Sales Tax by State: Rates, Exemptions & Local Taxes

Sales tax in the United States is not a single uniform system. It is 45 state systems (plus Washington DC), each with its own base rate, exemption rules, and relationship with thousands of local taxing jurisdictions. Understanding how your state works — and how local rates stack onto the state rate — can save real money and prevent compliance mistakes for businesses.

This guide covers what sales tax is, which states have none, how combined rates work, what items are typically exempt, and what use tax means for online shoppers. Use the state calculators linked throughout to estimate the exact tax on any purchase in specific states.

Sales tax is a consumption tax levied on the retail sale of goods and certain services. The seller collects tax from the buyer at the point of sale and remits it to the appropriate tax authority — state, county, city, or district.

The rate you pay at checkout is typically the combined rate: state rate plus applicable local rates. On a $100 purchase in a city with a 6% state rate and 2% local rate, you pay $8 in sales tax for a $108 total.

Key structural features of US sales tax:

• No federal sales tax — unlike VAT in most other countries, the US has no national sales tax. All sales taxes are imposed at the state and local level.
• Point-of-sale collection — tax is collected by the seller and remitted to the government, not paid directly by the buyer to authorities.
• Destination vs. origin sourcing — most states are destination-based (tax is charged at the buyer's location). A few are origin-based (tax is charged at the seller's location).
• Taxability rules — each state defines what is and is not subject to sales tax, often with complex exemptions for food, medicine, clothing, and services.

Five US states impose no statewide sales tax:

• Delaware — no state or local sales tax. Delaware funds its government primarily through income tax and business fees.
• Montana — no sales tax anywhere in the state. Montana relies on property and income taxes.
• New Hampshire — no general sales tax, though a meals and rooms tax (currently 8.5%) applies to prepared food, accommodation, and car rentals.
• Oregon — no sales tax at state or local level. Oregon has no local sales tax jurisdictions either.
• Alaska — no statewide sales tax, but local governments may impose their own. Rates range from 0% in most of the state to up to 7.5% in some communities.

Living or shopping in these states provides a direct cost advantage on large purchases. Buying a $50,000 car in Oregon vs. California (with a combined rate near 10%) saves approximately $5,000 in sales tax — though your home state may still require use tax payment when you register the vehicle.

Highest combined average rates (state + local):

• Louisiana — approximately 9.5–10%
• Tennessee — approximately 9.5%
• Arkansas — approximately 9.4%
• Washington — approximately 9.3%
• Alabama — approximately 9.2%

Highest state-only rates:

• California — 7.25%
• Indiana, Mississippi, Rhode Island, Tennessee — 7%
• Minnesota, Nevada — 6.875% / 6.85%

Lowest non-zero state rates:

• Colorado — 2.9% (but local rates are substantial, pushing combined rates higher)
• Alabama, Georgia, Hawaii, Louisiana, New York, Wyoming — 4%

Note: state rate rankings can be misleading. Colorado has one of the lowest state rates but local rates in cities like Denver and Aurora push combined rates above 8%. Always look at the combined rate for the specific location where a purchase occurs.

Most states permit counties, cities, municipalities, and special taxing districts to impose their own sales taxes on top of the state rate. This creates enormous variation within a single state.

For example, in California the statewide base rate is 7.25%, but:

• Most California cities add 0.5–2.5% in district taxes
• Los Angeles County adds layers totaling over 10% in some areas
• Some smaller cities and unincorporated areas stay at the base 7.25%

In Texas, the state rate is 6.25% and local governments can add up to 2% — making the maximum combined rate 8.25%. Most Texas cities, including Houston and Dallas, are at or near this maximum.

Special purpose districts for transit, stadiums, and tourism can add additional fractional rates. In some jurisdictions, a sales tax receipt might itemize several layers: city, county, transit district, and state — each charged separately but collected together at the register.

Taxability varies significantly by state. Common exemption categories:

Groceries (food for home preparation) — most states exempt unprepared food. States that do tax groceries include Alabama, Idaho (reduced rate), Kansas (being phased out), Mississippi, Oklahoma (reduced rate), South Dakota, Tennessee (reduced rate), and Utah (reduced rate).

Prescription medications — exempt in all 45 sales-tax states. This is one of the most universal exemptions in US sales tax law.

Clothing — taxable in most states. Notable exceptions include New York (exempt below $110 per item), Minnesota, Pennsylvania, and New Jersey. Some states hold annual "sales tax holidays" where clothing is exempt for a limited period.

Services — traditionally exempt in most states, but the trend is toward taxing more services. Some states now tax telecommunications, streaming subscriptions, SaaS software, and personal services. The rules are state-specific and rapidly evolving.

Digital goods — streaming services, digital downloads, and software are taxable in roughly half of states. Many states have updated their rules as digital commerce grew. Taxability of software-as-a-service (SaaS) is particularly variable.

Agricultural and manufacturing inputs — most states exempt machinery, equipment, or materials used directly in production to avoid tax cascading through the supply chain.

Use tax is the companion to sales tax. It applies when you purchase goods from an out-of-state seller who does not collect your state's sales tax, and then bring those goods into your state for use. The rate is the same as the sales tax rate that would have applied.

Historically, use tax applied to mail-order and out-of-state purchases. Before the 2018 Supreme Court ruling in South Dakota v. Wayfair, states could only require sales tax collection from sellers with a physical presence (nexus) in the state. That meant large online retailers with no in-state warehouses could legally sell without charging tax.

After Wayfair, states can impose sales tax collection obligations based on economic nexus — typically reaching $100,000 in sales or 200 transactions in the state per year. Every state with a sales tax has adopted economic nexus rules. As a result, most major online retailers now collect and remit sales tax for all states where they have nexus.

Remaining gaps:

• Small sellers below state nexus thresholds may still not collect tax.
• Private marketplace sales and peer-to-peer transactions often go uncollected.
• Some marketplace facilitators collect on behalf of third-party sellers; others do not.

Most states include a use tax line on their individual income tax returns. Voluntary compliance is low, but audits of high-income individuals and businesses do occur. For businesses making significant out-of-state purchases, use tax tracking and remittance is an important compliance obligation.

Each US state has its own calculator for estimating purchase costs with current rates. Enter a purchase amount to see state tax, local tax, combined rate, and total cost. Popular state calculators:

• California Sales Tax Calculator
• Texas Sales Tax Calculator
• New York Sales Tax Calculator
• Florida Sales Tax Calculator
• Washington Sales Tax Calculator

Browse the full Sales Tax Calculators hub for all 50 states plus DC, each with state-specific rates and local rate options.