Sales Tax Calculator

This tool can solve for any one of the three main variables in a sales tax calculation. Simply select the tab for the value you want to find and enter the other two known values.

• Final Price: Use this tab to find the total cost of an item including tax. You'll need the before-tax price and the local sales tax rate.
• Tax Rate: Use this tab if you know the original price and the final price and want to find the sales tax rate that was applied.
• Original Price: Use this tab to reverse-calculate the pre-tax price from a final total. This is useful if you have a receipt showing the total amount paid and know the tax rate.

Sales tax is a **consumption tax paid to a government on the sale of certain goods and services**. Typically, the vendor collects this tax from the consumer at the point of purchase. In the U.S., most prices are listed before tax, which is applied at checkout.

A Decentralized System

The U.S. has a unique, decentralized system where sales tax **does not exist at the federal level**. Instead, it is imposed by states, counties, and cities, leading to a wide variety of rates and rules. As of 2024, only five states do not have a statewide sales tax: **Alaska, Delaware, Montana, New Hampshire, and Oregon** (though some, like Alaska, allow localities to charge local sales taxes).

This decentralization means that rates and enforcement differ significantly. This is especially relevant for large purchases like vehicles, where sales tax can be a significant part of the total cost. You can model this using our Auto Loan Calculator.

In over 160 countries outside the U.S., a **Value-Added Tax (VAT)** is used instead of a retail sales tax. As an **indirect tax**, VAT is imposed at different stages of production whenever value is added. Unlike the U.S. system where only the final consumer pays, all participants in the supply chain (wholesalers, manufacturers, etc.) typically pay VAT. This method makes tax evasion difficult and can raise more revenue, but it is often considered regressive, as it takes a larger percentage from lower-income individuals.

A similar system, the **Goods and Services Tax (GST)**, is used in countries like Canada, India, and Singapore. Like VAT, GST is an indirect tax applied at multiple instances in a supply chain. However, the specific rules for both VAT and GST vary so widely that the terms do not have a single universal definition.

The concept of sales tax was a point of contention in early American history, famously contributing to the Boston Tea Party and the American Revolution. As a result, the U.S. has never had a federal sales tax.

State-level sales taxes became widespread during the **Great Depression in the 1930s** as governments sought effective ways to raise revenue, with Mississippi being the first to adopt it in 1930. Today, sales tax provides nearly **one-third of all state government revenue**, making it a critical financial pillar, second only to income tax. Its importance varies geographically, with states in the south and west relying on it more heavily than those in the northeast.

In the U.S., taxpayers can deduct state and local sales taxes on their federal income tax returns, but with important caveats. You must choose to **itemize your deductions** rather than taking the standard deduction, which most taxpayers use.

Furthermore, you must choose between deducting state and local **income taxes** or **sales taxes**—you cannot do both. Most people find that deducting income tax is more beneficial. However, in a year with very large purchases (like a car or boat), deducting sales tax might be the better option if the sales tax paid exceeds your state income tax liability. This requires meticulous record-keeping, and as a result, **less than 2% of Americans claim the sales tax deduction each year**.