Sales Tax Rates in America’s Largest Cities

With Chicago set to impose the highest combined sales taxA sales tax is levied on retail sales of goods and services and, ideally, should apply to all final consumption with few exemptions. Many governments exempt goods like groceries; base broadening, such as including groceries, could keep rates lower. A sales tax should exempt business-to-business transactions which, when taxed, cause tax pyramiding. rate of any major city as of January 2016, many people want to know how their city ranks. Last week, I set out a list of the 15 cities with the top sales tax rates, but many of these cities are on the small side: Birmingham and Mobile, for instance. Not until Seattle, with the seventh-highest rate among American cities, does one encounter a city that ranks in the top 100 by population. It seemed worthwhile, therefore, to take a second look, this time limiting the scope to America's 50 largest cities, with populations ranging from 384,000 (New Orleans) to 8.5 million (New York City).

Of America's most populous cities, the following impose the highest combined state and local sales tax rates:

1. Seattle, WA – 9.6%
2. Oakland, CA – 9.5%
3. Chicago, IL – 9.25% (10.25% as of Jan. 1, 2016)
4. Memphis, TN – 9.25%
5. Nashville, TN – 9.25%
6. Los Angeles, CA – 9.0%
7. Long Beach, CA – 9.0%
8. New Orleans, LA – 9.0%
9. New York, NY – 8.88%
10. San Jose, CA – 8.75% (tie)
    San Francisco, CA – 8.75% (tie)

For more on state and local sales tax rates, see our midyear update.

Correction: The table in this post originally indicated that several cities in Texas were tied for 18th. They are tied for 17th.