Tax on an item priced under a dollar?

Question

Can an item priced $0.99 or under be subject to sales tax? I got charged $0.01 tax on an itunes song. What is this 1% sales tax and who is benefiting from it?

Answer 1

Any time you make a purchase, regardless of the amount, it is subject to sales tax per local tax rates.  As for who benefits from the 1% tax you paid on a itunes purchase, it's the same as if you had paid 8% tax on a $5,000 flat panel TV.  The rate might be lower on the itunes purchase but sales tax is still sales tax.  there isn't some secret entity that collects sales tax on items under $1.00.

Answer 2

it sure can... sales taxes differ depending the business is located, because in addition to state rate local municipalities (counties, cities) can impose additional sales taxes.

Answer 3

Of course it can.  Most places an item of 30 cents or so, and sometimes much less, will be taxed - it depends on the tax rate, which can be different each state.