Please update this article to reflect recent events or newly available information. Logo of the Internal Txdot form 130 u pdf Service. Flag of the
Please update this article to reflect recent events or newly available information. Logo of the Internal Txdot form 130 u pdf Service.
Flag of the United States. Forty-five states, the District of Columbia, Puerto Rico, and Guam impose general sales taxes that apply to the sale or lease of most goods and some services, and states also may levy selective sales taxes on the sale or lease of particular goods or services. States may also delegate to local governments the authority to impose additional general or selective sales taxes. California has the highest state sales tax with a base rate of 7. Puerto Rico has a higher 10. Sales tax is calculated by multiplying the purchase price by the applicable tax rate.
Sales tax is collected by the seller at the time of sale. In cases where items are sold at retail more than once, such as used cars, the sales tax can be charged on the same item indefinitely. The definition of retail sales and what goods and services are taxable vary among the states. Nearly all jurisdictions provide numerous categories of goods and services that are exempt from sales tax, or taxed at reduced rates. The purchase of goods for further manufacture or for resale is uniformly exempt from sales tax.
Most jurisdictions exempt food sold in grocery stores, prescription medications, and many agricultural supplies. Sales taxes, including those imposed by local governments, are generally administered at the state level. In either case, the seller files returns and remits the tax to the state. In states where the tax is on the seller, it is customary for the seller to demand reimbursement from the buyer. Sellers generally must collect tax from in-state purchasers unless the purchaser provides an exemption certificate. Most states allow or require electronic remittance.
The effective tax shown is calculated using a microsimulation model based on the 1990 Public Use Microdata Sample of census records and statistical data from the Internal Revenue Service for undisclosed years. The tax is computed as the tax rate times the taxable transaction value. Rates vary by state, and by locality within a state. Not all types of transfers are taxable. The tax may be imposed on sales to consumers and to businesses. Sales tax does not apply to transfers of real property, though some states impose a real estate transfer or documentary tax on such transfers. All states provide some exemptions from sales tax for wholesale sales, that is, sales for resale.
However, some states tax sales for resale through vending machines. Purchases of gift cards are not subject to sales tax in all states. These purchases are considered to be similar to exchange of cash. The sales tax will be charged when gift cards are used as a method of payment for taxable goods or services. There was a proposal in New York State to impose a sales tax when a gift card is purchased instead of imposing it when the card is used, but it failed. Most states also exempt bulk sales, such as sales of an entire business. Most states exempt from sales tax goods purchased for use as ingredients or parts in further manufacturing.
Buyers in exempt sales must follow certain procedures or face tax. Sales to businesses and to consumers are generally taxed the same, except as noted in the preceding paragraph. Businesses receive no offset to sales tax collection and payment obligations for their own purchases. This differs significantly from value added taxes. The place and manner of sale may affect whether a sale of particular goods is taxable.