To calculate the sales tax on a watch that costs $40 with a tax rate of 6.5%, you can use the following formula:
\[ \text{Sales Tax} = \text{Cost} \times \text{Tax Rate} \]
Substituting in the values:
\[ \text{Sales Tax} = 40 \times 0.065 \]
Calculating that gives:
\[ \text{Sales Tax} = 2.60 \]
So, the sales tax will be $2.60.