Sales Tax

Sales tax is a consumption tax, paid by consumers when they buy things. Unlike value-added tax, which is collected at every stage of production, a traditional sales tax is usually charged only once, at the final sale to the consumer.

Sales taxes are especially associated with the United States, where there is no national sales tax, but most states, and many cities and counties, impose their own. Rates vary considerably by location, and prices displayed in shops typically do not include the tax, which is added at the till. In many other countries, VAT or goods and services tax is used instead, and is usually included in displayed prices.

For example, an item priced at 100 in a place with a combined sales tax rate of 8% would cost 108 at checkout.

Sales taxes are a significant source of revenue for many governments. They are generally considered regressive, because lower-income households spend a larger share of their income on taxable goods. Many jurisdictions exempt essentials such as groceries or prescription medicines to reduce this effect.