What Is Sales Tax
Sales tax is a consumption tax charged by state and local governments on the purchase of goods and certain services. The seller collects it at the point of sale and remits it to the government. Unlike income tax, you pay sales tax based on what you spend, not what you earn.
Most states levy a statewide rate, then counties and cities add their own local rates on top. The combined rate—state plus local—is what you actually pay at the register. Five states charge no state-level sales tax at all: Alaska, Delaware, Montana, New Hampshire, and Oregon. Alaska still allows local jurisdictions to collect their own sales tax, so some purchases there aren't fully tax-free.
State Sales Tax Rates: Top 10 Highest Combined Rates
| State | State Rate | Avg. Local Rate | Combined Rate | Tax on $100 |
|---|---|---|---|---|
| Louisiana | 4.45% | 5.11% | 9.56% | $9.56 |
| Tennessee | 7.00% | 2.55% | 9.55% | $9.55 |
| Arkansas | 6.50% | 2.97% | 9.47% | $9.47 |
| Washington | 6.50% | 2.67% | 9.17% | $9.17 |
| Alabama | 4.00% | 5.14% | 9.14% | $9.14 |
| Oklahoma | 4.50% | 4.44% | 8.94% | $8.94 |
| Illinois | 6.25% | 2.57% | 8.82% | $8.82 |
| Kansas | 6.50% | 2.19% | 8.69% | $8.69 |
| California | 7.25% | 1.43% | 8.68% | $8.68 |
| New York | 4.00% | 4.52% | 8.52% | $8.52 |
Source: Tax Foundation 2025 state and local sales tax data. Combined rates reflect state rate plus average local rate. Actual rates vary by city and county.
How to Reverse-Calculate Sales Tax from a Total
You paid $54.25 at the register and want to know how much was tax. If the combined rate is 8.25%, divide the total by 1.0825. That gives you $50.12 as the pre-tax price. The tax portion is $54.25 − $50.12 = $4.13. The formula: pre-tax price = total ÷ (1 + tax rate as a decimal).
This works for any rate. At 6% tax, divide the total by 1.06. At 10%, divide by 1.10. Receipts don't always show the breakdown clearly, especially when multiple items have different tax categories (groceries are exempt in many states, prepared food is not). Use this calculator to verify your receipt math.
Sales Tax by State: Key Differences
California has the highest base state rate at 7.25%, but Louisiana has the highest combined rate (9.56%) because local jurisdictions pile on over 5% in additional taxes. Meanwhile, Colorado's state rate is just 2.9%—the lowest among states that collect sales tax—though Denver's combined rate reaches 8.81% after city and county additions.
Groceries are a common exemption. Thirty-two states exempt unprepared food from sales tax entirely. Texas, New York, and Pennsylvania exempt clothing under certain thresholds. These exemptions mean the effective rate you pay varies widely depending on what you buy, not just where you buy it.
Online purchases are taxable in all 45 states that have a sales tax, following the Supreme Court's 2018 South Dakota v. Wayfair ruling. If a retailer has economic nexus in your state—typically $100,000 in sales or 200 transactions per year—they must collect and remit tax. Most major online retailers now charge sales tax automatically.
For a broader view of how federal and state taxes affect your income, try the tax bracket calculator. To estimate your full paycheck after taxes, use the paycheck calculator.