USA Sales Tax 2025 — State-wise Rates, Rules & How It Works
The United States does not have a federal VAT or national sales tax. Instead, each state sets its own Sales Tax, and some cities or local jurisdictions add additional tax on top of the state rate. This guide explains how US Sales Tax works in 2025, state-wise rate structures, economic nexus rules for online sellers, calculation steps, invoice requirements, and a built-in sales tax calculator.
Last Updated: 2025
Quick Summary
- No federal VAT in the USA — Sales Tax is state-level.
- Average combined sales tax (state + local) ranges from 4% to 10.75%.
- Five states have 0% state sales tax (Alaska*, Delaware, Montana, New Hampshire, Oregon).
- Alaska has no state tax but allows local city taxes.
- Online sellers must follow economic nexus rules (Common: $100,000 sales OR 200 transactions per year).
- Sales tax applies to tangible goods, some services, restaurants, clothing (varies by state).
How Sales Tax Works in the USA
Sales Tax is imposed at the point of sale. The seller collects the tax from the customer and remits it to the state. There is no national VAT system — everything depends on state law.
Key Components
- State Sales Tax — mandatory in 45 U.S. states.
- Local Sales Tax — added by cities, counties, districts.
- Special Taxes — alcohol, telecom, hotels, etc.
- Exemptions — groceries, medicine, education items (vary by state).
Sales Tax 2025 — State-wise Overview
| State | State Rate | Local Tax? | Combined Avg. |
|---|---|---|---|
| California | 7.25% | Yes | 8.82% |
| Tennessee | 7.00% | Yes | 9.55% |
| Louisiana | 4.45% | Yes | 9.55% |
| Texas | 6.25% | Yes | 8.20% |
| New York | 4.00% | Yes | 8.52% |
| Florida | 6.00% | Yes | 7.02% |
| Illinois | 6.25% | Yes | 8.82% |
| States with 0% Sales Tax | Delaware, Montana, New Hampshire, Oregon, Alaska* (local tax may apply) | ||
What is Economic Nexus?
Economic Nexus means you must collect sales tax in a state even if you do not have a physical store there.
Common Nexus Rules:
- $100,000 in sales per year; or
- 200 transactions per year
This rule affects eCommerce sellers (Amazon, Shopify, Etsy). Each state sets its own thresholds.
Sales Tax Calculation
Formula
Total Price = Product Price + (Product Price × Sales Tax Rate)
Example
Product price = $100
Sales tax rate = 8%
Tax = 100 × 8% = $8
Total = $108
Interactive Sales Tax Calculator
When to File Sales Tax
Filing frequency depends on state policy & sales volume:
- Monthly
- Quarterly
- Annually
Online sellers must register in each state where they meet nexus standards.
USA Official Resources
- Federation of Tax Administrators (FTA)
- Streamlined Sales Tax Governing Board
- IRS (Federal rules — not sales tax)
FAQ — USA Sales Tax
Q: Does the USA have VAT?
No. The USA does not have VAT. Only Sales Tax applies.
Q: Why is sales tax different in every state?
Because each state creates its own tax law — there is no federal VAT system.
Q: Do online sellers need to collect state tax?
Yes, if they meet economic nexus thresholds.
Q: Which state has the highest sales tax?
Louisiana & Tennessee have among the highest combined rates (over 9%).
Q: Which states have 0% sales tax?
Delaware, Oregon, Montana, New Hampshire, Alaska* (local taxes may apply).
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