Whether you’re a veteran small business owner or somebody who is just starting your business adventure, you’ve probably wondered at some point how much a small business pays in taxes.
Maybe you also wish you could calculate sales tax rates in your local area.
Well, look no further.
We’ve made this sales tax calculator for you so that you can find out the sales tax rate for any city in the country.
You can then enter the costs of the products you’re selling and your area’s sales tax to determine the total cost with sales tax.
However, in case you’re more of a deep dive kind of person, we’ve also included some state-specific sales tax information for you so you can learn more about particular states’ tax systems as you grow your business.
How to Calculate Sales Tax Using Our Sales Tax Calculator
There’s only two steps to follow for our sales tax calculator.
Step #1 – Determine your tax rate
The first step is to determine your tax rate. If you’re selling from your physical business, just enter the city and zip code that your business is in. Our calculator will pull from a large database of state and local tax rates to get you the rate you’re looking for.
If you’re selling online, by mail, or by phone, it’s a little more complicated. First, you’ll need to figure out whether your state’s sales tax is based on the point of destination or the point of origin.
If your state is destination-based, the purchaser’s location determines the sales tax rate.
If your state’s sales tax is origin-based, the sales tax rate is determined by your business’s location.
Step #2 – Determine the sales tax on your products
To calculate the sales tax for your products, just enter the combined costs of the products/services and the sales tax rate. This will give you the total sales tax.
Sales Tax Across the 50 States
While our sales tax calculator will help you quickly calculate the sales tax in your business’s area, you may be curious to learn more in-depth information about a certain state.
Earlier, we mentioned two ways of determining the sales tax rate: destination-based and origin-based.
Twelve states have a sales tax system that’s origin-based. Another 33 states use a destination-based sales tax system. Finally, five states have no sales tax at all.
Additional Information About States With Origin-based Sales Taxes
Let’s discuss each state that has an origin-based sales tax system. As you’ll see below, each one of the 12 origin-based sales tax states has its own unique features.
Arizona doesn’t have a sales tax, strictly-speaking. Instead, the state imposes a transaction privilege tax (TPT) upon almost every form of business.
Businesses that are subject to the TPT include retail businesses, restaurants, bars, motels, property rental companies, publishing firms, and telecommunications groups. All covered businesses must obtain a TPT license.
The TPT rate varies based on the city and county where the business is located. The state’s base TPT rate is 5.6%.
In addition, Arizona businesses that purchase items from retailers outside Arizona must register with the state’s department of revenue. Vendors based outside the state must also register if they make “recurring” sales within Arizona.
California uses an unusual modified origin-based sales tax system. The state’s sales tax — which is currently at a rate of 7.25% — is origin-based. The sales taxes imposed by cities and counties are also origin-based.
However, California also has district sales taxes that range from 0.10% to 1.00%. Unlike the other sales taxes, district taxes are destination-based.
On July 1, 2021, a slew of sales tax rate changes will come into effect throughout the state. You can see the upcoming changes at cdtfa.ca.gov.
In Illinois, there are two sales taxes. The first is the retailers’ occupation tax (ROT). Illinois requires any business selling tangible personal property to pay the ROT.
On buyers of tangible property, the state imposes a use tax. The tax rate for both the use tax and the ROT is 6.25%. However, various counties and cities can impose additional ROT taxes on top of the state rate.
For both the use tax and the ROT, Illinois law mandates that the location of the vendor controls the applicable sales tax rate.
However, Illinois recently passed the Levelling the Playing Field for Illinois Retail Act. This act created an exception to Illinois’s origin-based sales tax law for remote retailers and “marketplace facilitators” like Amazon that sell to Illinois purchasers.
As of January 1, 2021, any remote retailers or marketplace facilitator involved in the sale of over $100,000 in sales or more than 200 separate sales transactions a year must pay the sales tax rate that applies to the buyer’s location in Illinois. Illinois is just one of many states that have recently passed similar laws targeting remote retailers like Amazon and Wayfair.
Mississippi mandates a 7% sales tax on all sales of tangible personal property within the state. In addition, all businesses must obtain a sales tax permit from the state government before beginning sales.
As with all origin-based sales tax states, Mississippi law asserts that the tax rate is based on the location of the business, with a few minor exceptions.
Like Illinois, Mississippi charges sales tax on any vendor outside the state that sends items into Mississippi if the total amount sold by the vendor in Mississippi exceeds $250,000 in a calendar year.
Missouri’s state sales tax rate is 4.225%. However, cities and counties can impose additional local sales tax. Missouri has not yet enacted a law to tax remote retailers.
