Did you spend your purchases at the checkout during the trip and the total value was higher than expected? It was because of taxes! Find out how taxes on purchases work in the United States and stop being surprised during your travels!
Have you ever imagined going into a store, choosing some items, calculating in your head more or less how much the purchase will cost… And when you go to the checkout, the price is much higher than expected?
This situation often happens to Brazilians who visit the United States to shop, but it's not because we're bad at math. It is because the tax system under purchases works differently in the country.
While in Brazil the sticker value is the value of the merchandise plus tax, in the USA the tax is added only at the checkout, when paying. This means that that Macbook Air that is on Apple's website for $999 will actually cost more than a thousand dollars. And, worse, the value still varies depending on the state in which you are buying!
Confused? So read this post and understand everything about how purchasing taxes work in the United States, how much extra you will pay in each state, and whether it is possible to get an exemption from these taxes because you are a tourist.
How do purchase taxes work in the United States?
In Brazil, taxes are included in the sticker price of products, which means that the value you see is the final amount you will pay at the time of purchase.
In the United States, taxes are added to the purchase total at the time of payment, which may result in a final price different from what you expect. Furthermore, the amount of taxes is not fixed, and can vary from state to state and even from city to city.
This means that, if you are going to visit several destinations during your trip, it may be more interesting to shop in the one with the cheapest taxes. If you are buying cheap items, this variation may not make much difference, but for those who want to buy electronics or luxury pieces, for example, it can mean big savings.
How much are taxes in the main American destinations?
Among the main destinations visited by Brazilians in the United States, these are the values of sales tax, taxes on purchases:
- New York (city): 8,875% (includes a 4% state tax and a 4,875% city tax)
- Los Angeles, California: 9.5% (includes 7.25% state tax and 2.25% local tax)
- Orlando, Florida: 6.5% (includes 6% state tax and 0.5% local tax)
- Miami, Florida: 7% (includes 6% state tax and 1% local tax)
- Las Vegas, Nevada: 8.38% (includes 6.85% state tax and 1.53% local tax)
- San Francisco, California: 8.5% (includes a state tax of 7.25% and a local tax of 1.25%)
- Boston, Massachusetts: 6.25%
- Washington, DC: 6.0%
- New Jersey (city): 6.625%
You can check the value of fees in each state on this page.
Many Brazilians take itineraries that include Miami, Orlando and New York. In this case, for those who want to shop, it is best to take advantage of the cities in Florida, which have a tax rate almost 2% lower than in New York. For a US$999 MacBook, for example, the tax would go from US$89 in NY to US$64 in Orlando, a difference of US$25 that can be used on a case and film for the screen and lenses.
Anyone going on a road trip through California, passing through Las Vegas, will save money by shopping in the city of sin. Here on the blog there is a complete road trip itinerary along the California coast, passing through Las Vegas.
How to calculate the value of taxes on purchases in the United States?
It is unlikely that the products you will buy will have full prices that are easy to calculate, such as US$100. Furthermore, the percentage of taxes paid are also not whole numbers, which makes the math even more complex to do in your head.
Therefore, the easiest way to calculate taxes is to use the calculator on your cell phone. What you will need to make the account:
- The value of the product to be purchased
- The tax amount in the city where you are making the purchase
Open your calculator and do the following math:
Tax value = Product value * 0,0XX with XX being the tax value.
An example, let's assume you want to buy a Macbook Air that costs US$999, and you are in Orlando, where the rate is 6,5%. In this case, the calculation to be made is:
Tax amount = 999 * 0,065
That totals US$64 dollars. This is the amount you will pay in excess at the checkout, relating to taxes.
If you want to directly calculate the total purchase price, the calculation is as follows:
Total purchase value = Product Value * 1,0XX, with XX being the tax amount.
Using the same example, of purchasing a Macbook Air in Orlando, the bill would be:
Total purchase amount = 999 * 1,065.
That totals US$1063.
Save these two calculations and check the value of sales tax (purchase tax) at the destination of your trip. This way, your detailed shopping list, with the value of each product, will already reflect the price to be paid at the checkout, and you will no longer have surprises.
Do I need to pay taxes? Is there a tax-free system in the United States?
The United States does not have a system of tax-free for tourists, the same happens in European Union countries.
This means that yes, even if you do not live in the USA, you need to pay taxes on your purchases and do not receive a refund for these amounts.
The only way to avoid these taxes is to buy in places like stores duty-free inside airports. However, these stores have very high prices, and it is possible to find numerous promotions within the United States that make the products cheaper even with the added taxes.
I only stop by duty-free at the end of the trip, if I haven't found a product on my shopping list. Overall, it's not usually worth it and the selection is limited.
If you like perfumes, however, I suggest checking the price in duty-free on the outbound trip, comparing it with the prices charged in safe stores like Sephora and Ulta Beauty, and making your decision. If the value is the same, it's worth buying in duty-free, as there you won't have the added tax.
Here on the blog there is a complete post about the best perfumes to buy in the United States.
Is it still worth shopping in the United States even with taxes added?
Most of the time, yes!
As taxes in Brazil are very high, and with the high dollar conversion, even adding 8% or 9% more to the value of your purchase, it still usually compensates in relation to the price charged in the national territory.
Using the example of the US$999 Macbook Air, even if you buy it in Los Angeles, where the tax is 9.5%, you would still pay US$1093, which in current conversion would be around R$5485. The same computer, in Brazil, costs R$10.999 in the official store, twice the price.
Of course, the ideal would be to do a search between American websites and Brazilian websites, and do the math taking into account the value of the dollar and the tax. There are some situations where the price is not worth it in the US, but they are rare.
Conclusion
Now you know how purchase taxes work in the United States! It's a little different from Brazil, but you just need to know the value of sales tax At the destination you are going to visit, have your cell phone calculator on hand and you are good to go!
And the best thing is that, in most cases, even with this tax added, you still save a lot compared to prices in Brazil.
Did you already know how this purchase tax worked? Have you ever been surprised when paying for a purchase on your trip? Tell me here in the comments!