Sales & VAT Estimator 2025 | US Sales Tax, EU VAT, Global GST

No Sales Tax States

Five US states have no state-level sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon. However, Alaska allows local jurisdictions to impose sales taxes, so some Alaska cities (like Juneau) do collect local sales tax.

Highest Sales Tax States

Combined state and local rates can exceed 10% in some areas:

• Louisiana: Up to 11.45% (state 4.45% + high local rates)
• Tennessee: Up to 9.75% (state 7% + locals)
• Arkansas: Up to 11.625% (state 6.5% + locals)
• Washington: Up to 10.6% (state 6.5% + locals)
• Alabama: Up to 11% (state 4% + high local rates)

Common Exemptions

Many states exempt or reduce rates on essential items:

• Groceries: Exempt in 32 states, taxed at reduced rates in others
• Prescription drugs: Exempt in all states
• Clothing: Exempt in PA, NJ, NY (under $110), MA (under $175), MN, RI
• Medical equipment: Often exempt with prescription

Origin vs Destination Based

Origin-based states (11 states including Texas, Ohio, PA for intrastate) charge the seller's location rate. Destination-based states (majority) charge based on where the customer receives goods. This distinction affects which rate to use and where to remit taxes.

The Multi-Stage Collection Process

Unlike US sales tax (collected only at final sale), VAT is collected at every stage of production. Each business in the supply chain charges VAT on sales and deducts VAT paid on purchases, remitting only the difference to tax authorities. The final consumer bears the full tax burden.

EU VAT Rates by Country (Standard Rate)

• Highest: Hungary (27%), Denmark/Croatia/Sweden (25%)
• Average: Germany (19%), France (20%), Spain (21%), Italy (22%)
• Lowest: Luxembourg (17%), Malta (18%), Cyprus/Romania (19%)

Reduced and Zero Rates

EU members can apply reduced rates (typically 5-15%) to specific categories:

• Food and beverages: Reduced in most countries (5-13%)
• Books and newspapers: Reduced or zero-rated
• Medical equipment: Often reduced
• Children's clothing: Zero-rated in UK, reduced in some EU states
• Exports: Zero-rated (0% but input VAT reclaimable)

One-Stop Shop (OSS) for E-Commerce

Since July 2021, the OSS simplifies VAT compliance for cross-border B2C sales within the EU. Instead of registering in each country where you sell, you can register in one EU member state and file a single quarterly return covering all EU sales. The threshold for using OSS is €10,000 in annual EU cross-border sales.

Canada: GST/HST/PST

Canada's consumption tax varies by province:

• GST only (5%): Alberta, British Columbia, Manitoba, Saskatchewan, NWT, Nunavut, Yukon
• HST (combined): Ontario (13%), Nova Scotia (15%), New Brunswick (15%), Newfoundland (15%), PEI (15%)
• GST + PST: BC (5% + 7% = 12%), Manitoba (5% + 7% = 12%), Quebec (5% + 9.975% = ~15%)

Australia: 10% GST

Australia applies a flat 10% GST to most goods and services. Key exemptions include fresh food, medical services, education, and childcare. Registration threshold is AUD $75,000 annual turnover. Non-residents selling digital products to Australian consumers must register regardless of turnover.

India: Tiered GST

India's GST uses four main tax slabs:

• 0%: Essential goods (milk, fresh vegetables, grains)
• 5%: Mass consumption items (packaged food, economy hotels)
• 12%: Standard goods (processed food, computers)
• 18%: Most services and goods (software, electronics)
• 28%: Luxury items (automobiles, tobacco, aerated drinks)

Other Notable GST Countries

• Singapore: 9% GST (increased from 8% in 2024)
• New Zealand: 15% GST on most goods and services
• Japan: 10% consumption tax (8% on food/beverages)
• South Africa: 15% VAT

The calculator provides invoice-ready outputs with clear breakdowns of each component:

Output Fields Explained

• Net Price / Gross Price: Depends on selected mode. Net = tax-exclusive (before tax), Gross = tax-inclusive (after tax). The tool converts between them based on the tax rate.
• Taxable Base: Price after discounts but before shipping. Shipping may be taxable depending on region and item type.
• Tax Amount: Total consumption tax. For US: stacked rates (state + county + city + special). For EU/Global: single VAT/GST rate.
• Effective Rate: Tax ÷ Gross. Example: $9.50 tax on $109.50 gross = 8.68% effective rate.
• Invoice Totals: Shows Net + Tax = Gross. Reverse charge shows customer owes VAT, not seller.

Rounding Methods

Item-level rounding calculates and rounds tax per line item, then sums (common in retail POS systems). Receipt-level rounding applies tax to subtotal, then rounds once (common in invoicing). Both are legally acceptable; choose what matches your accounting system.

❌ Ignoring Economic Nexus

After the 2018 Wayfair decision, most US states require remote sellers to collect sales tax once they exceed thresholds (typically $100,000 in sales or 200 transactions). Failing to register after crossing thresholds can result in back taxes, penalties, and interest.

❌ Using Incorrect Tax Rates

US sales tax rates change frequently as local jurisdictions adjust rates. Using outdated rates or applying the wrong local rate (destination vs origin) leads to under-collection or over-collection. Automated tax solutions help ensure accuracy.

❌ Missing Product Exemptions

Charging sales tax on exempt items (groceries in exempt states, prescription drugs, certain clothing) means you've overcharged customers. Conversely, failing to charge on taxable items creates liability.

❌ Improper B2B Documentation

For EU VAT, reverse charge transactions require valid VAT ID verification and proper invoicing. In the US, exemption certificates must be collected and maintained for wholesale/resale transactions.

❌ Ignoring Marketplace Facilitator Rules

Many states now require marketplaces (Amazon, eBay, Etsy) to collect and remit sales tax on behalf of sellers. If the marketplace handles collection, sellers shouldn't double-collect. Verify who is responsible in each jurisdiction.

Do I need to charge sales tax on shipping?

It depends on the state. Most states tax shipping if the underlying goods are taxable. Some states (like California) tax shipping only if it's not separately stated. A few states (like Arizona) don't tax shipping at all. Check specific state rules.

What's the difference between VAT-inclusive and VAT-exclusive pricing?

VAT-inclusive (gross) pricing shows the total price including tax—what the customer pays. VAT-exclusive (net) pricing shows the base price before tax. EU B2C prices are typically VAT-inclusive; US prices are typically tax-exclusive (tax added at checkout).

How do I handle digital services/SaaS for international customers?

Digital services are typically taxed where the customer is located. For EU customers, you must charge their country's VAT rate (use OSS to simplify). For US customers, digital goods are taxable in some states. For other countries, check local rules—many now require non-resident digital service providers to register.

What records should I keep for sales tax compliance?

Keep transaction records including: date, customer location, item description, taxable amount, tax rate used, tax collected, and exemption certificates. Retain records for the statute of limitations period (3-7 years for US states, longer for VAT). Automated systems maintain audit trails automatically.

Can I reclaim VAT on business purchases?

Yes, VAT-registered businesses can reclaim input VAT on purchases used for business purposes. This is a key advantage of VAT systems—only the final consumer bears the tax burden. Businesses deduct input VAT from output VAT and remit the difference. US sales tax doesn't have a comparable mechanism (businesses pay sales tax on purchases unless they have resale certificates).