Sales tax rates are determined by which entity?

Sales tax rates are primarily determined by each state. This is because states have the authority to impose taxes on goods and services, and they establish the specific rates that apply within their jurisdiction. While local municipalities can set additional taxes on top of the state rates, and certain cities may have their own specific tax measures, the foundational sales tax rate is set by the state government.

This means that each state can provide a different rate depending on its tax policies and economic needs. The federal government does not set sales tax rates, as sales tax is generally managed at the state and local level. Therefore, understanding that states oversee the establishment of these tax rates is crucial for anyone involved in transactions that require sales tax considerations.