Sales tax is the tax that businesses collect on the behalf of municipalities and governments for the sale of goods and services; it’s a type of indirect tax that applies to most retail sales in the US. Countries other than the US use value-added tax (VAT) and goods and services tax (GST). These indirect taxes are different from direct taxes, such as income tax, which individuals and businesses pay directly to the government.

Most states and the District of Columbia impose a state-level sales tax (exceptions are Alaska, Delaware, Montana, New Hampshire, and Oregon). Local jurisdictions – including counties, cities, and districts – also impose tax in many of these states. Different rates and product taxation rules exist across states and even within states, which can make calculating sales tax a challenging task.

To stay compliant with tax laws, the indirect tax that is collected is then paid to the respective tax authority. You can learn more about sales tax, indirect tax, and indirect tax compliance on our website.

Calculating sales tax in the US begins with identifying the correct tax rate, which is generally based on the buyer’s location. First, convert the rate to decimal form by dividing it by 100. Then, multiply the item’s price by this decimal to calculate the sales tax amount. Finally, add the sales tax amount to the original price to determine the total amount due.

Accurately determining the applicable tax rate can be complex. Sales tax is imposed not only at the state level, but also by over 13,000 local jurisdictions across the US – including counties, cities, and special taxing districts – each potentially applying its own rate. As a result, relying solely on a state or ZIP code often yields inaccurate results, because ZIP codes can span multiple tax jurisdictions. For the most precise calculation, a complete street address is usually required to determine the correct jurisdiction and apply the appropriate rate.

If you’re interested in calculating tax rates outside the US, try our VAT calculator (for countries such as the United Kingdom and Ireland) and GST calculator (for countries such as Australia and Canada), and learn more about global tax compliance for businesses.

Based on the address details provided, the sales tax calculator uses the Stripe Tax API to return the state and local sales tax rate. If a price is also entered, the calculator multiplies the price and the tax rate (in decimal form), which are then added to provide the total price. For example, if you are purchasing a $10 item and the sales tax rate is 5%, the sales tax owed would be 50¢, making your purchase price $10.50 (if there are no other fees or taxes involved).

If you want to calculate and collect taxes in bulk as well as automate your tax registrations and filings, our tax compliance software makes it easy. Stripe Tax automates global tax compliance from start to finish, so you can focus on scaling your business.

Enter the full address details into the calculator, click “Calculate”, and you’ll get the right sales tax rate by address. You can also view a breakdown of state, county, city, and district taxes (if applicable).

Yes, sales tax can be different depending on the product you are selling or purchasing. For example, some jurisdictions might tax physical goods but exempt digital products such as SaaS.

This calculator uses a standard tax rate for the address or region entered. If you need to calculate sales tax for a specific type of product, you can do so through Stripe Tax. Refer to the list of product tax codes for more information about the different product types that Tax supports.

Before you begin calculating sales tax rates, the first step is to register for a sales tax permit in the state (or states) in which you have sales tax nexus. Sales tax nexus commonly occurs in two ways: physical or economic. Physical nexus means having enough physical presence or activity in a state to merit paying sales tax there. Economic nexus means passing a state’s economic threshold for total revenue or the number of transactions in that state. These thresholds vary by state; learn more about what creates economic nexus.

You’ll need to assess where you have met sales tax nexus requirements and register for a permit in those states. To register for a sales tax permit, you’ll need general business information, and note that certain states charge a small fee for registering. Registration is done online, and you can review this comprehensive list to find the relevant registration link.

Or, let Stripe manage your tax registrations in the US and 90+ other countries, and benefit from a simplified process that prefills application details from your Stripe account and automates tax collection.