🧾 How to Calculate Sales Tax in 2026
A Complete Step-by-Step Guide with Formulas, Examples & State Rates
📋 Table of Contents
🎯 Key Takeaway
To calculate sales tax, multiply the purchase price by the tax rate (as a decimal). For example, a $100 item with 7% sales tax costs $100 × 0.07 = $7 in tax, for a total of $107.
1. What is Sales Tax?
Sales tax is a consumption tax levied by state and local governments on the sale of goods and certain services. When you purchase an item, the seller collects the tax and remits it to the government. In the United States, sales tax rates vary by state, county, and city.
Understanding how to calculate sales tax is essential for:
- Consumers — Budgeting for purchases and comparing prices
- Business owners — Setting prices and remitting taxes
- Accountants — Ensuring tax compliance
- Online sellers — Calculating taxes across multiple jurisdictions
💡 Did You Know?
Five US states have no state sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon. However, Alaska allows local jurisdictions to levy their own sales taxes.
2. Sales Tax Formulas
2.1 Basic Sales Tax Formula
The most common calculation — finding the tax amount from a pre-tax price:
📐 Formula: Calculate Tax Amount
Where Tax Rate is expressed as a decimal (e.g., 7% = 0.07)
2.2 Total Price Formula
To find the total amount you'll pay including tax:
📐 Formula: Total Price with Tax
This combines the original price and tax in one step
2.3 Finding the Tax Rate
If you know the tax amount and original price:
📐 Formula: Calculate Tax Rate
Result is expressed as a percentage
2.4 Reverse Sales Tax (Find Original Price)
If you know the total (tax-inclusive) price and want to find the pre-tax amount:
📐 Formula: Reverse Sales Tax
Use this to "back out" the tax from a total amount
3. Free Sales Tax Calculator
Use our calculator to quickly compute sales tax, total price, or reverse-calculate the original amount:
4. Worked Examples
Example 1: Basic Sales Tax Calculation
📝 Problem
You're buying a laptop for $899.99 in California, where the state sales tax is 7.25%. What is the total cost?
7.25% ÷ 100 = 0.0725
Tax = $899.99 × 0.0725 = $65.25
Total = $899.99 + $65.25 = $965.24
Answer: You'll pay $965.24 total ($65.25 in sales tax).
Example 2: Reverse Sales Tax Calculation
📝 Problem
Your receipt shows a total of $53.50 including 6% sales tax. What was the original price before tax?
1 + 0.06 = 1.06
Original Price = $53.50 ÷ 1.06 = $50.47
Tax = $53.50 − $50.47 = $3.03
Answer: The original price was $50.47 (tax was $3.03).
Example 3: Combined State + Local Tax
📝 Problem
You're buying furniture for $1,500 in New York City. State tax is 4%, city tax is 4.5%. What do you pay?
Combined Rate = 4% + 4.5% = 8.5%
Tax = $1,500 × 0.085 = $127.50
Total = $1,500 + $127.50 = $1,627.50
Answer: Total cost is $1,627.50 (includes $127.50 in combined taxes).
5. Reverse Sales Tax (Back Out Tax)
Sometimes you need to find the original price from a tax-inclusive total. This is called "backing out" or "reverse calculating" sales tax.
📐 Reverse Sales Tax Formula
🔧 When to Use Reverse Calculation
- Verifying receipts for expense reports
- Calculating tax-inclusive international prices
- Determining pre-tax cost for accounting
- Analyzing competitor pricing
For more complex reverse calculations, try our Back Out Sales Tax Calculator.
