But local sales taxes fall under city, county, or other local jurisdictions and vary by location. However, there are some sales taxes that target specific zip codes. That’s why it’s critical to search for sales tax rates by zip code.
Tax compliance done right
The US has a complex and varied approach to sales tax, computing sales tax which differs significantly from the VAT systems common in many other countries. For foreign companies, understanding these nuances is essential to ensure compliance, avoid penalties, and accurately calculate sales tax liabilities. To calculate the effective sales tax rate, it is necessary to know both the state and local sales tax rates. Looking up state and local tax rates and determining the effective sales tax rate becomes cumbersome and error-prone.
Mixed Sales (Taxable and Non-Taxable Items)
Reliable sales tax software, regular self-audits, and consulting with experts are pillars to ensuring compliance. I’ve done this so many times in conversation that I figured it would be helpful to do it in writing. Another issue in dealing with multi-state transactions is determining if you have a sales tax nexus in the buyer’s state. If you do not have a sales tax nexus in the buyer’s state, then you are not required to collect and remit sales tax. The buyer would be required to pay use tax to their state under this scenario.
Who collects sales tax?

The amount of sales tax you pay depends on the state where you made your purchase. Some cities and counties can also charge a local sales tax on top of the state-level one, which this calculator does not account for. Calculating sales tax becomes more complex for businesses that operate in multiple states.
You can use our Ohio Sales Tax Calculator to look up sales tax rates in Ohio by address / zip code. The calculator will show you the total sales tax amount, as well as the county, city, and special district tax rates in the selected location. You can use our Washington Sales Tax Calculator to look up sales tax rates in Washington by address / zip code. Navigating the US tax system can be particularly challenging for international businesses.
Common Exemptions
Sales tax is a consumption tax levied on the final sale of goods and services. In the United States, sales tax laws and rates are determined at the state level. States may authorise local jurisdictions to levy an additional tax over the base sales tax rates. This leads to variation in sales tax across states and local jurisdictions. In this blog, we focus on how to calculate sales tax manually through a wide range of examples covering different sectors and states. This means that, depending on your location within Ohio, the total tax you pay can be significantly higher than the 5.75% state sales tax.
In origin-based states, the relevant sales tax rate for sales tax calculation is determined by the seller’s location. In destination-based states, the relevant sales tax rate for sales tax calculation is determined by the buyer’s location. If you’re selling tangible goods that are not exempt from sales tax (such as groceries), you more than likely have to collect sales tax.
- A customer arrives at his shop and purchases 2 pieces of clothing – a dress worth $ 200 and a shirt worth $50.
- The same goes for rate changes from one jurisdiction to another.
- You need to identify which sales are taxable in your jurisdiction.
- Robert works for a company that makes and sells software and wants a computer for work purposes.
- Once you’re registered, you need to start collecting and remitting sales taxes based on the state’s regulations.
You can use our California sales tax calculator to determine the applicable sales tax for any location in California by entering the zip code in which the purchase takes place. You may also be interested in printing a California sales tax table for easy calculation of sales taxes when you can’t access this calculator. Apply the rates that are based on your state and locality. So a business in New York would apply the state sales tax rate of 4% and add this to the tax rate for its specific location.
- Apply the rates that are based on your state and locality.
- Our sales tax calculator is powered by TaxCloud’s powerful API that’s powered by tax data from 13,000+ sales tax jurisdictions.
- If you have an ecommerce store, however, you’ll need to use an automated sales tax calculation solution like TaxCloud’s API.
- Sales tax is often calculated for online purchases using a sales tax API or sales tax software.
- That’s where sales tax automation solutions come into play.
North Carolina: Sales Tax Handbook
To determine the sales tax that was collected and belongs to the state and local governments, multiply the true sales revenue amount times the sales tax rate. She will not collect any sales tax from Robert, but will instead ask him to provide the exemption certificate for computer hardware so that she can remain compliant to sales tax laws. To ensure you comply, check local sales tax laws to correctly calculate sales tax for shipping. Find out how much sales tax to charge down to the zip code. Our sales tax calculator is powered by TaxCloud’s powerful API that’s powered by tax data from 13,000+ sales tax jurisdictions. He makes a sale of a product with $100 to three customers, one from each state.
Since every business is unique and so many different elements affect sales tax, there are dozens of places where you may be missing critical components to handle sales tax. Some states calculate that in dollars of sales in the state, whereas others calculate it in numbers of transactions. Other states require that you achieve either a certain number of transactions or a certain threshold of sales and some require that you achieve both.
Accurate record-keeping is essential for audits and reporting. Maintain detailed records of your sales, including the sales price, tax amount, and the date of the transaction. Online retailers can be subject to sales tax, especially if they have a physical storefront or employees in a state they sell in. Simple as it may be, miscalculations from basic math are among the most common sales tax mistakes. This is one reason I suggest a good mix of software and human expertise.
This means that, depending on your location within California, the total tax you pay can be significantly higher than the 6% state sales tax. At Yonda Tax, we understand the challenges businesses face when calculating sales tax, particularly for multistate operations. Our Sales Tax Calculation Tool is designed to simplify this process. It accurately calculates sales tax, considers varying state and local tax rates, and ensures compliance with product taxability rules. Keep in mind that some purchases may be exempt from sales tax, and others others may be subject to special sales tax rates. Sales tax jurisdiction rules can sometimes be too complicated to describe rate areas by zip code, so this calculator is provided for reference purposes only.
Using the right software can save time, reduce errors, and ensure compliance with sales tax laws across jurisdictions. Small businesses like yours need to know how to calculate sales tax to comply with state and local tax laws. Here’s what sales tax is, why it matters to small businesses, how it varies between states and local areas, and how to calculate it. Whether or not you need to pay sales tax on shipping costs depends on the state. Connecticut, for example, requires businesses to charge sales tax on shipping costs for taxable sales, but not on exempt sales. In Kansas, you no longer have to pay sales tax on shipping if it is separate from the product price on the invoice.