Tax Foundation Releases New Data on State and Local Sales TaxesAlaska Has Lowest Non-Zero Combined Sales Tax Rates Tennessee, California Have Highest Combined Sales Tax Rates Washington, DC, February 3, 2011 - Tennessee, California, Arizona, Louisiana, and Washington have the highest combined state and average local sales tax rates, according to a new report released today by the nonpartisan Tax Foundation. On the other end of the scale, Delaware, Montana, New Hampshire and Oregon all have the lowest combined rates of zero percent.
"Retail sales taxes are considered to be 'transparent' taxes; citizens are aware of how much they pay and when," said Tax Foundation Staff Economist and study author Kail Padgitt, Ph.D. "However, in two-thirds of the country, local-option sales taxes make it somewhat more difficult for citizens to know what the rates are, and transparency suffers."
Thirty-four states allow localities to charge a local sales tax. The rates vary from jurisdiction to jurisdiction, and the Tax Foundation averages those in a way that gives the most relevant figures for sales tax totals in each state.
The states with the highest combined state-local rates are Tennessee (9.44 percent), California (9.08 percent), Arizona (9.01 percent), Louisiana (8.69 percent), and Washington (8.64 percent).
The states with the lowest non-zero combined rates are Alaska (1.10 percent), Hawaii (4.35 percent), Maine (5.00 percent), Virginia (5.00 percent), and South Dakota (5.22 percent).
California has the highest state-level rate of 8.25 percent, including a mandatory 1 percent tax collected by the state but distributed to local governments. (Some sources describe California's statewide sales tax as one percentage point lower for this reason.) Five states tie for the second-highest state rate of 7 percent: Indiana, Mississippi, New Jersey, Rhode Island and Tennessee.
The states with the highest average local sales tax rates are Louisiana (4.69 percent), New York (4.52 percent), Colorado (4.08 percent), Alabama (4.03 percent), and Oklahoma (3.94 percent). The states with the lowest non-zero average local rates are Idaho (0.03 percent), Minnesota (0.27 percent) Pennsylvania (0.34 percent), Hawaii (0.35 percent), and Wisconsin (0.42 percent).
Tax Foundation Fiscal Fact No. 258, "Ranking State and Local Sales Taxes," is available online. The Tax Foundation is a nonpartisan, nonprofit organization that has monitored fiscal policy at the federal, state and local levels since 1937.
Posted: February 3, 2011
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