state.

Digital goods (software, e-books, streaming services) are increasingly taxable, and states are catching up to this reality. Physical goods almost always are.

States define "taxable" narrowly, which means exemptions are specific rather than broad. If you're unsure whether something is taxed in your state, check your state revenue department's website or ask the retailer at checkout — they should know.

Common exemptions across many states include unprepared food (groceries) — but prepared food and meals are taxed — prescription medications (but over-the-counter drugs are usually taxed), medical devices (but cosmetics are not), and services like repairs, haircuts, and consulting (though this is inconsistent by state). Education and training are mostly exempt, but college textbooks vary.

The tricky part: exemptions differ wildly between states. Clothing might be exempt in Pennsylvania but taxed in California. So a $100 pair of jeans costs you $100 in Pennsylvania (assuming no local tax above state) but $108.25 in California. These differences compound on large purchases.

Combined State, County, and Local Rates

Here's where US sales tax gets complex: your actual rate is the sum of state, county, and sometimes city tax. A purchase in Chicago is subject to Illinois state tax (6.25%) plus Cook County tax (1.25%) plus Chicago city tax (1.25%) — a total of 8.75%. The same item in a Chicago suburb just outside the city might be 7.5%.

This is why two towns just across a state line can have dramatically different sales tax rates. Someone buying a car on the Tennessee side of the Tennessee–Virginia border might save hundreds in sales tax by crossing the state line. It happens enough that people plan major purchases strategically — though it's worth noting that the savings need to offset travel costs and time.

Why this matters for e-commerce: If you order from a retailer in another state, who pays tax? Originally, states couldn't tax out-of-state retailers. That changed in 2018 (the South Dakota v. Wayfair Supreme Court case). Now most large retailers (Amazon, Walmart, Best Buy) collect sales tax based on your shipping address, even if the seller is out-of-state. Smaller retailers may not, leaving you responsible for "use tax" — a loophole most people and most states don't enforce strictly, but it's technically your obligation.

For businesses: If you sell goods online, you may need to collect sales tax in multiple states. This is a significant compliance burden, which is why many small sellers use platforms (Shopify, Etsy) or services like TaxJar that handle tax collection automatically. The complexity of tracking different rates by ZIP code is exactly why these services exist.

Check your exact rate at your state revenue department's website — they provide online lookup tools by ZIP code.

Sales Tax Tips for Businesses and Consumers

For small business owners: If you're selling taxable goods, register for a sales tax license in your state. Collect the tax at checkout, keep clear records of what you've collected by state and local jurisdiction, and remit it monthly or quarterly (frequency varies by state and sales volume). The IRS provides small-business tax resources that cover sales tax requirements.

For online buyers: Assume tax will be collected at checkout based on your shipping address. The days of "buying online to avoid sales tax" are mostly gone. Check your receipt; any reputable retailer shows the tax as a line item.

For high-ticket purchases: If you're buying a car, furniture, or expensive electronics, it's worth confirming the tax rate in advance. A difference of 2–3% on a $20,000 car is $400–$600. Some states allow tax-free purchases for businesses (inventory) — if you're buying for a business, ask about resale certificates to avoid paying sales tax on wholesale stock.

For tracking across states: If you operate a business across multiple states or have significant out-of-state purchases, use automation. Manual tracking of 45 different state rates, hundreds of county rates, and thousands of city rates is a recipe for errors. Services handle this so you don't have to.

Sales Tax vs Income Tax

Sales tax and income tax are fundamentally different in structure and impact. Income tax is progressive — higher earners pay a higher percentage. Sales tax is regressive — it hits low-income people harder, because they spend a higher percentage of their income on taxable goods. Someone earning $30,000 might spend $25,000 on living expenses (paying sales tax on most of it); someone earning $300,000 might spend $75,000 and invest the rest (paying no sales tax on investments).

This is why some states exempt groceries and medication from sales tax — to reduce the regressive impact. And it's why sales tax is often combined with income tax (in 45 states) rather than replacing it (as in the 5 no-sales-tax states, which typically use higher income tax instead).

If you're comparing your tax burden across states, factor in both: a state with high sales tax might have low income tax, and vice versa. For a detailed breakdown of how US income tax works, see our guide to US federal income tax brackets, which explains marginal rates and your effective tax rate.

Frequently Asked Questions

Do I have to pay sales tax on everything I buy? No. Most states exempt groceries, prescription medications, and services. Some exempt clothing or utilities. Digital goods (software, e-books, streaming) are increasingly taxable. Check your state revenue department's website for the full list of exemptions — they're published and searchable by item type.

Can I avoid sales tax by buying online from another state? Not anymore. Most major retailers (Amazon, Walmart, Best Buy) collect sales tax based on where you're having the item shipped. The 2018 South Dakota v. Wayfair Supreme Court ruling allowed states to tax out-of-state sellers. Smaller sellers may not collect, but you're technically responsible for "use tax" if they don't — though enforcement against individual consumers is rare.

What's the difference between sales tax and use tax? Sales tax is collected at the point of sale. Use tax is what you owe if you buy something in a state without sales tax (or from a seller who didn't collect it) and then use it in a state that taxes it. Practically speaking, most individual consumers never file use tax returns — but businesses are expected to pay it.

Do I pay sales tax on shipping? Usually not, but it depends on your state. Most states don't tax shipping separately, but some do in certain circumstances (e.g., when shipping is bundled with installation). Check your state revenue department's rules.

Is sales tax the same everywhere in my state? No. Your total sales tax is state + county + sometimes city. Two towns in the same state can have different rates by 2% or more. Use your state revenue department's ZIP code lookup tool to find your exact rate.

How do I find my exact sales tax rate? Go to your state's Department of Revenue website. Most have online tools where you enter your ZIP code and it shows you the combined rate. Alternatively, use our sales tax calculator, which covers all 50 states and their local variations.

Do I need to charge sales tax if I'm selling online? If you're selling taxable goods from a business, you almost certainly need to register for a sales tax license and collect tax. The rules depend on your state, your sales volume, and where your customers are located. Start with the IRS small-business tax guide and your state's department of revenue, or use a service like TaxJar to automate it.

What happens if a retailer didn't charge me sales tax? Nothing legally happens to you (enforcement against consumers is rare). The retailer is responsible for collecting and remitting it. If you suspect a major retailer didn't charge tax — which would be unusual in 2026 — double-check your receipt. Most modern systems automatically apply the correct rate for your location.