Most states and cities charge sales tax on retail purchases made by customers—from clothes to certain foods. This sales tax is based on a percent of the purchase price, with the percentage of tax called the tax rate. In turn, each state’s tax rates vary greatly, often with the counties charging additional taxes: For example, in Vermont, the state and local sales tax rate stands at 5 percent; Florida has a state sales tax rate of 6 percent. And in various counties of New York, the sales tax rates start as low as 7.25 percent to as high as 8.75 percent.

How is the sales tax calculated at the checkout? Take, for instance, a purchase of a $100.00 ring in New York City, a place with a sales tax rate of 8.265 percent. Multiply $100 times 8.265 percent, or $100 × 0.08265 = $8.265, which rounds up to $8.27 for sales tax. The merchant would then charge the customer a total of $100.00 + $8.27 = $108.27. If the same $100.00 ring was purchased in Florida, the sales tax would be $100.00 × 6 percent, or $100 × 0.06 = $6.00, with a total purchase price of $106.00. Of course, not every purchase will be as straightforward as this, since some cities can also add local taxes and/or surcharges and fees to the bill.