sales tax

A sales tax is a general tax on the transacting of goods or services paid at the time of the transaction. In the United States, sales taxes are imposed primarily by state and local governments. The federal government has not enacted a national sales tax, although it has the constitutional authority to do so under Article I, Section 8. As of 2025, five states do not impose a statewide sales tax: New Hampshire, Oregon, Montana, Delaware, and Alaska. However, some local jurisdictions within Alaska do collect local sales taxes.

Statewide sales tax rates generally range from about 4% to 7.5%, but combined rates can exceed 10% in some jurisdictions when local taxes are included. Tennessee, Louisiana, and Arkansas continue to have some of the highest average combined rates. Cities such as New York City levy additional local sales taxes; for example, New York City imposes a 4.5% local rate on top of the New York State sales tax.

While most sales taxes provide general revenue and are permanent, some are temporary and earmarked for specific purposes. For example, the 0.1% Miller Park sales tax in Wisconsin, which supported stadium construction, expired in 2020 after raising over $600 million.

[Last reviewed in July of 2025 by the Wex Definitions Team] 

Wex

• CIVICS
• taxation
• COMMERCE
• government
• tax