Sales Tax

Sales Tax Definition

Sales tax is a type of consumption tax which is charged at the point of purchase.

Types of Sales Tax

There are different types of sales tax. They are mentioned below.

Retail Sales Tax

This is charged by the retailer or the shop owner on the sale of an item or good to the consumer or the customer who purchases it. In order to levy a charge on the final user of the good, the purchaser of the good who is not the final user or the retailer of the shop has to provide the seller of the good a “resale certificate” which means a legal understanding that the retailer is purchasing the item to resell it.

Gross Receipts Tax

This is type of tax which is levied on the total sales of a business. This is imposed by the state of a country instead of corporate income tax. This is also called as gross excise tax. In economists point of view in this type an item is charged more than once in the form of tax as it goes from production to final sale. This tax is generally passed on through toconsumer of the good in the form of excess sale money.

Excise Tax

This is charged on the good produced within the country. It is type of duty paid to the government by the producer of the good. Excise tax is applied to narrow range of products. And more over it is heavier and specific. Some examples are excise duty on production of silk/wool or man-made filaments, duty on tobacco and alcohol.

An example of excise tax is a Use tax. This is paid by the individual when the sales tax has not been paid to the government. This is generally imposed in United States. This is tax on the use of certain goods and services. The use tax is a substitute for sales tax.

VAT or Value Added Tax

This is type of tax levied on the cost of a product. This is charged on all sales avoiding the need for the system of resale certificates.

Turnover Tax

T his type money is charged on the capital goods.

Sales Tax Calculation Formula

Tax= price of the good* rate.
If for example, the price of a good is Rs.10 and the sales tax rate is 5.25% then
Tax = 10*5.25 %= 10*.0525 = Rs. 0 .525
Total money to be paid is 10+.525 = Rs. 10.525

Sales tax Chart: Sales Tax Rate is .0825 (8 1/4%)

