One point of contention in the North Carolina tax reform debate has been the fate of one particular tax expenditure—the uncapped sales tax refund for nonprofits. The refund applies to "sales of taxable tangible personal...
- New Data on State and Local Sales Taxes from the Tax Foundation
New Data on State and Local Sales Taxes from the Tax Foundation
Local Rates Can Increase Total Sales Tax Burden Substantially
Washington, DC, July 31, 2012—California and Indiana have among the highest statewide sales taxes in the country, but Tennessee and Arizona take top billing when local sales taxes are added to the calculation, according to a new analysis by the Tax Foundation. Hawaii, Maine, Virginia, Wyoming, and Wisconsin have the lowest combined state and local rates. Delaware, Montana, New Hampshire, and Oregon do not levy sales taxes.
“Retail sales taxes are one of the more transparent ways to collect tax revenue, as statewide sales tax rates are generally well-understood by taxpayers. The local sales taxes collected in thousands of jurisdictions in 37 states, however, often are not,” said Tax Foundation economist Scott Drenkard. “These rates can be substantial, so a state with a moderate statewide sales tax rate can end up with a very high combined state and local rate.”
The states with the highest combined state-local rates are Tennessee (9.43 percent), Arizona (9.12 percent), Louisiana (8.86 percent), Washington (8.83 percent), and Oklahoma (8.68 percent). The states with the lowest non-zero combined rates are Alaska (1.79 percent), Hawaii (4.35 percent), Maine (5.00 percent), Virginia (5.00 percent), and Wyoming (5.18 percent).
California, despite a 1 percent reduction in its sales tax rate that took effect July 1, 2011, still has the highest state-level rate at 7.25 percent. Five states tie for the second-highest statewide rate with 7 percent each: Indiana, Mississippi, New Jersey, Rhode Island, and Tennessee.
The five states with the highest average local sales tax rates are Louisiana (4.86 percent), Colorado (4.52 percent), New York (4.48 percent), Alabama (4.37 percent), and Oklahoma (4.18 percent). Mississippi has the lowest non-zero average local rate of 0.004 percent, attributable to the state's only local sales tax: a 0.25 percent sales tax in Tupelo, the birthplace of Elvis Presley, with a current population of 34,546.
Sales Tax Clearinghouse publishes quarterly sales tax data at the state, county, and city level by ZIP code. The Tax Foundation weighs these numbers according to Census 2010 population figures in an attempt to give a sense of the prevalence of sales tax rates in a particular state.
Tax Foundation Fiscal Fact No. 323, “State and Local Sales Taxes at Midyear 2012” by Scott Drenkard, is available online.
The Tax Foundation is a nonpartisan research organization that has monitored fiscal policy at the federal, state and local levels since 1937. To schedule an interview, please contact Richard Morrison, the Tax Foundation’s Manager of Communications, at 202-464-5102 or firstname.lastname@example.org.
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