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What Products and Services are Subject to Sales Tax?

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Question: What Products and Services are Subject to Sales Tax?
Answer: Every state in the U.S. charges sales tax on various products and services, but the states vary greatly on the products and services they tax. For example, most states do not charge sales tax on food sales, but a few (Arkansas, Virginia, West Virginia, and Tennessee have the highest food tax) do charge sales tax on food. Prescription drugs are exempt from sales taxes in almost every state, while most states charge sales tax on non-prescription drugs, and Illinois levies a 1% tax on non-prescription drugs. Most states charge sales tax on most products sold in the state, but sales taxes on services vary widely. Use this PDF file to see sales tax rates and taxable products and servicesfor each state.

Sales Tax on Services
The Federation of Tax Authorities has a database called the Services Taxation Survey which you can search in two ways:

  • By state, for a list of services which are taxable in that state
  • By service, to see which states tax that service.
You can also go to your state's Department of Revenue (or equivalent state agency) to see if they have a list of services which are subject to sales tax.

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