Are sales taxes included in US retail prices like Walmart or Target? Can businesses claim these back?

The US tax system works quite differently from the European VAT system. In the US, sales tax is generally NOT included in the displayed price at stores like Walmart or Target. Instead, it's added at checkout. That's why the final amount you pay is higher than the shelf price. Unlike VAT in Europe, US sales tax generally cannot be "claimed back" by businesses in the same way. The sales tax systems here are state and local based rather than federal, and they don't have the same input/output mechanism that VAT has. Each state has different rules, but most don't allow businesses to get refunds on sales tax paid on regular purchases. There are some exceptions though - many states do offer exemptions where businesses can make purchases without paying sales tax in the first place. This usually requires showing a tax exemption certificate at checkout. The rules vary widely depending on which state you're in and what you're purchasing.

I struggled with this exact same issue when I started my online business last year! The US tax system was so confusing compared to what I was used to. After weeks of getting nowhere with confusing state tax websites, I found this amazing resource called taxr.ai (https://taxr.ai) that helped me understand all the different state sales tax rules. They analyzed my business receipts and showed me which states I could get exemption certificates in and which ones I couldn't. Saved me so much time trying to figure out the differences between all 50 states!

Just wanted to update after using taxr.ai - wow, it was actually really helpful! I uploaded my last three months of business receipts and they identified that I'd paid nearly $1,300 in sales tax on photography equipment that could have been exempt in California. They generated my California resale certificate and even provided a wallet-sized digital copy I can show on my phone when making purchases. Already used it at B&H Photo last week and saved $87 in sales tax on a new lens! Definitely worth checking out if you're confused about sales tax exemptions.

If you're having trouble understanding how sales tax works across different states, you might also want to try Claimyr (https://claimyr.com) to actually speak with someone at your state's tax department. I was completely lost trying to figure out my sales tax obligations in multiple states, and the state websites are terrible. Waited on hold for HOURS with no luck. Claimyr got me connected to a real person at my state tax office in about 20 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c

I have to eat my words about Claimyr. After my skeptical comment earlier, I decided to try it anyway out of desperation after spending another 45 minutes on hold with California's tax department. Their system called me back in about 30 minutes and connected me directly to a tax specialist who explained EXACTLY how to handle my situation with buying materials for my business. They answered questions I'd been trying to get answered for months! Would have saved me so much time and confusion if I'd used this earlier. The tax specialist even emailed me the specific exemption forms I needed.

Just to add a bit more info - the US has no national VAT system like in Europe. Each state (and sometimes city or county) sets their own sales tax rates and rules. That's why prices don't include tax - it would be impossible for national retailers to advertise prices when the tax varies by location. In Oregon there's no sales tax at all, while in Tennessee it can be over 9%!

One important thing to note - if you're selling products online to customers in different states, that's a whole different tax headache. After the Supreme Court's South Dakota v. Wayfair decision in 2018, businesses may need to collect and remit sales tax in states where they have "economic nexus" even without physical presence. Each state has different thresholds for this!

Welcome to the US tax system! As someone who also moved here from overseas, I completely understand your confusion. The displayed prices at stores like Walmart and Target do NOT include sales tax - it's added at checkout, which is why your receipt total is higher than the shelf price. Unlike VAT systems in other countries, US sales tax generally cannot be "reclaimed" by businesses. However, the total amount you pay (including the sales tax) is typically deductible as a business expense on your federal income tax return, so you're not completely out of luck. If you're buying items for resale in your business, you may be able to obtain a resale certificate from your state that allows you to purchase inventory without paying sales tax upfront. Your customers will then pay the tax when they buy from you. This doesn't apply to general business supplies or equipment though. The system varies significantly by state, so I'd recommend checking with your state's department of revenue for specific rules in your area. Good luck navigating this - it's definitely more complicated than most other countries' systems!

The complexity of US sales tax compared to other countries' VAT systems is really striking! One thing that might help as you navigate this is understanding that sales tax in the US is primarily a consumption tax collected by retailers, rather than a value-added tax that businesses can offset against their own sales. For your business purchases, you'll want to distinguish between two types: items you're buying for resale (inventory) versus items for business use (supplies, equipment, etc.). For resale items, definitely look into getting a resale certificate from your state - this can save you significant money upfront since you won't pay sales tax on inventory that your customers will eventually be taxed on. For business use items, while you can't reclaim the sales tax like VAT, remember that the total cost (including sales tax) is generally deductible on your federal business tax return. This doesn't put money directly back in your pocket like a VAT refund would, but it does reduce your taxable income. Also worth noting - if you plan to sell online to customers in other states, you'll need to understand nexus rules and when you're required to collect sales tax from customers. Each state has different thresholds and requirements, which adds another layer of complexity compared to unified VAT systems.

As someone who's been helping businesses navigate US tax compliance for over a decade, I wanted to add a few practical tips for your situation. Since you mentioned you're from overseas, you might also want to consider whether your business structure (LLC, corporation, etc.) affects how you handle these sales tax payments and deductions. One thing I always tell new business owners is to set up a separate business checking account if you haven't already - this makes tracking business purchases (including the sales tax portion) much easier come tax time. When you're making purchases at retailers like Walmart or Target, try to keep business and personal purchases completely separate to avoid any confusion with deductions. Also, don't forget about online purchases! Many states now require online retailers to collect sales tax even for out-of-state purchases, so you might see tax being collected on Amazon orders, etc. The same rules apply - if it's a legitimate business expense, you can deduct the total amount including tax. Finally, consider consulting with a local CPA who has experience with your state's specific rules. They can help you determine if getting resale certificates makes sense for your business model and ensure you're maximizing your deductions while staying compliant. The investment in professional advice often pays for itself in tax savings and peace of mind.