Sales tax rates change by state and sometimes by city

There is no single sales tax percentage that applies everywhere in the United States. Each state sets its own rate, and many cities and counties add their own tax on top of that. When you buy something, the total tax you pay depends on where you are when you make the purchase.

State sales tax rates range from zero percent in five states (Alaska, Delaware, Montana, New Hampshire, and Oregon) to as high as 7.25 percent in California. Most states fall somewhere between 4 and 7 percent. On top of the state rate, cities and counties often add between 0.5 and 2.5 percent more, which means the total tax at checkout can be anywhere from zero to over 10 percent depending on your location.

The tax is calculated on the purchase price and added at the register or at checkout online. If you buy a $100 item in a place with 8 percent total sales tax, you pay $108. The merchant collects the tax and sends it to the state and local governments.

Key Takeaways

  • Five states have no sales tax at all, while others charge between 4 and 7.25 percent at the state level.
  • Cities and counties often add their own local tax on top of the state rate, raising the total to 8 percent or higher in many places.
  • The tax you pay depends entirely on where the purchase happens, not where you live or where the seller is based.
  • Some items like groceries, prescription medications, and clothing are taxed at a lower rate or not taxed at all in certain states.

How state rates are set and why they differ

Each state legislature decides whether to have a sales tax and what rate to charge. States that rely heavily on sales tax revenue tend to have higher rates. States that fund government through income tax or other sources may have lower or no sales tax.

The five states with zero sales tax are Alaska, Delaware, Montana, New Hampshire, and Oregon. Some of these states make up the lost revenue through other taxes—Alaska has no income tax or sales tax but relies on oil revenue, while New Hampshire and Oregon have income taxes instead. Delaware and Montana have neither sales tax nor income tax but fund government through other sources.

States with the highest combined state and average local rates include Louisiana, Arkansas, Washington, and Alabama, where totals often exceed 9 percent. States with lower rates like Colorado, Georgia, and Hawaii typically fall between 4 and 5 percent.

Local taxes add to the state rate

Even if your state has a moderate sales tax, your city or county may add more. This local portion is separate from the state tax and goes to fund local schools, roads, and services. A state with a 5 percent rate might have cities where the local rate is 1.5 percent, bringing the total to 6.5 percent.

Some cities use local sales tax to fund specific projects. A city might add 0.5 percent specifically for public transportation or schools. These local rates change based on local elections and budget decisions, so the total tax rate in your area can shift year to year.

When you shop online, the tax rate applied depends on where the item is being shipped, not where you live or where the seller is located. If you order something to be delivered to an address in a high-tax city, you pay that city's rate.

What items are taxed and what are not

Most states exempt certain items from sales tax or tax them at a lower rate. Groceries and food for home preparation are not taxed in most states, though prepared food and restaurant meals usually are. Prescription medications are typically not taxed, but over-the-counter drugs and vitamins often are.

Clothing is tax-free in some states and taxed in others. A few states like Pennsylvania and New Jersey tax clothing, while most do not. Some states tax clothing only above a certain price point—for example, items under $110 might be tax-free while more expensive items are taxed.

Services are usually not subject to sales tax, though this varies by state. A haircut, car repair, or medical visit is typically not taxed, but some states tax certain services. Digital products like e-books, streaming subscriptions, and software downloads are taxed in most states, though the rules are still evolving.

How to find the sales tax rate where you shop

The easiest way to find your local sales tax rate is to search online for "sales tax rate" plus your city and state. Most state revenue departments publish current rates by county and city on their websites. You can also call your local tax assessor's office or city hall and ask directly.

If you are shopping online, the retailer will show you the tax amount before you complete your purchase. The rate applied will be based on the shipping address you provide. If you are unsure whether a specific item is taxed in your state, the retailer's website or your state revenue department can tell you.

Keep in mind that rates can change. States and cities adjust their rates periodically, so a rate you looked up six months ago may no longer be current. Before making a large purchase, it is worth checking the current rate in your area.

Why sales tax matters for budgeting

Sales tax affects the real cost of everything you buy. A $50 item costs $54 in a place with 8 percent tax, but only $50 in a state with no sales tax. Over time, this adds up—someone in a high-tax area pays noticeably more for the same goods than someone in a low-tax area.

When you are comparing prices between online retailers and local stores, remember to factor in sales tax. A store in a no-tax state might seem cheaper until you add shipping, but the final cost could still be lower than buying locally with tax included. Some people near state borders shop in neighboring states with lower rates, though this is only practical for large purchases.

Frequently Asked Questions

Do I pay sales tax when I shop online?

Yes, in most cases. Online retailers are required to charge sales tax based on where your order is being shipped. The rate applied is the total state and local rate for that address. A few small sellers may not charge tax, but major retailers do.

Is sales tax the same everywhere in my state?

No. Even within the same state, different cities and counties have different total rates because of local taxes. Two towns 10 miles apart might have different rates. Always check the specific rate for your city or the city where you are making a purchase.

Can I get sales tax back if I return something?

Yes. When you return an item, the store refunds both the price and the tax you paid. If you paid $108 for a $100 item with 8 percent tax and return it, you get back $108.

Why do some states have no sales tax?

States without sales tax fund government through other sources like income tax, property tax, or in Alaska's case, oil revenue. These states chose different tax structures based on their economic situation and what voters supported.

Does sales tax explore to used items?

Usually yes, though it depends on the state and the type of item. Used cars are often taxed differently than new cars. Used items sold by individuals in private sales typically are not taxed, but items sold by businesses usually are.