How to Calculate Sales Tax
To calculate sales tax, multiply the purchase price by your local tax rate. If an item costs $50 and your combined sales tax rate is 8.25%, the tax is $50 × 0.0825 = $4.13, making the total $54.13. If you need to find the pre-tax price from a total that already includes tax, divide the total by (1 + tax rate).
Sales Tax Rates by State (2026)
Sales tax rates vary significantly across the US. Here are the key groups to know:
| Category | States |
|---|---|
| No sales tax (0%) | Alaska, Delaware, Montana, New Hampshire, Oregon |
| Low rates (< 5%) | Colorado (2.9%), Alabama (4%), Georgia (4%), Wyoming (4%), Hawaii (4%) |
| Average rates (5-7%) | Florida (6%), Texas (6.25%), Ohio (5.75%), Michigan (6%), Pennsylvania (6%) |
| High rates (> 7%) | California (7.25%), Indiana (7%), Mississippi (7%), Tennessee (7%), Rhode Island (7%) |
But state rates are only part of the picture. Cities and counties often add their own taxes on top, which is why the same state can have very different effective rates depending on where you shop.
Combined Rates: Where You Really Pay the Most
The highest combined sales tax rates in the US — state plus local — can exceed 10%. Some notable examples:
- Tacoma, WA: 10.3% (6.5% state + 3.8% local)
- Chicago, IL: 10.25% (6.25% state + 4% local)
- Los Angeles, CA: 9.5% (7.25% state + 2.25% local)
- New York City, NY: 8.875% (4% state + 4.875% local)
Meanwhile, shoppers in Portland, Oregon pay 0% on everything. Where you live (or shop) matters.
What's Exempt from Sales Tax?
Most states exempt certain categories from sales tax, though the specific items vary:
- Groceries: Exempt in most states (but not Alabama, Mississippi, South Dakota, or Kansas where food is fully taxed)
- Clothing: Exempt in Pennsylvania, New Jersey, Minnesota, and New York (under $110 per item)
- Prescription drugs: Exempt in all states
- Back-to-school items: Many states offer annual tax-free weekends in August
If you're buying a mix of taxable and exempt items, only the taxable portion gets the sales tax applied. This is where a discount calculator can help figure out your actual savings during sales events.
Sales Tax vs. Use Tax
If you buy something online from a state that doesn't collect your state's sales tax, you technically owe use tax at the same rate. Since the 2018 Supreme Court ruling in South Dakota v. Wayfair, most online retailers now collect sales tax automatically, but it's worth knowing the rule if you buy from smaller sellers.
How Sales Tax Affects Big Purchases
On expensive items, sales tax adds up fast:
| Purchase | Price | Tax at 7% | Tax at 10% |
|---|---|---|---|
| Laptop | $1,200 | $84 | $120 |
| Furniture set | $3,500 | $245 | $350 |
| Used car | $25,000 | $1,750 | $2,500 |
For big-ticket items, it may be worth driving to a lower-tax jurisdiction — or timing your purchase with a tax-free holiday. Just make sure to factor in the overall cost, including gas and time. A tip calculator can help with restaurant stops along the way.
Reverse Sales Tax: Finding the Pre-Tax Price
Sometimes you see a receipt total and want to know the original price before tax. The formula:
Pre-tax price = Total ÷ (1 + tax rate)
For example, if your receipt says $107.00 and the tax rate is 7%:
$107.00 ÷ 1.07 = $100.00 pre-tax price, with $7.00 being the tax.
This is useful for expense reports, price comparisons across states, or splitting costs with someone. Our calculator above supports reverse calculation — just toggle the mode.
Key Takeaways
- Sales tax = price × rate (check your combined state + local rate)
- Five states charge no sales tax at all
- Combined rates can exceed 10% in some cities
- Groceries and clothing are exempt in many states
- Use the reverse formula to find pre-tax prices from totals
For related calculations, check the markup calculator if you're a seller setting prices that include tax, or the salary calculator to understand how sales tax impacts your purchasing power in different states.