Sales tax is the tax imposed on goods and services. Usually added to the cost of a product and then collected at the point of sale, businesses pass collected sales tax to the government of their state.
Different locations in the United States have different rules, regulations, and rates of sales tax. Businesses apply for a sales tax permit with their state department, then follow and implement the corresponding taxation guidelines.
Sales tax rates differ from state to state. 45 US states implement sales taxes ranging from 1.76% to 9.45%, while 5 states do not charge sales tax at all.
The goods and services subject to sales tax also vary according to location. Groceries, clothing, and prescriptions are common goods that are exempt from taxes.
Depending on the state or municipality a business resides in, owners are responsible for collecting, tracking, and remitting specific rates of tax either monthly or quarterly.