Sales tax

If you've ever bought anything in a store or online, you've probably seen sales tax added to your bill. Sales tax is a tax that is imposed by state and local governments that is a percentage of the purchase price of goods and services.

How is Sales Tax Calculated?

Sales tax is calculated as a percentage of the total price of the goods or services being purchased. The percentage rate of sales tax varies depending on the state and local government where the transaction is taking place.

Who is Required to Pay Sales Tax?

In the USA, sales tax is typically collected by retailers and then remitted to the state and local government authority. Consumers are responsible for paying sales tax on their purchases and retailers are responsible for collecting and remitting this tax on behalf of their customers.

It's important to note that sales tax does not only apply to traditional brick-and-mortar retail stores. Online retailers and other businesses that sell goods and services in states where they have a physical presence are also required to collect and remit sales tax.

How is Sales Tax Used?

Sales tax is used to fund state and local government programs, including education, transportation, public safety, and other public services. The exact use of sales tax revenue varies by state and locality.

Sales Tax Exemptions

There are certain cases where sales tax may be exempt. For example, some states may provide sales tax exemptions for certain items, such as grocery food, prescription drugs, or clothing. Additionally, non-profit organizations and government agencies may also be exempt from paying sales tax on certain purchases.


Sales tax is a necessary part of funding state and local government services and operations. Understanding how sales tax works can help consumers make informed purchasing decisions and can help retailers ensure that they are in compliance with state and local laws.

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