Question 1

What is sales tax?

Accepted Answer

Sales tax is a consumption tax added to the price of goods and services at the point of sale, collected by the seller and remitted to the government. Rates vary by state, county, and city.

Question 2

How do I add sales tax to a price?

Accepted Answer

Multiply the price by (1 + tax rate). For a $100 item at 8% sales tax: $100 × 1.08 = $108. The $8 difference is the tax amount.

Question 3

How do I find the pre-tax price from a total?

Accepted Answer

Divide the total by (1 + tax rate). For a $108 total at 8% tax: $108 ÷ 1.08 = $100 pre-tax price. Tax = $108 − $100 = $8.

Question 4

How is sales tax different from VAT?

Accepted Answer

Sales tax is only charged once, at the final sale to the consumer. VAT is collected at every stage of production, with businesses reclaiming what they paid — but the end consumer bears the same final cost either way.

Question 5

Do all states charge the same sales tax rate?

Accepted Answer

No — combined state and local sales tax rates in the US range from 0% (e.g. Oregon, Montana) to over 10% in some cities. Always check your local combined rate.