Sales tax amounts are typically established by?

Sales tax amounts are typically established by state and local rates, which are determined by the government entities responsible for tax collection in specific areas. Each state has the authority to set its own sales tax rate, and local governments, such as counties and municipalities, can impose additional taxes on top of the state rate. This structure enables various regions to generate revenue based on their unique economic needs and policy priorities.

Federal regulations do not set sales tax amounts; instead, they focus on broader economic policies and different types of taxes, such as income tax. Individual retailers may charge sales tax, but they are required to follow the established rates set by state and local governments. Thus, the correct understanding of sales tax amounts being set by state and local rates is crucial for financial literacy, as it directly impacts consumer purchases and business operations.