Sales Tax Calculator
Add tax to a subtotal or remove tax from a tax-inclusive price. Get net price, tax amount, and total in one click.
Use “Add tax” for invoices/quotes. Use “Remove tax” when you have a tax-inclusive receipt and need the net and tax amounts.
Complete Guide to Sales Tax Calculations
Understanding sales tax is essential for businesses, freelancers, and consumers alike. Learn how sales tax works in the US and how to calculate it accurately for any transaction. Also see our Tip Calculator for restaurant transactions.
How Sales Tax Works
Sales tax is a consumption tax imposed by state and local governments on the sale of goods and certain services. Unlike VAT (Value Added Tax) used in many countries, US sales tax is collected only at the final point of sale. The seller collects tax from the buyer and remits it to the government.
Sales Tax Formulas
Adding Tax
Total = Subtotal × (1 + Tax Rate)Example: $100 + 8% = $100 × 1.08 = $108
Removing Tax
Subtotal = Total ÷ (1 + Tax Rate)Example: $108 at 8% = $108 ÷ 1.08 = $100
State Sales Tax Rates (2024)
| State | State Rate | Max Local | Avg Combined |
|---|---|---|---|
| California | 7.25% | 2.50% | 8.68% |
| Texas | 6.25% | 2.00% | 8.20% |
| New York | 4.00% | 4.88% | 8.52% |
| Florida | 6.00% | 2.00% | 7.02% |
| OR, MT, NH, DE | 0.00% | 0.00% | No Sales Tax |
Tax-Exempt Items
Many states exempt certain categories from sales tax. Common exemptions include:
- Groceries: Most states exempt unprepared food (but not restaurant meals)
- Clothing: Some states (PA, NJ, NY under $110) exempt clothing
- Prescription drugs: Almost all states exempt prescription medications
- Medical equipment: Wheelchairs, prosthetics often exempt
- Resale items: Products purchased for resale are exempt with a resale certificate
Frequently Asked Questions
What is nexus and why does it matter?
Nexus is a legal connection between a business and a state that requires tax collection. It can be established by having physical presence, employees, inventory, or (after South Dakota v. Wayfair) significant economic activity in the state.
How do I calculate tax backwards from a receipt?
Use our "Remove Tax" mode. Enter the total amount and tax rate. The formula is: Subtotal = Total ÷ (1 + Tax Rate). For a $54 purchase at 8% tax: $54 ÷ 1.08 = $50 subtotal, $4 tax.
Is sales tax the same as VAT?
No. Sales tax is collected only at the final retail sale. VAT (used in Europe) is collected at every stage of production. However, VAT is refunded along the supply chain, so only the end consumer ultimately pays.
Do online purchases have sales tax?
Yes, since the 2018 Wayfair decision, online sellers with economic nexus must collect sales tax. Large marketplaces (Amazon, eBay) often collect tax automatically. Smaller sellers must register in states where they have nexus.
How often do businesses remit sales tax?
Filing frequency depends on sales volume. Monthly for high-volume businesses, quarterly for medium, and annually for small businesses. Some states require prepayment for very large sellers.