Free GST Calculator

How Sales Tax Works in the United States

Unlike most countries that have a national VAT (Value Added Tax), the United States does not have a federal sales tax. Instead, sales tax is set at the state and local level, meaning rates vary significantly depending on where you shop.

Sales tax is calculated as a percentage of the purchase price and added at the point of sale. The formula is simple:

• Add tax: Total = Price + (Price × Tax Rate / 100)
• Remove tax: Price = Total / (1 + Tax Rate / 100)
• Find tax amount: Tax = Total − (Total / (1 + Tax Rate / 100))

Most US states charge sales tax on tangible goods, while services and groceries may be exempt or taxed at reduced rates depending on the state.

States with No Sales Tax

Five US states do not charge any state-level sales tax:

• Alaska — No state tax, but some local jurisdictions charge up to 7.5%
• Delaware — No state or local sales tax at all
• Montana — No state tax, limited resort taxes in some areas
• New Hampshire — No state sales tax (has meals & rooms tax of 8.5%)
• Oregon — No state or local sales tax at all

Additionally, some states exempt essential items. For example, most states don't tax groceries (food for home consumption), and many exempt clothing, prescription drugs, and medical devices.

When to Add vs. Remove Tax

Our calculator supports three modes for different real-world scenarios:

• Add Tax — Use when you know the pre-tax price and want to find the total. For example, an item priced at $29.99 in Texas (8.25% combined rate) costs $29.99 + $2.47 = $32.46 after tax.
• Remove Tax — Use when you have a receipt total and want to find the original price. For example, you paid $32.46 total at 8.25% tax: $32.46 / 1.0825 = $29.99 pre-tax price.
• Tax Amount — Use when you need to know how much tax is embedded in a total. This is useful for expense reporting, bookkeeping, or determining the deductible portion of a purchase.