Sales Tax Calculator

What is sales tax? 

Sales tax is a consumption tax applied to the sale of goods and services. Across the United States, it serves as a key revenue source for state and local governments.

When you make a purchase, sales tax adds a percentage to the final price of your product or service. This rate varies by location—different states and localities set their own rates, creating a complex landscape of tax obligations.

As an indirect tax, sales tax can be shifted to others. Retailers add it to the sales price, collect it from consumers at checkout, and then remit the collected amount to the appropriate government authority. This process puts businesses at the center of tax compliance as they grow.

Who should collect sales tax? 

Your business needs to collect sales tax when you have nexus. Nexus is a connection that triggers tax obligations in a specific jurisdiction.

Physical nexus occurs when you have offices, warehouses, or employees in a state. This presence automatically means you'll need to collect and file sales tax there.

Even without physical presence, you may still have economic nexus in states where you make sales. Each state sets different sales and transaction thresholds that activate tax obligations as you grow.

When dealing with tax-exempt buyers, you'll need to manage exemption certificates, with documentation requirements varying by state. This adds another layer to your compliance responsibilities.

Remember: always register for a sales tax permit before collecting tax from customers in any state. As your company expands across borders, monitoring where you have nexus becomes increasingly important to protect your revenue.

Is my product taxable? 

Product taxability varies widely across jurisdictions, adding complexity as your business grows. Tangible personal property—items you can physically touch and move—is typically taxable in most states unless specifically exempted by law.

Services face even more variation. Some states tax many services, while others tax only specific services listed in their tax laws. Digital goods or digital services, like downloadable software, music, or e-books, create additional complexity with taxability rules differing significantly from state to state.

Location matters too. Most states use destination sourcing, applying the tax rate based on where your customer receives the product or service. Other states use origin sourcing, where tax is determined by your business location.

As you expand into new markets, monitoring these differences becomes critical to protect your revenue. To see exactly how your products or services are taxed across different jurisdictions, check out Anrok's taxability tool.

What sales tax rates apply to my business?  

The sales tax rate for any transaction combines multiple layers of taxation—state rates plus any additional local taxes imposed by counties or cities. Some states contain home rule jurisdictions, which is a city, county, or municipality with a self-administered local taxing authority that manages taxability, collection, and compliance independent from the state department of revenue. 

This layered approach creates significant variation, even between neighboring locations. A sale in one town can face a completely different tax rate than the same transaction just a few miles away.

As your business grows across borders, monitoring these complex rate differences becomes increasingly important to maintain compliance and protect your revenue. The right solution can automate this process, allowing you to focus on expansion rather than tax complexity. To learn more about the sales tax rates that apply to your business based on a specific state or region, check out Anrok’s sales tax index. 

When do I need to register for sales tax? 

Registration requirements trigger when your business establishes nexus in a jurisdiction. Physical nexus requires immediate registration. For economic nexus, each state sets different sales thresholds—typically between $100,000-$500,000 in annual sales or 100-200 transactions—that activate your registration obligation.

Most states require registration within 30 days of crossing these thresholds. Some jurisdictions even impose retroactive collection requirements, making proactive monitoring essential as your business scales.

As you expand into new markets, tracking these varying thresholds becomes increasingly complex. Automating this monitoring process helps protect your revenue from unexpected compliance issues and allows you to focus on growth rather than tax complexity.

How often do I need to file sales tax returns? 

Filing frequency varies based on your sales volume and jurisdiction requirements. Most states assign you a filing schedule, monthly, quarterly, or annually, based on your expected tax liability. Higher-volume sellers typically file more frequently.

As your business grows, states may change your filing frequency, adding another layer of complexity to your compliance calendar. Some jurisdictions even require prepayments for larger sellers, creating cash flow considerations alongside your regular filing obligations.

Managing these varying schedules across multiple jurisdictions becomes increasingly challenging as you expand. The right compliance solution can automate this process, ensuring you never miss a deadline while maintaining control over your global tax strategy.

What happens when your business fails to collect the sales tax owed? 

Non-compliance with sales tax obligations carries serious financial and reputational consequences for growing companies. When you fail to collect and remit sales tax in jurisdictions where you have nexus, states will hold you liable not just for the uncollected tax, but also for compounding interest and significant penalties.

Beyond these immediate costs, your business faces additional risks including potential criminal penalties, legal action from tax authorities, and lasting damage to your company's reputation. As your business scales across borders, these compliance risks grow in parallel with your revenue.

Protecting your business means implementing a proactive approach to sales tax compliance before these liabilities accumulate and threaten your growth trajectory.