What Is A Sales Tax?
A sales tax is levied by a state or local government on the sale of everyday goods and services, like clothing or energy costs. When you purchase a good or service, the sales taxis an extra fee added atcheckout.
The goodsand services subject to sales tax vary by state. For instance, some statesdon’tapply sales tax to food purchases. Check with your state government to determine which sales tax rates apply to you.
Retail businessesmust track and collectsales tax fromshoppers, payingit out to their state government on a recurring basis.
Sales Tax Rate
The sales tax rate is the percentage of the purchase price that’s taxed. State governments set the state sales tax rates, decide whether local governments can collect additional taxes and determine what types of products and services are taxed. Most sales tax rates range between 5% – 7%, thoughthe rate can beas low as 2.9% or as high as 7.25%.
What Is A Local Sales Tax?
Most states allow local governmentsto set and levy a sales tax. That said, 12 states and the District of Columbia don’t allow local sales taxes, which are taxesthat only applyto certain jurisdictions within a state. For example, a county maychargea local sales tax. The dozen states that don’t permit local sales taxes are Connecticut, Delaware, Indiana, Kentucky, Maine, Maryland, Massachusetts, Michigan, Montana, New Hampshire, Oregon and Rhode Island.
