Taxes are a necessary evil that everyone must deal with. But whether you’re an individual or running a business, figuring out the correct amount of tax to pay can be difficult.
But not anymore! With this free sales tax calculator, it’s easy to see how much money you’ll need for your next purchase, so you don’t get stuck with any surprises at checkout.
What Are Sales Taxes and Why Do They Exist?
A sales tax is a tax you pay when purchasing goods and services. Governments use sales taxes as a source of revenue, and by law, they need to state how much tax they will collect per purchase.
For the most part, sales taxes are very similar across the country (with exceptions). In addition, most sales taxes are a flat percentage with exceptions for specific counties and states.
This means that no matter how much the product costs, you will pay the same amount in sales tax when purchasing it. In some cases, sales tax rates are combined with other taxes like a value-added tax (VAT).
You need to pay sales tax when you make any purchase. Whether it’s a new suit for work, groceries, or other goods and services – the tax is already included in the price.
The tax revenue goes to the government who needs public services.
Types of Tax Rates
Now that you know that sales tax is a percentage of the product you’re buying, it’s essential to understand how this works.
There are several types of different rates that can be applied to purchases:
Local Sales Tax Rate
This is the percentage of tax charged by your city, county, or other municipality. In some cases, this rate can be as low as 1% while others can take up to 6%.
Retail Sales Tax Rate
This is the percentage charged of the product’s suggested retail price. Most retailers already incorporate this into their prices, but it’s good to be aware of the rate – especially if you’re shopping at a store that doesn’t.
Statewide Sales Tax Rate
This is the percentage of tax charged by all 50 states. The statewide sales tax rate is typically combined with a county tax rate and/or an additional city sales tax.
How to Calculate Sales Tax
Calculating sales tax manually is a time-consuming process, so we’ve created this calculator with steps to use it. Enter the before-tax price and the sales tax rate, and we’ll handle the rest!
Our calculator is perfectly capable of showing you how much sales tax you’ll need to pay.
Let’s use an example to help you understand how the calculator works. Let’s say that you want to buy a new smartphone at $950, and the sales tax rate is 8% in your state.
Using the Sales Tax Calculator
Find your state, enter $950 and 8% in the corresponding boxes. Once you’ve entered all of your information, click “calculate.” You will then see then the total amount you need to pay to receive your new smartphone.
What About Collecting Sales Taxes?
For most individuals, collecting sales taxes is not required. Only businesses are required to collect sales tax and keep them into account for the government.
Businesses need to clearly state their tax rates on receipts or invoices so buyers can understand how much they’ll be charged at checkout.
There are times where a business might not charge the correct amount of sales tax – this is called tax evasion. In many cases, companies can face severe consequences for under-collecting or failing to collect sales taxes from their customers.
Last Thoughts
Sales taxes are a necessary part of our economy, but they can be confusing to calculate. Fortunately, there is an easy way! The sales tax calculator will help you figure out what your customers owe in general and local sales taxes for any purchase made online or offline.
So have fun with the tool, and don’t forget that we’re here if you need us! We’ll take care of all the complicated calculations so that you never have to worry about it again.