Back to Glossary
Accounting Terms
Tax Rate
Definition
The percentage of sales tax, VAT, or GST applied to taxable goods or services.
Overview
Tax rates vary by location, product type, and business structure. Applying the correct rate is essential for compliance and accurate invoicing.
Example
A 10% sales tax on a $500 service adds $50 tax, totaling $550.
Best Practices
Research applicable tax rates for your location and services. Update rates when they change.
Common Mistakes to Avoid
Using wrong tax rate
Not updating rates
Taxing exempt items
Frequently Asked Questions
How do I know what tax rate to charge?
Consult local tax authorities or an accountant. Rates depend on your location and what you sell.