Originally Posted by Jackknifed Juggernaut
I assumed that any sale would generate a sales tax. Apparently a bad assumption on my part.
Most states separate out goods and services, and the tax rates depending on what those goods and services are vary. For example, some states have different sales tax rates based on whether the food is prepared or whether it is an ingredient ("grocery tax.") Many states, like yours, don't charge sales tax on services, or they restrict what services are taxed. If you go to an auto mechanic, you may notice that parts and labor are tallied up separately and taxed or not taxed accordingly. Or if you use an attorney, you may note no sales tax is added to their rate. It depends on the sales tax laws in your jurisdiction, but, generally, most states do make some sort of distinction between goods and services for the purposes of sales tax, often exempting the latter. (And even with "goods," there can be qualifiers like "tangible goods," so some digital products, for example, here in Illinois are not subject to sales tax.)