6. 2026 US State Sales Tax Rates
Sales tax rates vary significantly by state. Here are the state-level rates for 2026 (local taxes may add to these):
| State | State Rate | Avg. Combined Rate |
|---|---|---|
| Alabama | 4.00% | 9.29% |
| Alaska | 0.00% | 1.82% |
| Arizona | 5.60% | 8.40% |
| Arkansas | 6.50% | 9.45% |
| California | 7.25% | 8.85% |
| Colorado | 2.90% | 7.81% |
| Connecticut | 6.35% | 6.35% |
| Delaware | 0.00% | 0.00% |
| Florida | 6.00% | 7.02% |
| Georgia | 4.00% | 7.38% |
| Hawaii | 4.00% | 4.44% |
| Idaho | 6.00% | 6.02% |
| Illinois | 6.25% | 8.84% |
| Indiana | 7.00% | 7.00% |
| Iowa | 6.00% | 6.94% |
| Kansas | 6.50% | 8.69% |
| Kentucky | 6.00% | 6.00% |
| Louisiana | 4.45% | 9.56% |
| Maine | 5.50% | 5.50% |
| Maryland | 6.00% | 6.00% |
| Massachusetts | 6.25% | 6.25% |
| Michigan | 6.00% | 6.00% |
| Minnesota | 6.875% | 7.49% |
| Mississippi | 7.00% | 7.07% |
| Missouri | 4.225% | 8.29% |
| Montana | 0.00% | 0.00% |
| Nebraska | 5.50% | 6.97% |
| Nevada | 6.85% | 8.24% |
| New Hampshire | 0.00% | 0.00% |
| New Jersey | 6.625% | 6.60% |
| New Mexico | 5.125% | 7.69% |
| New York | 4.00% | 8.53% |
| North Carolina | 4.75% | 6.98% |
| North Dakota | 5.00% | 6.97% |
| Ohio | 5.75% | 7.24% |
| Oklahoma | 4.50% | 8.99% |
| Oregon | 0.00% | 0.00% |
| Pennsylvania | 6.00% | 6.34% |
| Rhode Island | 7.00% | 7.00% |
| South Carolina | 6.00% | 7.44% |
| South Dakota | 4.50% | 6.40% |
| Tennessee | 7.00% | 9.55% |
| Texas | 6.25% | 8.20% |
| Utah | 6.10% | 7.25% |
| Vermont | 6.00% | 6.35% |
| Virginia | 5.30% | 5.75% |
| Washington | 6.50% | 9.38% |
| West Virginia | 6.00% | 6.55% |
| Wisconsin | 5.00% | 5.43% |
| Wyoming | 4.00% | 5.34% |
⚠️ Important Notes
- Rates shown are for 2026 and subject to change
- Local taxes (city, county) may add 1-5% to these rates
- Some items (food, medicine) may be exempt or taxed at lower rates
- Always verify current rates with your state's Department of Revenue
7. Types of Sales Tax
7.1 State Sales Tax
Levied by individual states. Rates range from 0% (no tax states) to 7.25% (California's state rate).
7.2 Local Sales Tax
Counties, cities, and special districts may add their own taxes. NYC adds 4.5% on top of NY's 4% state tax.
7.3 Use Tax
Applies when you buy from out-of-state sellers who don't collect sales tax. You're legally required to report and pay this.
7.4 Excise Tax
Special taxes on specific goods like alcohol, tobacco, gasoline, and luxury items. These are separate from general sales tax.
7.5 VAT (Value-Added Tax)
Used in most countries outside the US. Unlike sales tax, VAT is collected at each stage of production. See our VAT Calculator for international tax calculations.
8. Pro Tips for Calculating Sales Tax
💡 Quick Mental Math Trick
For a quick estimate, round the tax rate and use easy math. For 7% tax on $50: calculate 10% ($5), then subtract 30% of that ($1.50) = approximately $3.50 tax.
Tips for Consumers
- Use the combined rate (state + local) for accurate totals
- Check if your purchase qualifies for tax exemptions (groceries, medicine)
- Tax-free weekends: Some states offer sales tax holidays on specific items
- Consider shopping in nearby no-tax states for major purchases
Tips for Business Owners
- Register for sales tax permits in states where you have nexus
- Use tax automation software for multi-state compliance
- Keep records of all tax-exempt sales with proper documentation
- File returns on time to avoid penalties and interest
