How sales tax is calculated
Tax = price × rate ÷ 100 · Total = price + tax
Sales tax in the US is set by states, and many counties and cities add their own rate on top. The rate you pay is the combined rate for the place where the sale happens.
Worked examples
- Adding tax: a $250 purchase at 8.25% has $20.63 tax, for a total of $270.63.
- Removing tax: a receipt total of $108 at 8% means the price before tax was 108 ÷ 1.08 = $100, and the tax was $8.
Why removing tax is not "minus 8%"
Taking 8% off $108 gives $99.36, not $100. That is because the tax was 8% of the pre-tax price, not of the total. Always divide by (1 + rate) to remove tax.
Good to know
- Five states (Alaska, Delaware, Montana, New Hampshire and Oregon) have no statewide sales tax, though some Alaskan towns charge local tax.
- Many states tax groceries at a lower rate or not at all.
- For business expenses, keep receipts showing the tax paid, since you may need them for bookkeeping.
Last reviewed October 2026.
Frequently asked questions
What sales tax rate should I use?
Use the combined rate where the purchase happens: the state rate plus any county, city and special district rates. Your receipt or your state's department of revenue website lists the exact rate for an address. Rates change, so check the current figure.
How do I calculate sales tax?
Multiply the price by the tax rate divided by 100. A $250 purchase with 8.25% tax has $250 × 0.0825 = $20.63 in tax, for a total of $270.63.
How do I find the price before tax?
Divide the total by (1 + tax rate ÷ 100). If you paid $108 including 8% tax, the price before tax was 108 ÷ 1.08 = $100. Use the "Remove tax" mode.
Which states have no sales tax?
Alaska, Delaware, Montana, New Hampshire and Oregon have no statewide sales tax, although some local areas in Alaska charge their own. Always check the rules where you are shopping.
Is sales tax charged on everything?
No. Many states exempt or reduce tax on items like groceries or prescription drugs, and rules for clothing, services and digital goods vary. Check your state's rules for specific items.