How Sales Tax Works in the US
The United States doesn't have a federal sales tax. Instead, each state (and many cities and counties) sets its own rate. Most US sales tax rates fall between 4% and 10.25%. Some states like Oregon, Montana, and Delaware have no statewide sales tax at all.
The Sales Tax Formula
To add tax to a price:
Total = Price × (1 + Tax % ÷ 100)
To extract tax from a tax-inclusive total (reverse calculation):
Pre-tax = Total ÷ (1 + Tax % ÷ 100)
Reference: Approximate State Sales Tax Rates
(State-level only; cities and counties can add 1–4% on top.)
- 0% (no state sales tax): Alaska, Delaware, Montana, New Hampshire, Oregon
- ~4%: Hawaii, Wyoming, Colorado
- ~6%: Florida, Pennsylvania, Michigan, Maryland
- ~7%: Indiana, Mississippi, Rhode Island, Tennessee
- ~7.25%: California (highest state rate)
- Combined 9–10%+ (with city/county): Many parts of California, Tennessee, Louisiana, Arkansas, Washington
Frequently Asked Questions
Why do receipts sometimes show tax already included?
Some businesses (especially food trucks, bars, and bundled-pricing stores) prefer to list the final price including tax for simplicity. Use the reverse calculator above to figure out the pre-tax price.
Are groceries and prescription drugs taxed?
It varies. Most US states exempt unprepared groceries and prescription medications from sales tax. Prepared food (restaurants, take-out) is almost always taxed.
What about online purchases?
Since the 2018 South Dakota v. Wayfair ruling, online retailers must collect sales tax in any state where they have economic nexus, which is most states for major retailers like Amazon. The rate applied is your shipping address's local rate.