Types of indirect taxes (VAT/GST and other indirect taxes).
The United States (US) does not have a national sales-tax system. Rather, indirect taxes are imposed on a sub-national level. Each state has the authority to impose its own sales and use tax, subject to US constitutional restrictions. In many states, local jurisdictions (e.g. cities and counties) also impose sales and use taxes.
What transactions are subject to sales and use taxes?
In general, transactions involving sales of “tangible personal property” and select services are subject to tax. States have varying definitions of tangible personal property. A number of states also tax digital goods (e.g. digital audio works, e-books, streaming video). Most states limit the tax to services specifically enumerated by statute. However, a few states tax nearly all services.
What are the standard or other rates (i.e. reduced rate) for sales and use taxes?
There is no national sales tax in the US and therefore no standard rate. Sales or use tax rates vary by state, ranging from 2.9 to 7.25 percent at the state level. In addition to the state rate, local governments in 35 states impose an additional sales or use tax ranging from 1 to 5 percent.
Various states also offer reduced or zero rates on certain types of property, such as food for home consumption, residential utilities and manufacturing-related machinery.
