There is no federal sales tax in the United States. The sales tax printed on your receipt is charged by your state or local government, not by Washington. The federal government funds itself mainly through income taxes and payroll taxes, with narrower revenue streams from excise taxes on specific products and customs duties on imports. Among developed countries, the U.S. is unusual in this: most peer nations collect a national value-added tax or consumption tax at the register, and the U.S. does not.
The Closest Thing: Federal Excise Taxes
The federal government does tax certain purchases, just not across the board. Excise taxes live in Chapters 31 through 36 of the Internal Revenue Code and apply to specific products, usually ones tied to infrastructure funding or public health policy. The tax is built into the shelf price, so most shoppers never see it as a line item.
A few of the common rates:
- Gasoline: 18.4 cents per gallon. Diesel: 24.4 cents per gallon. Both include a 0.1-cent fee for leaking underground storage tanks, and most of the revenue goes to the Highway Trust Fund. The rates have not changed since 1993.1U.S. Energy Information Administration. How Much Tax Do We Pay on a Gallon of Gasoline and on a Gallon of Diesel Fuel
- Cigarettes: $1.01 per pack.2Centers for Disease Control and Prevention. STATE System Excise Tax Fact Sheet
- Distilled spirits: $13.50 per proof gallon at the standard rate, with a reduced $2.70 rate for small producers on their first 100,000 proof gallons.3Alcohol and Tobacco Tax and Trade Bureau. Tax Rates
- Beer: $18.00 per barrel standard, $3.50 per barrel for small brewers on their first 60,000 barrels.3Alcohol and Tobacco Tax and Trade Bureau. Tax Rates
- Wine: about $0.23 per gallon for hard cider up to $3.40 per gallon for sparkling wine.3Alcohol and Tobacco Tax and Trade Bureau. Tax Rates
These excise taxes are real federal taxes on purchases, but they are targeted, not general. Buying a shirt, a laptop, or a haircut triggers no federal tax at all.
Import Duties as a Hidden Consumption Tax
Federal tariffs are the one area where the federal government taxes goods in a way that resembles a sales tax. Article I, Section 8 of the Constitution gives Congress the power to impose duties on imported merchandise, and U.S. Customs and Border Protection collects them.4Congress.gov. U.S. Constitution Article I Section 8 Clause 1 Importers classify products using the Harmonized Tariff Schedule to figure out what rate applies.5Harmonized Tariff Schedule. Harmonized Tariff Schedule
Rates vary widely. Some goods enter duty-free under trade agreements; others carry rates above 25 percent depending on origin and category. As of early 2026, the average effective U.S. tariff rate sits around 11 percent, the highest since 1943. Because importers pass those costs into retail prices, tariffs function as a hidden consumption tax that consumers pay without seeing it separated out.
The Sales Tax on Your Receipt Is a State Tax
When you see “sales tax” on a receipt, that money is going to your state and, in most places, your city or county. The Tenth Amendment leaves powers not granted to the federal government to the states, and taxing retail transactions is one of them.6Congress.gov. U.S. Constitution – Tenth Amendment
Forty-five states and the District of Columbia charge a statewide sales tax. Five states do not: Alaska, Delaware, Montana, New Hampshire, and Oregon. Even so, “no state sales tax” is not always “no tax on purchases.” Alaska allows local municipalities to charge their own, and roughly 100 do. New Hampshire taxes restaurant meals and hotel rooms at 8.5 percent. Montana taxes lodging at 8 percent. Only Delaware and Oregon are truly free of sales tax at every level.
In the states that do collect it, statewide rates run from about 2.9 percent to over 7 percent, and local add-ons can push combined rates past 10 percent in some places. Groceries and prescription drugs are commonly exempt, but which items qualify depends on the state.
Why Online Purchases Now Show Sales Tax
Online shopping used to escape sales tax if the retailer had no physical presence in the buyer’s state. The Supreme Court closed that gap in 2018 in South Dakota v. Wayfair, Inc., overturning the physical-presence rule and upholding South Dakota’s “economic nexus” standard: a state can require an out-of-state seller to collect sales tax if the seller delivers more than $100,000 in goods or services into the state, or completes 200 or more separate transactions there, in a single year.7Supreme Court of the United States. South Dakota v. Wayfair, Inc.
Every sales-tax state has since enacted an economic nexus law, though several have dropped the transaction-count piece and rely only on a dollar threshold. Nearly every sales-tax state has also passed a marketplace facilitator law, which shifts the collection duty onto platforms like Amazon, eBay, and Etsy for third-party sales. So when tax appears on your online order, it is your state’s sales tax being collected by the retailer or platform, still not a federal tax.
Use Tax: What You Owe When No Sales Tax Was Charged
If you buy something and the seller does not charge sales tax, your state generally expects you to pay a use tax at the same rate. Use tax is the companion to sales tax and exists so residents cannot avoid their state’s tax by buying from out-of-state sellers or in states with lower rates.
Common examples include ordering from an online retailer that does not collect your state’s tax, or crossing state lines to buy a big-ticket item somewhere cheaper. Many states include a use tax line on their individual income tax return for self-reporting. Enforcement against individuals is thin for small purchases, but states do audit businesses and large consumer purchases like vehicles or equipment. Wayfair and marketplace facilitator laws have reduced the situations where use tax matters, since most online purchases now include tax at checkout, but the underlying obligation is still on the books.
Has a Federal Sales Tax Ever Been Proposed?
Yes, and the leading proposal keeps coming back. The FairTax Act, reintroduced as H.R. 25 in January 2025, would replace the federal income tax, payroll taxes, and estate tax with a single national sales tax on goods and services purchased for final consumption. It would also repeal the Sixteenth Amendment, ending Congress’s power to tax income.8Congress.gov. Text – H.R.25 – 119th Congress (2025-2026) FairTax Act of 2025
The bill was referred to the House Ways and Means Committee and has sat there without further action, the same pattern as in every previous Congress. Supporters argue a national sales tax would simplify the code and encourage saving. Critics say a consumption tax is regressive because lower-income households spend a larger share of their earnings on taxable goods; the FairTax includes a “prebate” designed to offset that effect. The debate has not produced enough support to move the bill to a floor vote, so for now the federal government keeps collecting revenue through income and payroll taxes rather than at the register.