Sales tax rates depend on where you buy, what you buy, and sometimes who you are
Sales tax is not one number. The rate you pay depends on three things: the state where the sale happens, the county or city within that state, and the category of the item itself. A shirt bought in one county might be taxed at 7 percent, while the same shirt in the next county over is taxed at 7.5 percent. Some items—groceries, prescription medicines, clothing in certain states—are taxed at lower rates or not taxed at all. You cannot determine your sales tax by looking at the item alone.
The location of the sale is what matters, not where you live or where you ship the item. If you walk into a store in Denver and buy something, you pay Denver's rate. If you order online and the seller has a warehouse in that same Denver location, you typically pay Denver's rate too. If the seller has no physical presence in your state, the rules change—but that is a separate question about whether tax applies at all.
Key Takeaways
- Sales tax rates combine state tax, county tax, and sometimes city tax, and the total varies by location even within the same state.
- The tax rate that applies is determined by where the sale physically happens or where the seller is located, not where you live.
- Many items are taxed at a lower rate or not taxed at all—groceries, medicine, and clothing in some states are common examples.
- You can find your exact rate by entering your address into your state's Department of Revenue website or by asking the retailer before you buy.
- Online sellers are required to collect sales tax in your state if they have a physical location there, even if you never set foot in that location.
How state, county, and local taxes stack together
Every state except five—Alaska, Delaware, Montana, New Hampshire, and Oregon—collects a state sales tax. That state rate is the floor. On top of it, most counties add their own tax, and many cities add a third layer. A purchase in Nashville, Tennessee, for example, is subject to Tennessee's 4 percent state tax, Davidson County's 2.25 percent, and Nashville's 2.25 percent—a combined 8.5 percent.
You cannot assume that two cities in the same state have the same rate. In California, the state rate is 7.25 percent, but Los Angeles County adds 0.5 percent and San Francisco adds 1.25 percent. A $100 item costs $107.25 in one place and $108.75 in another, both in the same state. The only way to know your exact rate is to look it up for your specific address or ask the seller.
Some states allow cities to set their own rates within a range, while others set a single county rate that applies everywhere in that county. A few states do not allow local taxes at all. Your state's Department of Revenue website will show you the breakdown for your location.
Items that are taxed differently or not at all
Most states exempt groceries from sales tax or tax them at a lower rate. The definition of "groceries" varies: in some states it means only food you cook at home, while in others it includes prepared food from a deli counter. Candy, soda, and hot food are usually taxed even in states that exempt cold groceries.
Prescription medicines are exempt in all states. Over-the-counter medicines like aspirin or cold medicine are taxed in most states, though some exempt them. Clothing is exempt in a handful of states (New York, Pennsylvania, New Jersey, and a few others), but taxed normally everywhere else. Medical equipment like wheelchairs or hearing aids may be exempt or taxed at a lower rate depending on your state.
Services are usually not subject to sales tax—a haircut, a car repair, or a dental cleaning typically has no sales tax. But some states tax certain services. South Dakota taxes repair services. New Mexico taxes many services that other states do not. The safest approach is to ask the business what they will charge before you commit to the purchase.
Finding the sales tax rate for your location
Your state's Department of Revenue website has a sales tax lookup tool. You enter your street address, city, or ZIP code, and it returns the combined state, county, and city rate for that location. The tool is free and takes less than a minute. Search "[your state] Department of Revenue sales tax rate" to find it.
If you cannot find the tool or it does not work for your address, call the Department of Revenue directly. Their phone number is on the website. Have your full street address ready, because the rate can change block by block in some cities.
For online purchases, you can also ask the seller what rate they will charge before you complete the transaction. Major retailers like Amazon and Walmart show the tax amount in your cart before you pay. If you are buying from a small business or a marketplace seller, send them an email with your address and ask what the total will be.
When you buy in one place but receive in another
The sales tax rate is based on where the item is delivered or picked up, not where you live. If you order something online to be shipped to your home in Ohio, you pay Ohio's rate for the delivery address. If you order it to be picked up at a store in Pennsylvania, you pay Pennsylvania's rate.
This matters for online shopping. If you live in a state with no sales tax and order from a seller with a warehouse in your state, you will pay tax. If you live in a high-tax state and order from a seller with no location in your state, you may not pay tax at the point of sale—though some states now require you to pay tax when you file your income tax return instead.
How to calculate the tax amount on your purchase
Once you know your rate, the math is straightforward. Multiply the price before tax by the tax rate as a decimal. A $50 item in a location with 8 percent tax costs $50 × 0.08 = $4 in tax, for a total of $54.
Most retailers do this for you and show the tax separately on the receipt. Online retailers show it in the cart. If you are doing the math yourself to budget for a large purchase, remember that the rate applies only to the subtotal before any discounts. If you have a coupon that reduces the price to $40, the tax is calculated on $40, not $50.
Some states round the total to the nearest cent, while others round each line item. This rarely makes a difference on a single purchase, but it can matter if you are buying many items. The retailer's system handles this automatically.
Special situations: resale, tax-exempt organizations, and business purchases
If you are buying items to resell—you own a store or sell online—you do not pay sales tax on your inventory. Instead, you provide the seller with a resale certificate, which is a document from your state that proves you are a registered business. The seller keeps the certificate on file and does not charge you tax. You collect tax from your customers instead.
Tax-exempt organizations like nonprofits, schools, and government agencies can also avoid paying sales tax. They provide the seller with a tax-exempt certificate. The process is the same as resale: the seller keeps the certificate and does not charge tax.
If you are buying something for your business but not reselling it—office supplies, equipment, a company vehicle—you pay sales tax normally. The tax applies to the business, not to you personally, but the rate and rules are the same.
Frequently Asked Questions
Does sales tax explore to online purchases from out-of-state sellers?
It depends on whether the seller has a physical location in your state. If they do, they must collect sales tax. If they do not, they typically do not collect it at the point of sale, though your state may require you to pay it when you file your tax return. Check your state's Department of Revenue website for the current rule, as these laws change frequently.
Why is the tax amount on my receipt different from what I calculated?
Rounding and the order of operations can cause small differences. If you have a discount or coupon, the tax is calculated on the discounted price, not the original price. Some items in your cart may be taxed at different rates. Ask the cashier or check your receipt to see the breakdown.
Can I get a refund of sales tax I already paid?
In most cases, no. Sales tax is final once the transaction is complete. If you return an item, the store refunds the tax along with the purchase price. If you believe you were overcharged, contact the retailer first. If the error is systematic, you can file a complaint with your state's Department of Revenue.
Do I pay sales tax on services like haircuts or car repairs?
Most services are not subject to sales tax. However, some states tax certain services. Check your state's Department of Revenue website or ask the business before you pay. The rules vary widely by state and by type of service.
What if I buy something in one state and take it home to another state?
You pay the sales tax rate of the state where you buy it, not where you live. The tax is based on the location of the sale. Once you own the item, you do not owe additional tax when you cross the state line.