Taxable items include most physical goods sold in stores, many services, digital downloads and streaming subscriptions, real estate, titled vehicles, and specific commodities like fuel, tobacco, and alcohol. Forty-five states levy a general sales tax, with a population-weighted average combined state and local rate of about 7.5% as of 2026. On top of point-of-sale charges, you may owe recurring property taxes on land and buildings, excise taxes baked into the price of gasoline and alcohol, use tax on purchases where no sales tax was collected, and customs duties on anything shipped from overseas.
Physical Goods You Buy in Stores
Tangible products are the most commonly taxed category in the country. Electronics, furniture, appliances, clothing, sporting goods, building materials, and household supplies all trigger sales tax in nearly every state that imposes one. Five states have no statewide sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon. In the other forty-five, the retailer collects tax at the register and remits it to the state.
Combined state and local rates vary widely. The lowest-tax states hover around 4% to 5%, while the highest combined rates exceed 10%. Louisiana tops the list at about 10.1% once local taxes are added in.
What’s Usually Exempt
Not everything on a shelf is taxed. Most states exempt unprepared food purchased at a grocery store, so a bag of rice or a carton of eggs won’t carry sales tax in the majority of the country. Prepared food from a restaurant or deli counter is almost universally taxable. Some states run temporary sales tax holidays, often around back-to-school season, during which qualifying purchases like clothing and school supplies are exempt up to a per-item dollar limit.
Prescription drugs and most medical devices are exempt in nearly every state. Over-the-counter drugs get less favorable treatment and remain taxable in many jurisdictions, though a growing number of states have moved to exempt them as well.
Businesses buying inventory for resale don’t pay sales tax on those purchases. They provide the supplier with a resale certificate that shifts the tax obligation downstream to the eventual retail buyer. Using a resale certificate for items you actually plan to keep and use, rather than resell, is a common audit trigger and can result in back taxes plus penalties.
Qualifying nonprofits can obtain exemption certificates for purchases tied to their exempt purpose. Requirements vary by state, but a 501(c)(3) designation from the IRS is usually the starting point. Religious institutions, schools, veterans’ organizations, and volunteer fire departments commonly qualify.
Services That Get Taxed
Every state with a sales tax also taxes at least some services, and four states tax services by default unless a specific exemption applies. The most commonly taxed categories include repair and maintenance work on tangible property, landscaping, dry cleaning, pest control, and admission to entertainment and sporting events.
A plumber who installs a new faucet will likely collect tax on the entire job in most states because parts and labor are bundled. A consultation where no work is performed and no parts installed may not be taxable, though the line isn’t always obvious. State revenue departments publish guidance bulletins listing taxable service categories when you need to check.
Professional services from lawyers, doctors, and accountants remain untaxed in the vast majority of states. Data processing and cloud-based information services are a newer battleground. A handful of states now tax payroll processing, web hosting, and similar digital business services.
Digital Products and Streaming
Downloaded software, ebooks, music files, and streaming subscriptions are taxed in roughly forty states. An ebook is treated the same as a paperback, a downloaded movie the same as a disc. If you see a small tax line on your streaming invoice or app store receipt, that’s your state’s digital goods tax at work.
The rate generally matches the combined sales tax rate where you live. Your billing address determines which jurisdiction’s rate applies, which is why two subscribers in different counties can pay slightly different totals for the same plan.
Cloud-based software sold as a subscription, often called Software as a Service or SaaS, sits in murkier territory. Some states tax SaaS as a digital product, others treat it as a nontaxable service, and a third group taxes it only under certain conditions.
Use Tax on Untaxed Purchases
If you buy something from an out-of-state seller who doesn’t charge your state’s sales tax, you aren’t off the hook. Every state with a sales tax also imposes a companion use tax at the same rate, and the obligation to report and pay it falls on you as the buyer. The use tax exists specifically to prevent people from dodging local sales tax by shopping across state lines or online from sellers with no in-state presence.
Compliance among individual consumers is low because most people don’t know the obligation exists. The legal requirement is still real. Many states include a use tax line on the individual income tax return, making it easy to report. If you bought furniture from an out-of-state retailer, had an online order shipped from a seller that didn’t collect tax, or brought a large purchase home from a vacation, you technically owe use tax.
