The US has no federal sales tax. Every state, county, and city sets its own rate, and they stack. A "9.5% sales tax" in practice is usually 6% state + 3.5% local. That's why the tax on the same item can vary by several percentage points between neighboring zip codes.
The layers
- State tax — 0% to 7.25%, set by state legislature.
- County tax — 0% to 3%, added on top of state.
- City / municipal tax — 0% to 3%, added on top of state + county.
- District / special taxes — transit, tourism, stadium levies in some areas.
Total combined rate ranges from 0% (Oregon, NH) to 10%+ in parts of Tennessee, Louisiana, and Arkansas.
No-sales-tax states
Oregon, Montana, New Hampshire, Delaware — true zero. No state, no local sales tax. These states fund themselves through income tax, property tax, or other sources.
Alaska — no state tax, but many cities and boroughs charge local sales tax (1–7%). Anchorage has no sales tax; Juneau does.
Category exemptions
Most states exempt or tax at lower rates:
- Groceries — exempt or reduced in most states (with varying definitions).
- Prescription drugs — exempt nearly everywhere.
- Clothing — exempt in Pennsylvania, New Jersey, Minnesota, Vermont, Massachusetts (under $175).
- Services — often not taxed, or taxed at different rates.
Online tax post-Wayfair
Before 2018, online retailers had to charge sales tax only in states where they had physical presence. The Supreme Court's Wayfair decision changed that — economic nexus (volume of sales in a state) now triggers collection. Most large online retailers collect based on shipping address.
Price + rate → tax + total. Works forward (add tax) or reverse (find pre-tax from total).