Sales Tax by State

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Sales Tax by State

When you purchase anything in the United States, chances are it will cost more than the quoted price. This is most likely due to the sales tax applied to the cost of your transaction. One of the ways governments collect tax income from their people is via sales tax.

The rate of sales tax varies depending on the state and local government where the transaction is made. By 2021, 45 states, the District of Columbia, and Puerto Rico will have imposed a sales tax on various products and services. Alaska, Delaware, Guam, Montana, New Hampshire, and Oregon, according to our study, do not have a statewide or territorial sales tax (although they may selectively tax certain purchases like alcohol or hotel rooms).Even when imposed by a local government, such as a city, a sales tax is normally handled by the state.

While most jurisdictions have a “general” sales tax that applies to all transactions, some commodities, such as cigarettes, alcohol, and motor fuels, have a distinct “selective” tax rate that differs by state.

Key Takeaways

  • When you buy anything in most regions in the United States, a sales tax is added to the sticker price, which the purchaser must pay.
  • States and local governments employ sales taxes to collect income, albeit the amount varies by jurisdiction.
  • Sales taxes are levied on most products and services in 45 states, Washington, D.C., and Puerto Rico, frequently at a predetermined percentage of the purchase price.

What Are Sales Taxes?

A sales tax is an obligatory government levy levied on the sale of goods and services, computed as a percentage of the purchase price.

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For example, if you purchase a $15 T-shirt in Pitt County, N.C., you could anticipate to pay an extra $0.71 since the state’s sales tax rate is 4.75% (0.0475 x 15 = 0.71). A state’s sales tax rate, on the other hand, only accounts for a percentage of the total amount levied against a transaction, which may also include a county rate, a municipal rate, or an excise rate. Some establishments even charge a “sin” tax on things like cigarettes or gambling. Pitt County, in instance, charges a 2.25% sales tax on top of a 2.25% use tax. That implies the T-shirt will cost you $1.05 more than the stated price (0.07 x 15 = 1.05).

Sales taxes are collected at the moment of sale and passed on to the government by the collecting shop. In most circumstances, the customer is the only payer of sales taxes. This is because the numerous producers that generate the items have a government resale certificate. As a result, they are not considered end users.

Sales Taxes and You

When developing a monthly budget, consider the whole cost of products and/or services, including sales tax. Furthermore, if you purchase anything online, you are not exempt from paying sales tax. However, depending on your local legislation and whether or not the company has a nexus (i.e., a physical presence) in a nearby place, you may be able to avoid this. Since 2018, most states have implemented legislation forcing internet businesses selling to citizens to collect sales tax, regardless of their location.

Also, if you buy anything while traveling, the final amount you pay will most likely vary from what you would anticipate to spend at home. However, if you make a major big purchase in another jurisdiction (assuming that the item in issue will be used when you return home), you may be required to pay your state’s use tax, which is normally set at the same rate as local sales taxes.

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Although many customers disregard it, persons who buy products outside their states of residence but use them in their states of residence are normally liable to their jurisdictions’ use taxes and are legally compelled to pay such taxes directly.

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