Monday Map: Combined State and Local Sales Tax Rates

August 26, 2013

Scott Drenkard

, Scott Drenkard

This week's Monday Map shows the state sales tax rate, plus the average local rate, for each state as of July 1, 2013. This data comes from a new sales tax report coming out this Wednesday which will include each state’s minimum, maximum, and average local sales tax rates, as well as each state sales tax rate. Click here for the study (link will go live on the morning of August 28).

Tennessee has the highest average combined rate at 9.44%, and is followed closely by Arkansas (9.18%) and Louisiana (8.89%). On the other end of the spectrum are states with no sales taxes: Oregon, Delaware, and New Hampshire.

All maps and other graphics may be published and re-posted with credit to the Tax Foundation.

Click on map to enlarge it. Click here for previous maps.

One thing that is important to remember here is that state and local tax rates are only part of the total sales tax story. Equally important are sales tax bases—what the tax applies to—which can have a palpable impact on how much the tax collects in revenue and how the tax effects the economy. In this regard, Hawaii is generally considered to have the broadest sales tax rate, as their “General Excise Tax” taxes many products multiple times in the production chain as opposed to just one time at the point of final consumption.

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A tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities.

The tax base is the total amount of income, property, assets, consumption, transactions, or other economic activity subject to taxation by a tax authority. A narrow tax base is non-neutral and inefficient. A broad tax base reduces tax administration costs and allows more revenue to be raised at lower rates.

A 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.

An excise tax is a tax imposed on a specific good or activity. Excise taxes are commonly levied on cigarettes, alcoholic beverages, soda, gasoline, insurance premiums, amusement activities, and betting, and typically make up a relatively small and volatile portion of state and local and, to a lesser extent, federal tax collections.