US Sales Tax Guide 2026
Sales tax is a consumption tax collected by retailers at the point of sale and remitted to state and local governments. Unlike a federal income tax, sales tax is administered at the state level — meaning rates, rules, and exemptions vary significantly by location.
How Sales Tax Works
When you make a purchase in most states, the retailer collects sales tax on top of the purchase price. The retailer holds these funds and periodically remits them to the state tax authority. Online purchases are also taxable in most states following the 2018 Supreme Court decision in South Dakota v. Wayfair, which allowed states to require out-of-state sellers to collect sales tax even without a physical presence.
2026 State Sales Tax Rates
| State | State Rate | Avg. Local Rate | Avg. Combined |
|---|---|---|---|
| California | 7.25% | 1.57% | 8.82% |
| Texas | 6.25% | 1.94% | 8.19% |
| New York | 4.00% | 4.52% | 8.52% |
| Florida | 6.00% | 1.04% | 7.04% |
| Tennessee | 7.00% | 2.55% | 9.55% |
| Louisiana | 4.45% | 5.10% | 9.55% |
| Oregon | 0.00% | 0.00% | 0.00% |
| Delaware | 0.00% | 0.00% | 0.00% |
| Montana | 0.00% | 0.00% | 0.00% |
| New Hampshire | 0.00% | 0.00% | 0.00% |
States With No Sales Tax
Five states have no statewide sales tax:
- Alaska — No state tax, but local jurisdictions may impose up to 7.5%
- Delaware — No sales tax; has a gross receipts tax on businesses instead
- Montana — No sales tax; some resort areas impose local taxes
- New Hampshire — No general sales tax; taxed on meals and room rentals (9%)
- Oregon — No sales tax at state or local level
Common Sales Tax Exemptions
Most states exempt certain categories from sales tax:
- Groceries: Most states exempt unprepared food. Exceptions include Alabama, Mississippi, and South Dakota which tax groceries at full rate.
- Prescription drugs: Exempt in almost all states.
- Medical equipment: Usually exempt or taxed at reduced rates.
- Clothing: Some states (Minnesota, New York, Pennsylvania) exempt most clothing purchases.
- Agricultural supplies: Typically exempt in farming states.
- Manufacturing equipment: Often exempt or reduced to encourage economic activity.
Sales Tax Holidays
Many states run annual sales tax holidays — brief periods (usually a weekend) when certain items are exempt from sales tax. Common categories include:
- Back-to-school clothing and supplies (August)
- Energy-efficient appliances
- Hurricane preparedness supplies
- Firearms and hunting supplies (in some states)
In 2025, over 20 states ran back-to-school tax holidays, with purchases up to specified dollar limits exempt from state and sometimes local sales tax.
Online Purchases and Sales Tax
Since the 2018 South Dakota v. Wayfair ruling, states can require online retailers to collect sales tax even without a physical store in the state. Most major online retailers (Amazon, Walmart, Target) now collect sales tax in all states that have it. Smaller online sellers may not collect if they fall below the state's economic nexus threshold (typically $100,000 in sales or 200 transactions annually).
Reverse Sales Tax Calculation
If you already paid a tax-inclusive price and want to find the pre-tax price:
Pre-tax price = Total price ÷ (1 + tax rate)
Example: You paid $107 total. Tax rate is 7%. Pre-tax price = $107 ÷ 1.07 = $100.00.