Sales tax in the United States is calculated at the state, county, and city level — there is no federal sales tax. Rates and rules vary dramatically, making it essential to use the correct combined rate for any transaction.
The Basic Formula
Tax amount = Pre-tax price × Tax rate
Total = Pre-tax price × (1 + Tax rate)
Example: $80 item in California (state rate 7.25% + local 1% = 8.25%):
Tax = $80 × 0.0825 = $6.60
Total = $80 + $6.60 = $86.60
State Sales Tax Rates (2025)
| State | State rate | Combined (avg) |
|---|---|---|
| California | 7.25% | 8.82% |
| Tennessee | 7.00% | 9.55% |
| Texas | 6.25% | 8.19% |
| New York | 4.00% | 8.52% |
| Florida | 6.00% | 7.02% |
| Illinois | 6.25% | 8.83% |
| Washington | 6.50% | 9.29% |
| Oregon | 0% | 0% |
| Montana | 0% | 0% |
| Delaware | 0% | 0% |
No sales tax states: Alaska, Delaware, Montana, New Hampshire, Oregon.
Extracting Sales Tax from a Total
When only the total is shown:
Pre-tax price = Total ÷ (1 + Tax rate)
Tax = Total − Pre-tax price
Example: $86.60 total, 8.25% tax:
Pre-tax = $86.60 ÷ 1.0825 = $80.00
Tax = $86.60 − $80.00 = $6.60
Nexus and Online Sales
Since the 2018 South Dakota v. Wayfair Supreme Court ruling, states can require out-of-state sellers to collect sales tax once they reach an economic nexus threshold (typically $100,000 in sales or 200 transactions per year in that state).
What Is Taxable?
Rules vary by state. Generally:
| Category | Taxability |
|---|---|
| Physical goods | Taxable in most states |
| Groceries | Exempt or reduced rate (most states) |
| Prescription drugs | Exempt in all states |
| Clothing | Varies (exempt in NY under $110 per item) |
| Digital goods | Increasingly taxable |
| Services | Generally exempt, but varies |
Quick Calculation: Common Rates
| Pre-tax | 6% | 8% | 9% | 10% |
|---|---|---|---|---|
| $10 | $0.60 | $0.80 | $0.90 | $1.00 |
| $50 | $3.00 | $4.00 | $4.50 | $5.00 |
| $100 | $6.00 | $8.00 | $9.00 | $10.00 |
| $500 | $30 | $40 | $45 | $50 |
Use Tax
If you purchase taxable goods in a state without sales tax or from an out-of-state seller who does not collect tax, most states require you to self-report and pay use tax — the same rate as sales tax — on your state income tax return.