How Sales Tax Works
Sales tax is a consumption tax imposed by the government on the sale of goods and services. A conventional sales tax is levied at the point of sale, collected by the retailer, and passed on to the government.
Calculation Formula
To calculate sales tax, you multiply the price of the item by the tax rate in decimal form (percentage divided by 100).
- Tax Amount = Price × (Tax Rate / 100)
- Total Price = Price + Tax Amount
- Total Price = Price + Tax Amount
Reverse Sales Tax
If you have the total price and want to find the original pre-tax price, use the following formula:
Pre-tax Price = Total Price / (1 + Tax Rate / 100)
USA Sales Tax Overview
In the United States, sales tax is governed at the state and local levels. There is no national sales tax. Currently, 45 states and the District of Columbia impose state-level sales taxes. Alaska, Delaware, Montana, New Hampshire, and Oregon do not have state-level sales taxes.