The gap has narrowed since the Supreme Court’s 2018 decision in South Dakota v. Wayfair, which allowed states to require out-of-state sellers to collect sales tax once they hit certain thresholds. Most states now set that threshold at $100,000 in annual sales or 200 transactions into the state, though the exact numbers vary. Major online marketplaces are also required to collect tax on behalf of third-party sellers in most states. Smaller sellers and private-party transactions can still slip through, leaving the use tax obligation with you.
Real Estate and Vehicles
Owning real estate creates a recurring tax obligation that lasts as long as you hold the property. Property taxes on land and buildings are assessed annually by local officials and fund schools, fire departments, roads, and other municipal services. Effective rates run from about 0.3% of market value in the lowest-tax states to over 2.2% in the highest, with a national average near 1%.
Your local assessor determines your property’s market value, then applies an assessment ratio and the local tax rate to calculate your bill. If the assessed value changes from one year to the next, you’re entitled to a written notice explaining the new figure. You also have the right to challenge the assessment through a formal appeal process, typically starting with a conference at the assessor’s office and escalating to a local board of review.
Many states offer homestead exemptions that reduce the taxable value of your primary residence. Some states offer enhanced exemptions for seniors, disabled veterans, and surviving spouses of military service members. The savings can be substantial, and the exemption usually requires a one-time application rather than automatic enrollment.
Falling behind on property taxes is one of the fastest ways to lose a home. Unpaid taxes become a lien that takes priority over virtually every other claim, including your mortgage. After a delinquency period that typically lasts several years, the taxing authority can sell the lien to an investor or initiate a tax sale. Redemption periods give you a window to pay what you owe and keep the property, but once that window closes, the new lienholder or the government can take title.
Titled personal property like cars, boats, and private aircraft often carries its own tax obligations beyond the initial sales tax at purchase. Many states impose an annual personal property tax or registration fee on vehicles based on value, weight, or age. These recurring costs can range from under $50 to several hundred dollars a year depending on your state and the type of vehicle.
Excise Taxes on Fuel, Tobacco, and Alcohol
Certain products carry excise taxes separate from and in addition to general sales tax. Gasoline, diesel fuel, tobacco products, and alcoholic beverages are the main four. Unlike sales tax, which is a percentage of the purchase price, excise taxes are usually a flat dollar amount per unit: per gallon, per pack, or per proof gallon.
The federal excise tax on gasoline is 18.3 cents per gallon, plus a 0.1-cent-per-gallon fee for the Leaking Underground Storage Tank Trust Fund, bringing the total federal charge to 18.4 cents per gallon.1Office of the Law Revision Counsel. 26 USC 4081 – Imposition of Tax Diesel is taxed at 24.4 cents per gallon at the federal level.2U.S. Energy Information Administration. Frequently Asked Questions – How Much Tax Do We Pay on a Gallon of Gasoline and on a Gallon of Diesel Fuel State fuel taxes stack on top of those federal rates and average roughly 33 to 35 cents per gallon, so the total tax per gallon of gas in many places exceeds 50 cents. These are collected from wholesalers and refiners, so they’re already embedded in the pump price.
Revenue from fuel excise taxes is earmarked for transportation infrastructure. Tobacco and alcohol excise taxes serve both a revenue purpose and a public health discouragement function. Federal and state rates on these products vary widely and change more frequently than fuel taxes do.3Internal Revenue Service. Excise Tax
Import Duties and Tariffs
Goods imported into the United States are subject to customs duties, and the rules shifted in early 2026. The federal government suspended the longstanding de minimis exemption, which had previously allowed shipments valued under $800 to enter the country duty-free.4The White House. Continuing the Suspension of Duty-Free De Minimis Treatment for All Countries As of February 24, 2026, all imported shipments are subject to applicable duties, taxes, and fees regardless of value or country of origin. If you order products directly from overseas retailers, expect customs charges that weren’t there before.
Tariff rates depend on the product’s classification under the Harmonized Tariff Schedule and range from zero on some raw materials to double-digit percentages on manufactured goods. Duties are paid by the importer of record, which in most consumer transactions means either the seller or the shipping carrier will collect the amount and pass the cost along to you.