Legal Definitions - Sales tax

A sales tax is a tax on the purchase of goods or services. It is paid at the time of the transaction and is usually a percentage of the total cost. Sales taxes are a type of consumption tax, which means they are based on how much people buy and use.

In the United States, sales taxes are determined by state and local governments. Some states, like New Hampshire, Oregon, Montana, and Alaska, do not have a statewide sales tax. However, most states have a sales tax that ranges from 5% to 9%. Some cities and counties also add their own sales tax on top of the state tax. For example, New York City has a sales tax of 4.5% on most products.

Sales taxes are used to raise revenue for the government. They can be used for general purposes or for specific projects. For example, Milwaukee County and four surrounding counties levied a special stadium tax of 0.1% to assist in funding the construction of Miller Park, the stadium for the Milwaukee Brewers.

Example: If you buy a shirt for $20 and the sales tax is 6%, you would pay an additional $1.20 in tax. This means the total cost of the shirt would be $21.20.

Example: A city might raise the sales tax for a few years to pay for a new library. This temporary tax would only be in effect until enough money was raised to pay for the library.

These examples illustrate how sales taxes work and how they can be used to raise money for different purposes.