Question 1

Which US states have no sales tax?

Accepted Answer

Five states have no state sales tax: Oregon, Montana, New Hampshire, Delaware, and Alaska (though Alaska allows local jurisdictions to impose their own). This is a significant advantage — on a $50,000 car purchase, the difference between 0% (Oregon) and 9.5% (California) is $4,750 in tax. Some residents near state borders strategically shop in tax-free states for major purchases, though most states have use tax laws requiring residents to remit tax on out-of-state purchases.

Question 2

What is the highest sales tax rate in the US?

Accepted Answer

Tennessee has the highest combined state + average local sales tax rate at approximately 9.55%. Louisiana (9.56% combined) and Arkansas (9.46%) are also among the highest. However, total rates vary significantly within states due to local additions. Some counties and cities layer additional sales tax on top of state rates — parts of Chicago reach 10.25%+. Always check the specific county rate for major purchases, not just the state rate.

Question 3

Is sales tax calculated on the pre-discount or post-discount price?

Accepted Answer

It depends on the type of discount. Manufacturer's coupons: in most states, sales tax is charged on the pre-coupon price (full price). Store coupons and promotional discounts: sales tax is charged on the discounted price. Buy-one-get-one deals: varies by state but most charge tax on the full price of the purchased item. Sales tax on trade-ins for vehicles: most states only tax the net amount (vehicle price minus trade-in value), though some states (like California) tax the full vehicle price regardless of trade-in.

Question 4

Do I pay sales tax on purchases made online?

Accepted Answer

Since the 2018 South Dakota v. Wayfair Supreme Court decision, online retailers must collect sales tax for orders shipped to states where they have 'economic nexus' (generally $100,000+ in sales or 200+ transactions per year). In practice, Amazon and most large retailers collect the sales tax of your destination state for all purchases. Small Etsy sellers and individual marketplace transactions may not collect tax, but you technically owe 'use tax' to your state — though enforcement is minimal for small amounts.

Question 5

Are groceries and prescription drugs taxed?

Accepted Answer

Most states exempt prescription drugs entirely from sales tax. Grocery exemptions vary significantly: 13 states fully exempt groceries from state sales tax (including California, New York, and Texas). Some states tax groceries at a reduced rate (Mississippi taxes groceries at 7%). Several states that tax groceries offset this with grocery tax credits for low-income households. Prepared food (restaurant meals, deli items) is typically taxed even in states that exempt unprepared groceries.

State	State Rate	Avg Combined
Tennessee	7.0%	9.55%
Louisiana	4.45%	9.56%
Texas	6.25%	8.19%
California	7.25%	8.82%
New York	4.0%	8.52%
Florida	6.0%	7.08%
Oregon	0%	0%
Montana	0%	0%

Sales Tax Calculator

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