State and local governments depend on many different types of taxes, one of which is known as an excise tax. Like general sales taxes, excise taxes are paid on the purchase of an item. But unlike sales taxes, excise...
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- New Report: State and Local Sales Tax Rates
New Report: State and Local Sales Tax Rates
While state sales taxes are familiar to most taxpayers, local sales tax are less well-known. There are nearly 10,000 sales tax jurisdictions in 37 states. This report calculates the average local sales tax rate for each state.
Some key findings:
- The five states with the highest average combined rates are Tennessee (9.44 percent), Arizona (9.16 percent), Louisiana (8.87 percent), Washington (8.86 percent), and Oklahoma (8.67 percent).
- On the other end of the scale, Alaska, Hawaii, Maine, Virginia, and Wyoming have the lowest non-zero combined state and local sales tax rates.
- Five states do not have a statewide sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon. Of these, Alaska and Montana allow localities to charge local sales taxes.
- California, which raised its sales and income taxes through the initiative process last November, has the highest state-level rate at 7.5 percent. Five states tie for the second-highest statewide rate with 7 percent each: Indiana, Mississippi, New Jersey, Rhode Island, and Tennessee.
- Sales taxes are just one part of an overall tax structure and should be considered in context. For example, Tennessee and Washington State have high sales taxes but no income tax; Oregon has no sales tax but high income taxes. States also vary by the breadth of their sales tax; for example, Hawaii and New Mexico tax many more transactions than other states' sales taxes.
Tax Foundation Fiscal Fact No. 354, “State and Local Sales Tax Rates in 2013” by Scott Drenkard is available online.
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