What Is Sales Tax?
Sales tax is a tax added to the price of goods and some services at the point of sale and collected by the seller for the government. In the United States, sales tax is set by states and local governments, so the combined rate depends on where the purchase is made; some states have no statewide sales tax.
How to Calculate Sales Tax
Sales tax = price × tax rate. Total price = price × (1 + tax rate). An item priced 80 with a 7% sales tax costs 80 × 1.07 = 85.60.
Sales Tax vs. VAT
Sales tax is charged once, at the final sale to the consumer. Value-added tax (VAT) is charged at each stage of production and distribution, with businesses reclaiming the tax they paid on inputs.
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🔗 Related Terms
More Taxes Terms
- Additional Medicare Tax
- Adjusted Gross Income (AGI)
- Alternative Minimum Tax (AMT)
- Capital Gains Tax
- Capital Loss
- Child Tax Credit
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Last updated: September 27, 2026. This definition is for general educational purposes only. It is not financial, investment, tax, legal, or medical advice, and it does not recommend any product or course of action. For decisions about your own situation, consult a qualified professional.