How US Sales Tax Works in 2025 (Add It, Reverse It, By State)

Unlike most countries, the US has no federal sales tax and no VAT. Instead, sales tax is set at the state level, and counties and cities often add their own rate on top. That is why the same purchase can cost a different amount in two towns an hour apart. This guide explains why there is no single national rate, how the state base rate and the combined state plus local rate differ, and how to add sales tax to a price or reverse it back out of a total, with a worked example.

Why there is no national sales tax rate

There is no federal sales tax or VAT in the US. Each state decides whether to charge sales tax and at what rate, and most also let local governments add a district, county, or city tax. The result is that combined rates vary widely, from 0 in a handful of states to over 10% in some localities. Because of this, a calculator cannot assume a rate for you. You enter the combined rate that applies where the sale happens.

State base rate vs combined state plus local

Two numbers matter. The state base rate is what the state itself charges. The combined rate is the state rate plus any county, city, or special district tax stacked on top, and it is the rate you actually pay at the register. For example, a state with a 6.25% base rate plus a 2% local tax gives a combined 8.25% rate. When you fill in the calculator, use the combined rate for your location, not just the state base, or your total will be too low.

Adding sales tax to a price

To add sales tax, multiply the pre-tax subtotal by the rate, then add it back. The formula is tax = subtotal * rate / 100, and total = subtotal + tax. Take a 100 USD subtotal at a 7% combined rate: the tax is 7 USD and the total is 107 USD. The subtotal is the listed, pre-tax price; sticker prices in the US are usually shown before sales tax, which is why the amount at checkout is higher than the shelf label.

Reversing sales tax out of a total

If you only know the tax-inclusive total, for example from a receipt, you can work backward to the pre-tax subtotal. Divide the total by 1 plus the rate: subtotal = total / (1 + rate / 100), and the tax is the difference. A 107 USD total at 7% is 100 USD subtotal plus 7 USD tax. Reversing is useful for expense reports and bookkeeping, where you need the pre-tax amount and the tax split out separately.

Worked example: 100 USD at 7%

Sourcing and taxable categories vary by state

Two more things differ by state. Sourcing decides which rate applies: some states use origin sourcing (the seller's location) and others use destination sourcing (the buyer's location), which matters most for shipped and online orders. Taxable categories also vary: many states exempt or reduce tax on groceries, prescription drugs, or clothing, while others tax them fully. Because of these differences, treat any sales tax figure as an estimate and check the rate and rules for the specific location.