Sales Tax

Sales tax is a state or local tax imposed on the sale of goods and certain services. It is usually calculated as a percentage of the purchase price, collected by the seller at the point of sale, and then remitted to the appropriate tax authority.

✅ Key Points

👤 Who Pays It?

• 💳 The consumer ultimately pays the sales tax
• 🏪 The seller is responsible for collecting and submitting the tax to the state or local government

📍 Where Is It Applied?

• Sales tax is governed at the state and local level
• 📊 Rates and rules vary by location
• Some states allow local (city or county) add‑on taxes

🛍️ What Is Taxed?

Sales tax generally applies to:

• 📦 Tangible personal property
  • Examples: electronics, clothing, furniture
• 🛠️ Certain services, depending on the state
  • Examples: repairs, cleaning, installation services

🚫 Common Exemptions

Many states exempt or reduce tax on necessities, such as:

• 🥦 Groceries
• 💊 Prescription drugs
• 🩺 Medical devices

⚠️ Exemptions vary by state and locality.

🔄 Sales Tax vs. Use Tax

• 🧾 Sales Tax
  • Applies to purchases made within the state
  • Collected by the seller at the time of purchase
• 📦 Use Tax
  • Applies to out‑of‑state or online purchases
  • Used when sales tax was not collected
  • Typically reported and paid by the consumer

📘 Example

A customer buys a laptop for $1,000 in a state with a 6% sales tax.

• Sales tax collected:
  • $1,000 × 6% = $60
• Total cost to customer:
  • $1,060
• The seller remits the $60 to the state tax authority

🗂 Quick Takeaway

Sales tax is paid by the consumer but collected by the seller, with rates and rules set at the state and local level. When sales tax isn’t collected, use tax may apply instead.