What does sales tax apply to?

Sales tax primarily applies to the purchase of goods and services. This tax is levied by the government on the sale of tangible personal property and certain services when they are bought or consumed. When a consumer buys items from a retailer, sales tax is added to the sale price, which the retailer then collects on behalf of the state or local government. The rationale behind sales tax is to generate revenue for various public services and infrastructure.

In contrast, income from employment is subject to income tax, not sales tax. Real estate transactions often involve property taxes or transfer taxes rather than sales tax. Similarly, property insurance claims do not invoke sales tax, as they are a different type of financial transaction concerning coverage and compensation rather than a sale of goods or services.