General information, not tax advice. Sales tax rules and rates are set by each state and often by cities and counties; check your state’s tax agency for the rate and rules that apply to you.
How to calculate sales tax
Sales tax = price × tax rate, and total = price + sales tax.
At an 8.25% rate, the tax on a $40 item is 40 × 0.0825 = $3.30, so the customer pays $43.30.
How to remove sales tax from a total
Price before tax = total ÷ (1 + tax rate)
If you priced something at $20 “tax included” and your rate is 7%, the price before tax is 20 ÷ 1.07 = $18.69, and the tax inside it is $1.31. This is useful for round-number pricing at markets, where you still owe the tax out of what you took.
Which rate to use
The rate is usually the combined rate where the sale happens: the state rate plus any county, city or special district tax. That can differ from your home address, which matters if you sell at markets or events in other towns. Five states have no statewide sales tax (Alaska, Delaware, Montana, New Hampshire and Oregon), though some Alaska localities charge their own.
Rounding
Tax is rounded to the nearest cent per sale. On a big order with many items, calculating tax on the total can differ by a cent or two from adding up each item’s tax; states have their own rounding rules.
Keeping track for filing
When you file, you’ll need how much you sold and how much tax you collected for the period. Our guide to sales tax for small businesses covers permits, collecting and filing.
Frequently asked questions
How do I calculate sales tax?
Multiply the price by the tax rate. At 8.25%, tax on $40 is 40 × 0.0825 = $3.30, for a total of $43.30.
How do I remove sales tax from a total?
Divide the total by 1 plus the rate. A $43.30 total at 8.25% is 43.30 ÷ 1.0825 = $40.00 before tax.
What rate should I use?
The combined rate where the sale happens: the state rate plus any county, city or district tax. Your state’s tax agency lists the rates.
Does this look up rates by ZIP code?
No. Enter the rate yourself. Rates change and can differ within a ZIP code, so check your state tax agency for the current one.