Why is the price at the till higher than the label?
Short answer
Sales tax is added at the register rather than built into the label, and the rate depends on the city you are standing in, not the country. A shop may include it in the price if it posts a sign saying so — most do not.
The label is the pre-tax price
In most of the world the shelf price is what you hand over, because the tax is already inside it. Here the shelf price is generally the price before tax, and the tax appears as a separate line when the item is rung up.
State revenue departments set out the mechanics: the seller collects the tax and may either add it to the selling price and show it separately, or include it in the price and post a sign saying it is included. The second is permitted and unusual, so the safe assumption is that the label is not the total.
The rate is local, and that is why nobody can tell you a number
Sales tax is a state tax with city and county rates stacked on top, and it is charged based on where you receive the goods. Two shops a short drive apart can ring up different totals for the same item.
A few states have no sales tax at all. There is no single figure to memorise, which is why the useful habit is arithmetic rather than a number: add roughly a tenth to anything you are about to buy and you will not be surprised often.
Where this catches people out hardest
Cash. If you are counting out notes for a marked price you will be short, and that is the most common way a visitor meets this rule.
Restaurant bills too, where the tax comes before the tip and the tip should be calculated on the pre-tax amount — not on the total the card machine offers you a percentage of.
Good to know
- The shelf label is normally the pre-tax price
- The rate is state plus city and county, so it changes by location
- A shop may include tax in the price only if it posts a sign
- Tip on the pre-tax amount, not the taxed total
