Whenever you buy something in the U.S., odds are it's going to cost more than the listed price. This is likely the result of the sales tax levied against the cost of your purchase. Sales tax is one of the ways governments collect tax revenue from their citizens.

The sales tax rate varies by the state and local jurisdiction in which the purchase is made. As of January 2024, 45 states, the District of Columbia, and Puerto Rico require a sales tax on many goods and some services. Alaska, Delaware, Guam, Montana, New Hampshire, and Oregon do not levy a statewide or territory sales tax, although they may selectively tax certain purchases like alcohol or hotel rooms. A sales tax, even when levied by a local municipality such as a city, is generally administered by the state.

While most states have a "general" sales tax that's used across all purchases, some items, such as tobacco, alcohol, and motor fuels, have a unique "selective" tax rate that also varies by state.

What Are Sales Taxes?

A 澳洲幸运5官方开奖结果体彩网:sales tax is an involuntary fee imposed by the government on the sale of goods and services, calculated as a percentage of the price of a purchase.

For instance, if you were to buy a $15 T-shirt in Pitt County, N.C., you might expect to pay an additional $0.71, as the state's sales tax rate is 4.75% (0.0475 x 15 = 0.71). However, a state's sales tax rate only accounts for a portion of the full amount levied against a purchase, which can also include a county rate, a city rate, or an excise rate. Some locations even levy a "sin" rate on items such as cigarettes or gambling. Pitt County, in particular, levies a sales tax plus a use tax rate of 2.25%. That means the T-shirt will actually cost you an extra $1.05 above the list price, as the state's total sales and use tax rate is 7% (0.07 x 15 = 1.05).

Sales taxes are levied at the 澳洲幸运5官方开奖结果体彩网:point of sale, after which they are passed on to the government by the collecting retailer. In most cases, sales taxes are only paid by the consumer. That's because the various manufacturers who create the products possess a resale certificate from the government. This ensures that they aren't considered 澳洲幸运5官方开奖结果体彩网:end-users.

Sales Taxes and You

When creating a monthly budget, take into account the full price of goods and services, including the sales tax. Even if you shop online, you may not be exempt from owing sales tax. This depends on local laws that determine whether retailers are obliged to collect state taxes, typically based on whether they have a nexus (i.e., a physical presence) in a given jurisdiction. Since 2018, most states have enacted laws requiring online retailers making sales to their residents to collect sales tax regardless of their address.

Also, should you purchase something while traveling, the ultimate price you pay may differ from what you expect. That's because most states have use taxes. These apply when residents make a significantly large purchase in a different jurisdiction where sales taxes were not paid. Based on the assumption that purchase in question would then be used back home, states charge use taxes on the purchase, the rate of which is typically set at the same rate as local sales taxes.

The Bottom Line

Most U.S. states have sales taxes, which are levied against purchases of goods and services within their jurisdiction. These taxes are added to the sticker price that consumers pay. They apply not only to brick-and-mortar retail, but to online purchases, as well. Due to recent legislation, most states now have in place laws obliging e-commerce businesses to collect local taxes regardless of the retailer's own location. In addition, consumer should be aware that they may owe use taxes if they make large out-of-state purchases for use back home, if they were not originally charged a sales tax. These are key considerations to make when budgeting for sales tax obligations.