Sales tax. Another way that the government takes their pound of flesh from us. Don’t get me wrong, I don’t mind paying taxes. I just wish that the government (federal, state, or local) would spend our tax dollars appropriately instead of wasting the money like they do. But I digress. this is a form of tax that we (but not all) of us pay on the goods and/or services that we purchase. Here is how it works.
What is Sales Tax?
Sales tax is levied on goods and services that we purchase each time we swipe our debit card, insert our credit card, or hand over some cash at the register of a store or merchant.
This type of tax is levied by the state in which you purchase the goods and/or services. And in some instances, there are counties and/or cities that levy their own tax on top of the state rate.
Most of us are used to this. And it’s not really a “rocket science” sort of topic. But it is important nonetheless.
Sales tax is often called a “consumption tax”. This means that the more you consume, the more you will pay in taxes.
For example, if you purchase a pair of shoes you will pay taxes on just that one pair of shoes.
But if you purchase ten pairs of those same shoes you will pay 10x the tax because you purchased 10x of the product.
Who Pays Sales Tax and Who Doesn’t?
As I said before, sales tax is based on the state in which you live. Some states have high sales tax and some have low taxes. And there are even a few states that have ZERO sales tax. They are often referred to as the NOMAD group. They are:
- New Hampshire
- Oregon
- Montana
- Alaska
- Delaware
Each of the other states in the union have some form of this tax. Here is a map of what this looks like from SmartAsset:
In addition to this, some states that have sales tax, do not charge taxes on specific items. A good example of this is groceries and food. Here is a map of the states that do not charge sales tax on food:
Final Thoughts
This is one of those topics that people don’t often think about. Most of us are simply used to tapping our card at the checkout and knowing that there is going to be a tax applied to the purchase. But it is important to know how this works and what places you may not have to pay an extra price for the goods and services that you purchase.
Here is a list of the other tax articles that I have written for you. 🙂
You can do this!
I am here for you!
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