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.06 .00 5.87 .48 11.69 .96 17.51 1.44 23.33 1.92
.18 .01 5.99 .49 11.81 .97 17.63 1.45 23.45 1.93
.30 .02 6.12 .50 11.93 .98 17.75 1.46 23.57 1.94
.42 .03 6.24 .51 12.06 .99 17.87 1.47 23.69 1.95
.54 .04 6.36 .52 12.18 1.00 17.99 1.48 23.81 1.96
.66 .05 6.48 .53 12.30 1.01 18.12 1.49 23.93 1.97
.78 .06 6.60 .54 12.42 1.02 18.24 1.50 24.06 1.98
.90 .07 6.72 .55 12.54 1.03 18.36 1.51 24.18 1.99
1.03 .08 6.84 .56 12.66 1.04 18.48 1.52 24.30 2.00
1.15 .09 6.96 .57 12.78 1.05 18.60 1.53 24.42 2.01
1.27 .10 7.09 .58 12.90 1.06 18.72 1.54 24.54 2.02
1.39 .11 7.21 .59 13.03 1.07 18.84 1.55 24.66 2.03
1.51 .12 7.33 .60 13.15 1.08 18.96 1.56 24.78 2.04
1.63 .13 7.45 .61 13.27 1.09 19.09 1.57 24.09 2.05
1.75 .14 7.57 .62 13.39 1.10 19.21 1.58 25.03 2.06
1.87 .15 7.69 .63 13.51 1.11 19.33 1.59 25.15 2.07
1.99 .16 7.81 .64 13.63 1.12 19.45 1.60 25.27 2.08
2.12 .17 7.93 .65 13.75 1.13 19.57 1.61 25.39 2.09
2.24 .18 8.06 .66 13.87 1.14 19.69 1.62 25.51 2.10
2.36 .19 8.18 .67 13.99 1.15 19.81 1.63 25.63 2.11
2.48 .20 8.30 .68 14.12 1.16 19.93 1.64 25.75 2.12
2.60 .21 8.42 .69 14.24 1.17 20.06 1.65 25.87 2.13
2.72 .22 8.54 .70 14.36 1.18 20.18 1.66 25.99 2.14
2.84 .23 8.66 .71 14.48 1.19 20.30 1.67 26.12 2.15
2.96 .24 8.78 .72 14.60 1.20 20.42 1.68 26.24 2.16
3.09 .25 8.90 .73 14.72 1.21 20.54 1.69 26.36 2.17
3.21 .26 9.03 .74 14.84 1.22 20.66 1.70 26.48 2.18
3.33 .27 9.15 .75 14.96 1.23 20.78 1.71 26.60 2.19
3.45 .28 9.27 .76 15.09 1.24 20.9. 1.72 26.72 2.20
3.57 .29 9.39 .77 15.21 1.25 21.03 1.73 26.84 2.21
3.69 .30 9.51 .78 15.33 1.26 21.15 1.74 26.96 2.22
3.81 .31 9.63 .79 15.45 1.27 21.27 1.75 27.09 2.23
3.93 .32 9.75 .80 15.57 1.28 21.39 1.76 27.21 2.24
4.06 .33 9.87 .81 15.69 1.29 21.51 1.77 27.33 2.25
4.18 .34 9.99 .82 15.81 1.30 21.63 1.78 27.45 2.26
4.30 .35 10.12 .83 15.93 1.31 21.75 1.79 27.57 2.27
4.42 .36 10.24 .84 16.06 1.32 21.87 1.80 27.69 2.28
4.54 .37 10.36 .85 16.18 1.33 21.99 1.81 27.81 2.29
4.66 .38 10.48 .86 16.30 1.34 22.12 1.82 27.93 2.30
4.78 .39 10.60 .87 16.42 1.35 22.24 1.83 28.06 2.31
4.90 .40 10.72 .88 16.54 1.36 22.36 1.84 28.18 2.32
5.03 .41 10.84 .89 16.66 1.37 22.48 1.85 28.30 2.33
5.15 .42 10.96 .90 16.78 1.38 22.60 1.86 28.42 2.34
5.27 .43 11.09 .91 16.90 1.39 22.72 1.87 28.54 2.35
5.39 .44 11.21 .92 17.03 1.40 22.84 1.88 28.66 2.36
5.51 .45 11.33 .93 17.15 1.41 22.96 1.89 28.78 2.37
5.63 .46 11.45 .94 17.39 1.42 23.09 1.90 28.90 2.38
5.75 .47 11.57 .95 17.39 1.43 23.21 1.91 29.03 2.39
29.15 2.40 33.75 2.78 38.36 3.16 42.96 3.54 47.57 3.92
29.27 2.41 33.87 2.79 38.48 3.17 43.09 3.55 47.69 3.93
29.39 2.42 33.99 2.80 38.60 3.18 43.21 3.56 47.81 3.94
29.51 2.43 34.12 2.81 38.72 3.19 43.33 3.57 47.93 3.95
29.63 2.44 34.24 2.82 38.84 3.20 43.45 3.58 48.06 3.96
29.75 2.45 34.36 2.83 38.96 3.21 43.57 3.59 48.18 3.97
29.87 2.46 34.48 2.84 39.09 3.22 43.69 3.60 48.30 3.98
29.99 2.47 34.60 2.85 39.21 3.23 43.81 3.61 48.42 3.99
30.12 2.48 34.72 2.86 39.33 3.24 43.93 3.62 48.54 4.00
30.24 2.49 34.84 2.87 39.45 3.25 44.06 3.63 48.66 4.01
30.36 2.50 34.96 2.88 39.57 3.26 44.18 3.64 48.78 4.02
30.48 2.51 35.09 2.89 39.69 3.27 44.30 3.65 48.90 4.03
30.60 2.52 35.21 2.90 39.81 3.28 44.42 3.66 49.03 4.04
30.72 2.53 35.33 2.91 39.93 3.29 44.54 3.67 49.15 4.05
30.84 2.54 35.45 2.92 40.06 3.30 44.66 3.68 49.27 4.06
30.96 2.55 35.57 2.93 40.18 3.31 44.78 3.69 49.39 4.07
31.09 2.56 35.69 2.94 40.30 3.32 44.90 3.70 49.51 4.08
31.21 2.57 35.81 2.95 40.42 3.33 45.03 3.71 49.63 4.09
31.33 2.58 35.93 2.96 40.54 3.34 45.15 3.72 49.75 4.10
31.45 2.59 36.06 2.97 40.66 3.35 45.27 3.73 49.87 4.11
31.57 2.60 36.18 2.98 40.78 3.36 45.39 3.74 49.99 4.12
31.69 2.61 36.30 2.99 40.90 3.37 45.51 3.75 50.12 4.13
31.81 2.62 36.42 3.00 41.03 3.38 45.63 3.76 50.24 4.14
31.93 2.63 36.54 3.01 41.15 3.39 45.75 3.77 50.36 4.15
32.06 2.64 36.66 3.02 41.27 3.40 45.87 3.78 50.48 4.16
32.18 2.65 36.78 3.03 41.39 3.41 45.99 3.79 50.60 4.17
32.30 2.66 36.90 3.04 41.51 3.42 46.12 3.80 50.72 4.18
32.42 2.67 37.03 3.05 41.63 3.43 46.24 3.81 50.84 4.19
32.54 2.68 37.15 3.06 41.75 3.44 46.36 3.82 50.96 4.20
32.66 2.69 37.27 3.07 41.87 3.45 46.48 3.83 51.09 4.21
32.78 2.70 37.39 3.08 41.99 3.46 46.60 3.84 51.21 4.22
32.90 2.71 37.51 3.09 42.12 3.47 46.72 3.85 51.33 4.23
33.03 2.72 37.63 3.10 42.24 3.48 46.84 3.86 51.45 4.24
33.15 2.73 37.75 3.11 42.36 3.49 46.96 3.87    
33.27 2.74 37.87 3.12 42.48 3.50 47.09 3.88    
33.39 2.75 37.99 3.13 42.30 3.51 47.21 3.89    
33.51 2.76 38.12 3.14 42.72 3.52 47.33 3.90    
33.63 2.77 38.24 3.15 42.84 3.53 47.45 3.91    

Sales Over $50

Amount Tax
60.000 4.95
70.00 5.78
80.00 6.60
90.00 7.43
100.00 8.25
150.00 12.38
200.00 16.50
250.00 20.63
300.00 34.75

Internet Sales Tax

Taxing the use of internet is called as internet taxation. This generally comes under the sales tax. Now-a-days internet is widely used for advertising many products. So the tax levied on the sale made through net comes under internet taxation.

Internet sales taxes are generally treated as the normal sales at the retail store. There are two cases which are to be considered. They are

a) If a business is located within a certain location
b) If a business is located outside a certain location

For the case “a” internet sales of physical products are generally taxable unless they come under specific tax exemption.

For the case “b” sales of physical products delivered to a particular location are generally subjected to state’s use tax. The customers are required to pay the use tax and the retailer or the man who sells it has to collect it from the customers and pay them to the government.

Sales Tax on Vehicle Purchase

Vehicles like motorcycle, cars, trucks are qualified for deduction on the individual’s yearly tax returns according to U.S. tax law. They come under the American Recovery and Reinvestment Act. This is applicable only to sales and excise tax and other similar taxes paid upto $49,500 of the purchase price of the new vehicle. This deduction is reduced for those individual’s whose gross income comes between $125,000 to $135,000. This is not applicable for tax payers of high incomes.