In US, an individual or business is required to pay sales tax when that person/business buys a product from another business house. The percentage of tax and the item on which this tax will be levied varies from one state to another. Some states even require customer to pay sales tax on services. Despite this requirement, an entity is exempt from paying sales tax in different scenarios.
1. Exemption by entity
Some states exempt organizations such as charitable organizations, religious organizations and government entities from paying sales tax on certain items. The limitation with these organization is still that these entities cannot undertake any commercial activity especially with the bought item.
2. Exemption by products
Some products such as prescription medicine, raw food bought from super market are generally exempt from sales tax. It is to be noted that cooked food bought from restaurant may still incur sales tax.
3. Purchase for reselling
A merchant buying product from another business to be further sold to retail customers or another business may claim exemption from paying sales tax directly. 
In this case, such buyer will need to give Sales Tax Resale Certificate which essentially states that the product being brought will be sold further in its current state or refined state to another entity. This certificate should not be used if the buyer will use the product as consumable or tool.
The buyer is still required to collect sales tax if selling to end consumer if required by the state of buyer.
4. Use Tax
If business buys a product for self consumption then that business may pay Use Tax equal to the sales tax rate in the state where premises for the buyer is located. Use Tax is on honor basis and one may pay higher or lower sales tax depending upon the home state instead of the seller’s state. This is particularly useful for online or over the phone purchase.
Conclusion
Just as investment in various financial instruments (taking life insurance, buying mutual funds/equities) can save tax, so is an entity may postpone paying sales tax to the end user of product. In some circumstances no tax is levied.
