How To Calculate Sales Tax

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Sales tax can sneak up on you — especially with larger purchases. Knowing how to figure it out ahead of time can save you from sticker shock at the register. Just take the item’s price and multiply it by the sales tax rate in your area. That’s your extra cost.

How To Calculate Sales Tax: Formula and Example

If you know the price of an item and your local sales tax rate, calculating the total cost is simple.

• Sales tax formula:
  • Sales tax = Item price x Sales tax rate (as a decimal)

Calculating Sales Tax Example

Say you’re buying a refrigerator that costs $1,200 and your local sales tax rate is 6%.

• $1,200 x 0.06 = $72 in sales tax
• $1,200 + $72 = $1,272 total cost

How To Calculate Sales Tax in Reverse

If you don’t know the sales tax rate or it’s not printed on your receipt, you can work backwards to figure it out.

Here’s an example:

• Michael bought a toy for $5 but paid $5.30 total.
  • Step 1. Subtract item cost from total paid: $5.30 – $5.00 = $0.30
  • Step 2. Divide tax by item price: $0.30 ÷ $5.00 = 0.06, or 6% tax rate

What Is Sales Tax?

Sales tax is a government-imposed tax on most goods and services. You pay it at the time of purchase, and the retailer forwards it to state or local tax authorities.

Most states charge both a state and local sales tax, which are combined into the total rate you pay.

Here’s an example:

• The total sales tax rate in Franklin County, Ohio is 7.5%.
• Ohio’s state sales tax rate is 5.75%.
• The local sales tax rate for Franklin County is 1.75%.

Sales tax helps fund public services like education and infrastructure. Some essentials, like groceries or clothing under a certain amount, may be tax-exempt depending on the state.

Which States Don’t Charge Sales Tax?

Delaware, New Hampshire, Montana and Oregon do not charge sales tax. Alaska does not charge a state sales tax but does allow local communities to leverage a local sales tax.

Some states may offer sales tax holidays throughout the year to minimize the burden on necessary purchases like school or disaster preparation supplies.

Pro Tip

Planning a big purchase? Time it with your state’s sales tax holidays. You’ll skip the tax and may score extra savings from retailers offering holiday discounts to attract more shoppers.

State Sales Tax Rates

Each state sets its own sales tax, and local municipalities may set their own rate, too. The chart below shows the state sales tax, the range of local tax rates and the total of state and local taxes.

Final Take

Before you make a purchase, it’s worth knowing how much extra sales tax you’ll owe — especially if it’s a large purchase like a car or home appliance. Here are some key points to remember:

• Multiply the item price by your local tax rate to estimate your total.
• To calculate sales tax backwards, divide the total by (1 + tax rate).
• Check your local and state rates to budget for large purchases.
• Keep your receipts to track sales tax, especially if you itemize deductions.

Elizabeth Constantineau contributed to the reporting for this article.

Data is accurate as of April 23, 2025, and is subject to change.

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