Sales tax in the U.S. is not a value added tax
The United States has no value added tax at any level of government. There is no federal consumption tax and no general input tax credit mechanism. What exists instead is a state and local retail sales tax, charged once at the point of the final sale to a consumer, with rates and rules set separately by each state and by counties and cities within it. Five states impose no statewide sales tax at all.
The structural difference matters for a business. Under a VAT you charge output tax, deduct the input tax on your own purchases and remit only the difference, so the tax never sticks to a business in the middle of the chain. Under a sales tax there is no input credit: you avoid tax on goods you buy for resale only by presenting a resale certificate, and any sales tax you do pay on supplies, equipment or services simply becomes a cost.
Enter your taxable sales and the combined rate for the delivery address to see what you collect and remit, then compare it with what the same transactions would produce under a VAT. Rates are entered manually because they change frequently and differ street by street; confirm the current rate with your state department of revenue. The comparison is shown on a 2026 basis.
This is an estimate for understanding the structure, not a filing calculation. Nexus rules, marketplace facilitator laws, product taxability, sourcing rules and use tax on out-of-state purchases all change the answer. Confirm with a state and local tax professional.
Frequently asked questions
Not against the sales tax you collect. There is no input tax credit. It is generally deductible as part of the cost of the item for income tax purposes, which is a different benefit entirely.
Because county, city and special district taxes stack on top of the state rate. The combined rate depends on the exact delivery address, which is why the calculator asks you to enter it.