Sales tax is a transactional tax that is imposed on the privilege of transacting business in a particular state and/or local jurisdiction, based on the product or service being sold. As a general rule, the sale of tangible personal property (TPP) is taxable unless specifically exempted by statute, or through the receipt of a valid exemption certificate. By contrast, services are generally exempt unless specifically identified as taxable by statute. Exceptions are the two true gross receipt states, Hawaii and New Mexico. In these two states, the tax is imposed on the seller, with few exceptions.
45 states, including the District of Columbia, impose some form of sales and use tax. These transactional taxes are called by various names including Sales Tax, Transaction Privilege Tax, Gross Receipts Tax, General Excise Tax, Retailers Occupation Tax, Gross Retail Tax, and/or Consumer Sales Tax. The five states that do not impose general sales and use taxes are Alaska, Delaware, Montana, New Hampshire and Oregon, although Alaska does not impose a state sales tax, many local jurisdictions there impose a local sales tax.