How US sales tax is calculated
The US has no federal sales tax. States set their own rate, and many counties, cities and special districts add a local rate on top. What you pay at the till is the combined rate for the place of sale, applied to the pre-tax price.
Sales tax = price × rate ÷ 100 · Total = price × (1 + rate ÷ 100)
Worked example (New York City): the combined rate is 8.875% (4% New York State, 4.5% New York City and 0.375% Metropolitan Commuter Transportation District). On a $59.99 item the tax is $5.32 and the total is $65.31.
Working backwards from a receipt
To find the pre-tax price, divide the total by 1 plus the rate: $65.31 ÷ 1.08875 = $59.99. This is useful for expense reports and when a price is quoted "tax included".
Finding your rate
- Five states have no statewide sales tax: Alaska, Delaware, Montana, New Hampshire and Oregon. Some Alaska towns still charge a local sales tax.
- Local rates vary within a state, sometimes from one street to the next. Use your state department of revenue's rate lookup for an exact address.
- Some items are taxed differently. Many states exempt or reduce tax on groceries, prescription drugs or clothing.
Pro-tip: online sellers usually charge the rate for the delivery address, not their own location, following the 2018 Supreme Court decision in South Dakota v. Wayfair.
For businesses: this calculator is for quick estimates. For filing, use the rate tables published by each state's tax authority, and check which products are taxable there.
Frequently asked questions
How do I calculate sales tax?
Multiply the price by the combined rate as a decimal. At 8.875%, $59.99 × 0.08875 = $5.32 tax, for a total of $65.31.
How do I work out the price before tax?
Divide the total by 1 plus the rate. $65.31 ÷ 1.08875 = $59.99.
Which states have no sales tax?
Alaska, Delaware, Montana, New Hampshire and Oregon have no statewide sales tax, although some Alaska localities charge their own.
Why is my sales tax higher than the state rate?
Counties, cities and special districts can add local sales tax on top of the state rate. The rate on your receipt is the combined total.