Last updated: March 2025
Quick Answer
Sales Tax = Price × Tax Rate. US sales tax rates range from 0% (OR, MT) to 10%+ (TN, AR). Most states fall in the 4-8% range.
Key Takeaways
- ✓ Sales Tax = Price × Tax Rate
- ✓ Total = Pre-Tax Price + Sales Tax
- ✓ Reverse: Pre-Tax = Total ÷ (1 + Tax Rate)
- ✓ Rates vary by state, county, and city
What Is Sales Tax?
Sales tax is a consumption tax on goods and services. In the US, there is no federal sales tax — rates are set at state, county, and city levels.
How to Calculate
Tax = Price × Rate. For $100 at 8.5%: $8.50 tax, $108.50 total.
Reverse: Pre-Tax = Total ÷ (1 + Rate). $108.50 ÷ 1.085 = $100.
State Tax Rates
Five states have no sales tax: Oregon, Montana, New Hampshire, Delaware, Alaska. Highest combined rates: Tennessee, Louisiana, Arkansas (~9.5%). California has the highest base rate at 7.25%.
Business Compliance
- Nexus rules — Collect tax where you have physical or economic presence
- Exemptions — Many states exempt groceries, medications, clothing
- eCommerce — Since Wayfair (2018), online sellers must collect tax above economic thresholds
Frequently Asked Questions
How do I calculate sales tax?
Multiply the price by the tax rate as a decimal. For example, $100 at 8% tax: $100 × 0.08 = $8 tax, for a total of $108.
How do I find the pre-tax price from a total?
Divide the total by (1 + tax rate). For example, $108 total at 8% tax: $108 / 1.08 = $100 pre-tax.