Like Arizona, New Mexico doesn’t have a sales tax rate, strictly speaking. Instead, it imposes a gross receipts tax (GRT) which is a sales tax in all but name.
The rate of the GRT varies between 5% and 9%, based on the combined state, county, and city tax rates that apply to the business’s location. New Mexico publishes an updated GRT tax rate schedule every six months.
In contrast to many states, Ohio’s sales tax applies not only to the sale, lease, and rental of property, but also to the sale of certain services. The state sales tax rate is 5.75%, and counties may impose additional sales taxes.
Every business making retail sales in the state must first obtain a vendor’s license from the Ohio Department of Taxation.
Pennsylvania requires all businesses selling products and services to have a state “Sales, Use, and Hotel Occupancy Tax License.” The sales tax rate across the commonwealth is 6%.
In addition, the commonwealth granted two counties the power to impose additional taxes on vendors located within their borders. Allegheny County imposes an additional 1% local sales tax on local vendors. Philadelphia County similarly imposes an additional 2% sales tax on all vendors.
Tennessee’s general sales and use tax rate is 7%. Counties and cities may impose an additional tax rate, provided that rate doesn’t exceed 2.75% and comes in an increment of 0.25%.
Like Illinois, Tennessee requires out-of-state vendors that don’t have any physical presence in the state to collect sales tax if the vendor makes $100,000 or more in sales in a year.
Furthermore, the state mandates that any sales made outside of Tennessee by a seller in Tennessee will be liable for sales tax. The rate of this tax is based on where the buyer receives the item.
Texas’s sales and use tax rate is 6.25%. As with many other states, certain Texas localities — like cities, counties, and transit authorities — can charge an additional sales tax of up to 2%.
Moreover, Texas recently enacted legislation to tax out-of-state vendors and marketplace providers. Under the new law, all remote sellers who obtain more than $500,000 in revenue from Texas must pay Texas sales tax based on the applicable rates at the buyer’s location.
Utah’s sales tax rate — currently at 4.85% — can change every quarter. Various cities apply their own local sales tax, so you can expect your business to pay between 5% and 8% in Utah sales tax.
As of January 1, 2019, Utah requires remote sellers to pay sales tax if the vendor received gross revenue of more than $100,000 from Utah-based sales or made more than 200 transactions in Utah within the past calendar year.
Virginia’s general sales tax rate is 5.3% in much of the state. However, certain counties near DC, Norfolk, and Richmond pay 6%. A few other counties impose a tax of either 6.3% or 7%.
For food and personal hygiene products, however, the sales tax rate is limited to 2.5% across the state. Additional taxes apply on motor vehicles, aircraft, and watercraft.
As with many other states, Virginia passed a law that requires all remote vendors with “economic nexus” to pay the sales tax rate applicable to the location of the buyer. Under this law, any remote seller that “sells or facilitates the sale of” more than $100,000 in annual gross sales or 200 or more transactions to Virginia customers is considered to have “economic nexus.”
States with Destination-Based Sales Tax
The majority of states use a destination-based sales tax.
Again, this means that a business must use the buyer’s location to determine the applicable sales tax rate, rather than the business’s location.
Here are the states with destination-based sales tax systems:
- New Jersey
- New York
- North Carolina
- North Dakota
- Rhode Island
- South Carolina
- West Virginia
Although each one of these states’ tax systems has its own unique features, their destination-based sales tax systems are generally more straightforward than the origin-based sales tax states.
However, we’ll mention that several of these don’t allow localities to impose additional sales taxes. These states are Connecticut, Hawaii, Indiana, Kentucky, Maine, Maryland, Massachusetts, Michigan, and Rhode Island.
States with No Sales Tax
If you’re a business located in one of the following five states, you won’t have to pay sales tax at all:
While Alaska also doesn’t have a statewide sales tax, it does allow localities to impose their own local sales taxes. You can view a list of the cities that impose sales tax on page 20 of the state’s Alaska Taxable 2020 report.
Also, Delaware requires all sellers of goods and providers of services to pay a gross receipts tax. The rate varies from about 0.01% to 2%.
ZenBusiness is Here for You
Learning how to calculate sales tax is just one part of the adventure of owning a business. Depending upon your location, however, you may need a sales tax license or permit.
Our handy business licensing service can help you out there.
But maybe you’re a long way away from calculating sales taxes on your products. Maybe you just have a few business ideas bouncing around in your head. The good news is that we’ve got you covered there, too.
Whether you want to start a limited liability company or a corporation, we can give you the information you need to start your own business today.
ZenBusiness is here to help your small business dreams blast off. So buckle up!
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