Sales tax is a type of levy imposed by the government at the point of sale for goods or services. To simplify, when you make a purchase, the sales tax is added to the cost of your purchase. For example, if a state has a 5% sales tax and you purchase an item that costs ten dollars, you will pay $10.50 at the register.
The amount of sales tax varies from state to state. Some states – 38 as of November 2018 – also have local sales taxes. The highest average combined state and local tax rates are in Tennessee, Louisiana, Arkansas, and Washington, each of which has combined taxes of over 9%. At the state level, California has the highest tax rate at 7.25%. Four states fall only slightly behind with state sales tax rates of 7%. Those states are Tennessee, Indiana, Mississippi, and Rhode Island.