State and Local Sales Tax Rates, 2026

State Sales Tax Rates

Five states have no statewide sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon. Of these, only Alaska allows localities to impose local sales taxes.

California has the highest state-level sales tax rate at 7.25 percent. Four states tie for the second highest at 7 percent: Indiana, Mississippi, Rhode Island, and Tennessee. The lowest non-zero state-level rate is Colorado at 2.9 percent, followed by five states at 4 percent: Alabama, Georgia, Hawaii, New York, and Wyoming.

Louisiana is the most recent state to raise its sales tax rate. The state rate increased from 4.45 to 5 percent in January 2025, reversing a prior reduction implemented in July 2018. This rate increase was part of a broader tax reform package that yielded a 3 percent flat individual income tax, a 5.5 percent corporate income tax, full expensing, and franchise tax repeal.

Prior to that, South Dakota cut its state sales tax rate in 2023, a reduction set to sunset in 2027, and New Mexico lowered the rate of its state-level sales tax—a hybrid tax the state refers to as its gross receipts tax—from 5.125 percent to 5 percent in July 2022. Notably, if the revenue from the gross receipts tax in any single fiscal year from 2026 to 2029 is less than 95 percent of the previous year’s revenue, then the state’s rate will return to 5.125 percent on the following July 1.

There was no state-wide tax rate change between July 2025 and January 2026. Sales tax rate reductions have been relatively rare in recent years, as state lawmakers have instead prioritized income tax cuts, which yield more economic benefit.

Local Sales Tax Rates

The five states with the highest average local sales tax rates are Alabama (5.46 percent), Louisiana (5.11 percent), Colorado (4.99 percent), Oklahoma (4.56 percent), and New York (4.54 percent).

Since July 2025, most changes have been minor local adjustments, leading to small shifts in combined rates and rankings for several states. Florida's combined rate decreased slightly, improving its rank by four places, while others, like Illinois, Georgia, and Washington, saw increases. Except for Florida, no other state changed by more than one place in its rankings. Louisiana continues to have the highest combined state and average local sales tax rate among the states at 10.11 percent.

Notably, effective January 1, 2026, Illinois eliminated its one percent sales tax on food items; however, many local jurisdictions chose to impose their own local taxes on food. The sales tax rate in many Georgia counties increased by up to a percentage point due to the Floating Local Option Sales Tax, an optional countywide sales tax that may be levied for up to five years to provide property taxA property tax is primarily levied on immovable property like land and buildings, as well as on tangible personal property that is movable, like vehicles and equipment. Property taxes are the single largest source of state and local revenue in the U.S. and help fund schools, roads, police, and other services. relief. The revenue from this tax is shared between the levying county and its municipalities. Local and special district adjustments caused the average combined sales tax rate in Kansas to decrease by 0.09 percentage points, the largest drop since July 2025.

Some cities in New Jersey are in “Urban Enterprise Zones,” where qualifying sellers collect sales tax at half the statewide rate (3.3125 percent). This is reflected as a small negative adjustment to the average local rate.

The Role of Competition in Setting Sales Tax Rates

Avoidance of sales tax is most likely to occur in areas where there is a significant difference between jurisdictions’ rates. Research indicates that consumers can and do leave high-tax areas to make major purchases in low-tax areas, such as from cities to suburbs. For example, evidence suggests that Chicago-area consumers make major purchases in surrounding suburbs or online to avoid Chicago’s 10.25 percent sales tax rate.

At the statewide level, businesses sometimes locate just outside the borders of high-sales-tax areas to avoid being subjected to their rates. A stark example of this occurs in New England, where even though I-91 runs up the Vermont side of the Connecticut River, many more retail establishments choose to locate on the New Hampshire side to avoid sales taxes. One study shows that per capita sales in border counties in sales-tax-free New Hampshire have tripled since the late 1950s, while per capita sales in border counties in Vermont have remained stagnant. At one time, Delaware actually used its highway welcome sign to remind motorists that Delaware is the “Home of Tax-Free Shopping.”

State and local governments should be cautious about raising rates too high relative to their neighbors because doing so will yield less revenue than expected or, in extreme cases, revenue losses despite the higher tax rate.

Sales Tax Bases: The Other Half of the Equation

Sales tax rates differ by state, but sales tax bases also impact how much revenue is collected from a tax and how the tax affects the economy.

This report ranks states based on tax rates and does not account for differences in tax bases (e.g., the structure of sales taxes, defining what is taxable and nontaxable). States can vary greatly in this regard. For instance, most states exempt groceries from the sales tax, others tax groceries at a limited rate, and still others tax groceries at the same rate as all other products. Some states exempt clothing or tax it at a reduced rate.

Tax experts generally recommend that sales taxes apply to all final retail sales of goods and services but not intermediate business-to-business transactions in the production chain. These recommendations would result in a tax system that is not only broad-based but also “right-sized,” applying once and only once to each product the market produces. Despite agreement in theory, the application of most state sales taxes is far from this ideal, and occasionally gets worse. Ideally, states would modernize their sales tax regimes to better align with personal consumption in a changing economy.

Hawaii has the broadest sales tax in the United States, but it taxes many products multiple times, and, by one estimate, ultimately taxes 119 percent of the state’s personal income. This base is far wider than the national median, where the sales tax applies to 36 percent of personal income.

Methodology

Sales Tax Clearinghouse publishes quarterly sales tax data at the state, county, and city levels by ZIP code. We weight these numbers according to the most recent Census population figures to give a sense of the prevalence of sales tax rates in a particular state. This is a change from certain previous editions, where we used figures available every decade. Due to updated population weighting, this report is not strictly comparable to most previously published editions, though differences amount to minor rounding errors.

It should also be noted that while the Census Bureau reports population data using a five-digit identifier that looks much like a ZIP code, this is actually a ZIP Code Tabulation Area (ZCTA), which attempts to create a geographical area associated with a given ZIP code. This is done because a surprisingly large number of ZIP codes do not actually have any residents. For example, the National Press Building in Washington, DC, has its own ZIP code solely for postal reasons.

For our purposes, ZIP codes that do not have a corresponding ZCTA population figure are omitted from calculations. These omissions result in some amount of inexactitude, but overall do not have a significant effect on resultant averages because proximate ZIP code areas that do have ZCTA population numbers capture the tax rate of those jurisdictions.