Sales Tax Calculator

Sales tax in the United States is a complex patchwork of state, county, city, and special district rates that combine to create the total rate charged at the register. Unlike a national VAT (value-added tax) used in most other countries, the U.S. has no federal sales tax. Instead, 45 states and the District of Columbia impose their own sales taxes, and most allow local jurisdictions to add additional levies. This means the total sales tax rate can vary dramatically not just between states, but between neighboring cities within the same state. For example, the combined rate in one part of a metropolitan area might be 7.5% while a location just a few miles away charges 10.25%.

Origin-Based vs. Destination-Based Sales Tax

States use one of two methods to determine which local tax rate applies to a transaction. In origin-based states (like Texas, Ohio, and Pennsylvania), the sales tax rate is determined by the seller's location. A business in Dallas charges the Dallas rate regardless of where the buyer is located within the state. In destination-based states (like California, New York, and Washington), the rate is based on the buyer's location — specifically, the shipping or delivery address. Most states use destination-based sourcing, which makes compliance more complex for sellers who ship to multiple locations. For in-store purchases, both systems yield the same result since the buyer and seller are in the same place.

Economic Nexus and Online Sales

The 2018 Supreme Court ruling in South Dakota v. Wayfair fundamentally changed how sales tax applies to online commerce. Before the ruling, states could only require businesses with a physical presence (store, warehouse, or employees) to collect sales tax. Now, states can establish economic nexus thresholds — typically $100,000 in sales or 200 transactions within the state — that require remote sellers to collect and remit sales tax even without any physical presence. This means small businesses selling online may need to register, collect, and file sales tax returns in dozens of states. Marketplace facilitator laws have simplified this for sellers on platforms like Amazon and Etsy, where the marketplace handles tax collection, but direct-to-consumer sellers must navigate this compliance landscape on their own or use sales tax automation software.