US sales tax rates by state

There is no national sales tax in the United States. Forty-five states and the District of Columbia levy one, five do not, and the rate you actually pay at a till is almost never the state rate on its own.

Statewide sales tax rates

These are the state portions only. Counties, cities, and special districts add their own on top, which is why a combined rate can be several points higher than anything in this table. Rates are revised by legislatures, so confirm with the state's department of revenue before filing anything.

The five states with no sales tax

A useful mnemonic is NOMAD — New Hampshire, Oregon, Montana, Alaska, Delaware.

Alaska is the one that trips people up. "Alaska has no sales tax" is a statement about Juneau, not about the checkout in Ketchikan.

Hawaii is not a sales tax state

Hawaii's General Excise Tax looks like sales tax and behaves differently in a way that matters. It is levied on the seller's gross receipts rather than on the buyer's purchase, at 4% statewide with a county surcharge that takes Oahu to 4.5%.

Because it is the seller's tax, businesses are allowed to pass it on and to charge tax on the passed-on amount. That is why Hawaiian receipts often show 4.712% rather than 4.5% — the visible rate is the gross-up of a 4.5% tax that is itself taxable. It also applies to services and wholesale transactions that a conventional sales tax would leave alone, so it reaches far more of the economy than the low headline rate suggests.

Why the rate changes street by street

A combined US rate is a stack:

combined = state + county + city + special district

Special districts fund transit authorities, stadium bonds, hospital levies, and tourism development, and their boundaries follow neither city nor county lines. A single ZIP code can contain several different combined rates.

Colorado is the clearest illustration. Its 2.9% state rate is the lowest in the country, and its combined rates are middling to high — the headline number tells you almost nothing.

Origin vs destination sourcing

For a delivered or online order, which rate applies? Most states use destination sourcing: the rate is the buyer's address. A handful — including Arizona, Illinois, Missouri, Pennsylvania, and Texas for intrastate sales — use origin sourcing, where the seller's location sets the rate.

Since the Supreme Court's 2018 Wayfair decision, states can require out-of-state sellers to collect once they pass an economic nexus threshold, commonly $100,000 of sales or 200 transactions in a year. That is why online orders now show sales tax where they once did not.

What gets taxed differs as much as the rate

Two states with identical rates can produce very different bills, because the base is defined separately:

• Groceries — exempt in most states, taxed at a reduced rate in some, and fully taxed in a few.
• Prescription drugs — exempt almost everywhere; over-the-counter medicine usually is not.
• Clothing — exempt in Minnesota, New Jersey, and Pennsylvania; exempt below a price threshold in Massachusetts and New York.
• Prepared food — normally taxed even where groceries are not, and often at a higher restaurant rate.
• Digital goods and services — a patchwork, and the fastest-changing area of all.

Sales tax holidays add another layer. Many states suspend tax on school supplies, clothing, or emergency preparedness items for a few days each year, usually in late summer.

Working the arithmetic

gross = net × (1 + rate)  ·  net = gross ÷ (1 + rate)  ·  tax = gross − net

Removing tax is a division, not a subtraction. On a $108 total at 8%, the pre-tax price is 108 ÷ 1.08 = $100. Taking 8% off $108 gives $99.36 — wrong, and wrong in the direction that under-reports your revenue.