What is Sales Tax?

There are a lot of things that you know about, but don’t completely understand in life. Multiple things fall into the category of I-should-know-this-but-I-don’t-really-know-it, this includes: filing taxes, making doctor’s appointments for yourself, opening a bank account, voting, getting a loan, checking your credit score, and getting insurance. These tasks can be daunting, and just plain confusing. The good news is we’re here to explain sales tax.

Sales tax is a tax that you pay for services and goods. For example if you’re buying a new gaming system, you pay a sales tax on it. You can also pay sales tax on services, like house cleaning, or installing new equipment in your house. Sales tax is attached to just about anything and everything you purchase. If you ever feel like this must just be an American thing, it’s not. Dating back to ancient Egypt, paintings on tombs showed a sales tax being implemented. Sales taxes are a worldwide deal, but vary between nations, states, and counties.

Different states have different sale tax rates. States will have an overall state-level sales tax and then each county will have another sales tax rate. California has the highest state-level sales tax in the US, at 7.25%. As a result, California has some of the highest sale tax rates in the nation. Surprisingly the highest sales tax in nation, according to a 2018 Tax Foundation polling, is Louisiana.

California’s sale tax actually moved up to ninth highest in the nation. California used to rest right below the top ten highest sales tax states, but these past few years it’s increased. With a statewide sales tax at 7.25% our average local tax increases it by 1.25%. What does this mean for us as consumers? It means that we’re paying more when we buy groceries in California than we would in Oklahoma. This means a higher cost of living for all of us.

Sales taxes can be broken down a lot further, but for a general understanding of them just know that you have to pay them. They vary from state to state, as well as county to county. You can be tax exempt, however more than likely you won’t. You can find out how much you’re being taxed by looking at the bottom of your bill or by going online to look up local laws.

If you feel like you’re not being taxed enough, or being taxed too much, you can always try to change it by voting in your local elections. No matter what, don’t be intimidated by the word “sales tax”anymore.