Sales Tax

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Definition of 'Sales Tax'

Sales tax is a tax levied on the sale of goods and services. It is typically collected by the seller at the point of sale and then remitted to the government. The rate of sales tax varies from state to state, and in some cases, from city to city.

Sales tax is a major source of revenue for state and local governments. In 2017, sales tax revenue accounted for 33% of total state tax revenue and 13% of total local tax revenue.

There are a number of different types of sales taxes. The most common type is a general sales tax, which is levied on the sale of all goods and services. Some states also have selective sales taxes, which are levied on specific goods or services, such as gasoline or alcohol.

Sales tax can be a significant burden on businesses, especially small businesses. The cost of collecting and remitting sales tax can be high, and the tax can also reduce the amount of profit that businesses can make.

There are a number of ways to reduce the cost of sales tax compliance. One way is to use a sales tax software solution. Sales tax software can help businesses to calculate the correct amount of sales tax to collect, and to file sales tax returns.

Another way to reduce the cost of sales tax compliance is to register for a sales tax exemption. A sales tax exemption allows businesses to purchase goods and services without paying sales tax. However, businesses that qualify for a sales tax exemption must still file sales tax returns.

Sales tax is a complex topic. There are a number of different rules and regulations that businesses need to be aware of. If you have any questions about sales tax, you should consult with a tax professional.

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