When using a Tax Calculator, it’s not uncommon to encounter results that differ from your expectations. Several factors can contribute to this discrepancy. Here’s a breakdown of potential reasons why you may have seen a different rate:
In many states, multiple tax rates combine to determine the total rate you should charge for a transaction. Here’s an example on how it works in Hawaii:
Base Rate: The standard tax rate is 4%, which is automatically applied to every transaction in Hawaii.
Additional Taxes: In addition to the base rate, there are county and city taxes that vary based on the location of the transaction.
Combined Rate: The 4.7% rate you see is the total of the base rate plus any applicable county or city taxes associated with the address you entered into the calculator.
This combination results in the overall tax rate charged for your transaction.
The average combined rate of 4.44% is just an average rate across all cities and counties in Hawaii; however, individual zip codes may have rates that are higher or lower.