Sales Tax

Definition

Sales tax is a government charge added as a percentage of the price when goods or services are sold.

Sales tax is calculated by multiplying the taxable subtotal by the applicable rate and is shown as its own line on the receipt, above the total. In the United States there is no national sales tax; states, counties, and cities set their own rates, so the combined rate varies by location. The seller collects the tax from the buyer and remits it to the tax authority. On a tax-inclusive receipt, the tax can be recovered by dividing the total by one plus the rate.