In the United States, every citizen must pay a state sales tax on the sale or lease of goods and services. A national sales tax does not exist; however, the federal government does levy a sales tax on certain goods and services. Forty-five states impose sales tax on most goods and services, and may delegate local governments to enforce laws governing the payment of these taxes. Tax rates vary from jurisdiction to jurisdiction and range between one and ten percent. In addition, used items generally require the payment of a sales tax every time it is sold. Many goods and services fall into numerous categories that qualify them as exempt from sales tax or at reduced rates. This may include groceries, prescription drugs, and agricultural-related supplies. These rules vary from jurisdiction to jurisdiction. States imposing sales tax collect it from the retailer; however, the vendor usually passes sales tax to the customer. Sellers typically collect from in-state purchasers; however, electronic transactions face the possibility of a sales tax imposition from out-of-state buyers in the near future.
Sales Tax State Laws
State sales taxes are only imposed on taxable goods and services. The tax rates and exemptions vary by state and jurisdiction. The sales tax may be imposed on consumers and vendors. All states categorize and separate taxable items from exempt goods and services. Therefore, definitions become critical when dealing with tangible transactions. Most intangible property is not subject to sales tax. Most states exempt bulk sales, such as manufacturing parts. Many states exempt groceries, or food taken off the premises. Others impose state taxes on food eaten on the premises, such as restaurants and fast food eateries. Most states impose state sales tax on leased items, including real estate, commercial, and residential property. In addition, charitable donations are exempt from sales tax. Some states impose a similar tax, often called a use tax, on certain items not subject to sales tax. State laws and rules vary from state to state. Sellers and buyers can contact their local governing bodies on specific laws regarding sales tax by state.
How to Calculate Sales Tax
Sellers and buyers can calculate sales tax on taxable items in just a few easy steps. The first step requires the seller or buyer to find out the sales tax rate in the jurisdiction and state that the transaction takes place. Sellers can use a variety of resources that list sales tax by state. The sales tax rate is generally computed as a percentage; therefore, it is handy to have a calculator on hand. Next, multiply the purchase price of the item or items by the sales tax rate. For instance, if an item costs $29.99 and the sales tax rate is 6.25%, then multiply 29.99 by 6.25 to find out the answer. Add up the prices for multiple items and then multiply the subtotal and the sales tax rate.
Many resources exist to help businesses and consumers to help find out and calculate sales tax. Many websites, magazines, and local government agencies can provide answers to questions on sales tax by state, including tax rates, taxable items, exemptions, and more. Consumers may find out information on how to obtain a certificate for sales tax exemption if they meet the qualifications for it. E-commerce retailers can learn more about recent legislative efforts to regulate Internet-related transactions by contacting their local governing bodies.
Follow these links to learn more about state sales tax: