Sales tax calculator

How sales tax works

In the United States, sales tax is set by states, counties and cities, not the federal government. A seller adds it to the price at the time of sale, collects it from the customer, and pays it to the state. It is the customer's tax; the business only holds it for the state, so it is not your income.

The formulas

• Add tax: total = price × (1 + rate)
• Take tax out of a total: price = total ÷ (1 + rate), and tax = total − price

Taking tax out is not the same as subtracting the rate from the total. On a $108.25 total at 8.25%, the tax is $8.25, not $8.93.

Which rate to use

The rate is usually the sum of the state rate and any county, city or special district rates for the place where the sale happens. For goods shipped to a customer, many states use the customer's address. Check your state's tax agency for the right rate and for which things are taxable.

Do you need to collect it?

It depends on what you sell and where. Many services are not taxed, and many states tax physical goods. If you sell into other states, you may need to collect there once your sales pass that state's threshold. Your state tax agency, or a tax professional, can tell you what applies to you.

Keep it apart in your books

Sales tax you collect belongs to the state until you pay it. Keep it out of your income so your profit is right, and set the money aside for each filing.

Frequently asked questions