How Sales Tax Works: A State-by-State Breakdown
5 min
What Is Sales Tax?
Sales tax is a consumption tax on goods and services, collected by sellers at the point of sale. Rates vary by state, county, and city — the combined rate is what you actually pay.
State vs Local Rates
State rates range from 0% to 7.25%. Local taxes can add up to 5% more, making the combined rate significantly higher than the state rate alone.
Common Exemptions
Most states exempt prescription drugs. Many exempt groceries and some exempt clothing. Digital goods and services have varying treatment by state.
Tip
Tax laws vary by state and change frequently. Use our calculators for the most up-to-date rates and estimates for your specific situation.
Related Guides
Online Shopping and Sales Tax: What You Owe
After the South Dakota v. Wayfair Supreme Court decision, online purchases are generally taxable. Here's what you need to know.
Sales Tax Exemptions by State
Which items are exempt from sales tax varies dramatically by state. We break down exemptions for groceries, clothing, prescriptions, and more.