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Sales Tax in the United States — Complete State Guide

Sales tax in the US is collected at the state and local level — there is no federal sales tax. This means the rate you pay depends entirely on where you are making the purchase. Rates vary dramatically: from 0% in five states to over 10% when state and local rates are combined in high-tax jurisdictions.

The state sales tax rate is set by the state legislature and applies uniformly across the state. On top of the state rate, counties and municipalities often add their own rates. For example, California's statewide base rate is 7.25%, but in Los Angeles County the combined rate is 10.25%. Our calculator uses statewide base rates; check your local government website for combined rates.

States With No Sales Tax

Five states have no statewide sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon. Among these, Alaska is the outlier — while the state itself charges no sales tax, many Alaskan boroughs and municipalities impose local sales taxes of up to 7.5%, giving the state an average combined rate of around 1.76%. Delaware, Montana, New Hampshire, and Oregon have neither state nor significant local sales taxes.

Sales Tax by State — Reference Table

*Average combined rates are approximate (Tax Foundation 2024). Actual rates depend on exact purchase location.

How to Calculate Sales Tax

Sales tax calculation is straightforward. To find the tax amount, multiply the pre-tax price by the tax rate expressed as a decimal. To find the total price, multiply the pre-tax price by (1 + tax rate).

• Tax amount: $100 × 0.085 = $8.50
• Total price: $100 × 1.085 = $108.50

For reverse sales tax (working backwards from a total price to find the pre-tax amount), divide the total price by (1 + tax rate): $108.50 ÷ 1.085 = $100.00.

What Is (and Isn't) Subject to Sales Tax?

Sales tax applies to tangible personal property (physical goods) in most states, but there are significant exemptions that vary by state. Common exemptions include:

• Groceries: Most states exempt unprepared food. Some tax it at a reduced rate (e.g., Tennessee). Others fully tax it.
• Prescription drugs: Exempt in nearly all states.
• Clothing: Exempt in some states (New York, Pennsylvania) but taxable in others.
• Digital products: Rules vary widely — software, streaming services, and digital downloads may or may not be taxable depending on the state.
• Services: Most services are not subject to sales tax, though some states have expanded their tax base to include certain services.

How Federal Income Tax Works — 2024 Brackets Explained

One of the most common misconceptions about the US tax system is how tax brackets work. Many people believe that if they earn $50,000 and fall into the 22% bracket, they pay 22% on all $50,000. This is wrong. The US uses a progressive (marginal) tax system, which means each bracket's rate applies only to the income within that range — not your total income.

Think of tax brackets like buckets. Your income fills up each bucket in order. The first bucket (10%) fills up first, then you start filling the 12% bucket, then 22%, and so on. You only pay the higher rate on the portion of income that spills into that higher bucket.

2024 Federal Tax Brackets

The Standard Deduction for 2024

Before applying tax brackets, most taxpayers subtract the standard deduction from their gross income. This reduces your taxable income — the amount that brackets are actually applied to.

• Single / Married Filing Separately: $14,600
• Married Filing Jointly: $29,200
• Head of Household: $21,900

For example, a single filer with $80,000 in gross income subtracts $14,600, leaving $65,400 in taxable income. The income tax calculator above automatically applies the standard deduction before computing brackets.

About 90% of taxpayers take the standard deduction. The alternative is to itemize deductions — listing actual deductible expenses like mortgage interest, state and local taxes (up to $10,000), charitable contributions, and large medical expenses. Itemizing is only worth it if your itemized total exceeds the standard deduction.

W-4 and Withholding: Paying Taxes Throughout the Year

Most employees don't write a check to the IRS in April — instead, taxes are withheld from each paycheck throughout the year. Your employer uses your Form W-4 to determine how much to withhold. The W-4 was redesigned in 2020 to use dollar amounts instead of "allowances," making it more accurate.

Key points about withholding:

• If too much is withheld, you get a refund after filing — essentially an interest-free loan to the government.
• If too little is withheld, you owe at filing — and may owe a penalty if underpayment is significant.
• Update your W-4 when life changes: marriage, divorce, new job, having a child, or starting a side business.
• Self-employed individuals pay estimated quarterly taxes (due April 15, June 15, September 15, January 15) rather than having withholding.

Self-Employment Tax

When you work for an employer, they pay half of your Social Security and Medicare taxes (FICA — 7.65%) and you pay the other half from your paycheck. When you're self-employed, you pay both halves — the full 15.3% (12.4% Social Security on income up to the wage base of $168,600, plus 2.9% Medicare on all earnings).

The good news: you can deduct 50% of self-employment tax when calculating your adjusted gross income (AGI), which reduces your taxable income. High earners also pay an additional 0.9% Medicare surtax on wages above $200,000 ($250,000 for married filing jointly).

Self-employment tax is separate from and in addition to income tax — both apply to self-employment net earnings. This calculator estimates income tax only; consult a tax professional if you have self-employment income.

Common Tax Deductions

Beyond the standard deduction, many above-the-line deductions (adjustments to income) reduce your AGI before you even reach the standard deduction. These include:

• Traditional IRA contributions: Up to $7,000 ($8,000 if age 50+) for 2024, subject to income limits
• 401(k) contributions: Up to $23,000 ($30,500 if age 50+) — reduces W-2 taxable wages directly
• Health Savings Account (HSA): Up to $4,150 (self) or $8,300 (family) for 2024
• Student loan interest: Up to $2,500, phased out at higher incomes
• Alimony paid (for divorces finalized before 2019)
• Self-employed health insurance premiums

Tax Filing Deadline and Extensions

The federal income tax filing deadline is April 15 for most individuals. If April 15 falls on a weekend or holiday, the deadline shifts to the next business day. For 2025 (filing 2024 returns), the deadline is April 15, 2025.

You can request a 6-month extension by filing Form 4868 by the original deadline, giving you until October 15 to file. However, this is an extension to file — not an extension to pay. Any taxes owed must still be paid by April 15 to avoid late-payment penalties (0.5% per month) and interest.

Will You Get a Refund or Owe Money?

Whether you receive a refund or owe money at filing depends on whether your total tax payments (through withholding or estimated payments) were more or less than your actual tax liability.

• Refund: Overpaid during the year. The IRS average refund is around $3,000. While it feels like a bonus, it means you gave the government an interest-free loan.
• Owe: Underpaid during the year. You'll need to pay the balance by April 15. If you substantially underpaid, you may also owe an underpayment penalty.

To get closer to "break even" (neither large refund nor large balance due), update your W-4 using the IRS Tax Withholding Estimator at irs.gov/W4app.