Computing the Tax

Regardless of the type of sales tax with which you're dealing, the amount of tax that is owed with respect to each taxable sale comes down to applying the applicable tax rate to the total sales price. That is, the tax generally applies to the total amount that was received for the property or service, without any deductions for the cost of the property or service that was sold or any materials that may have been used, labor or service costs, or other expenses. In other words, the tax base doesn't necessarily bear any relation to the actual profit the seller may have realized on the sale.

The tax computation may be complicated by the fact that not all states have a single sales tax rate. Rather, many states have both a general rate and one or more special rates that apply to specific types of sales. Adding to the problem is that most states have local jurisdictions that impose their own sales taxes.

The following are some of the items that may affect the tax base: