It varies. Gift cards and periodicals are not taxed here in Corruption Central (Illinois). If you're trading in merchandise towards the purchase of something, be it a car or video-game system, and/or pay with a gift card, you only pay tax on the outstanding balance. When I bought my PSP Go from GS, with trades and store credit, I only had to pay about $10 out of pocket. I only had to pay our county's illustrious 10% sales tax on that $10. I rather like having to pay only $1 to our government, rather than $25.