Key Findings
- There are over 11,000 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. jurisdictions in the United States, with widely varying rates.
- Among major cities, Tacoma, Washington imposes the highest combined state and local sales taxA 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. rate, at 10.30 percent. Five other cities—Fremont, Los Angeles, and Oakland, California; Chicago, Illinois; and Seattle, Washington—are tied for the second highest rate of 10.25 percent. Birmingham, Alabama, at 10 percent, rounds out the list of major cities with a combined rate of 10 percent or higher.
- Neither Anchorage, Alaska, nor Portland, Oregon, impose any state or local sales taxes. Honolulu, Hawaii, has a low rate of 4.5 percent and several other major cities, including Milwaukee and Madison, Wisconsin, keep overall rates modest.
- Successful ballot measures yielded local sales tax increases in eight major cities last year, with a voter-approved 0.10 percentage point increase in Tacoma, Washington giving it the highest overall rate in a major city.
- Three cities—Fremont, Oakland, and Oxnard, California—saw sales tax rate increases of 1 percent or more in the first half of 2021.
- Research demonstrates a rise in cross-border shopping and other avoidance efforts as sales tax rates increase.
Introduction
Sales taxes in the United States are levied not only by state governments but also by city, county, tribal, and special district governments. In many cases these local sales taxes can have a profound impact on the total rate that consumers pay.
Several private firms maintain databases of the sales tax rates in the roughly 11,000 local jurisdictions in the United States that levy them.[1] Here, we list the combined state and local sales tax rates in major U.S. cities, defined as U.S. Census-designated incorporated places with a population over 200,000. This report complements our semiannual calculation of the average of all local sales taxes in each state.[2]
Highest and Lowest Sales Taxes in Major Cities
On July 1, Tacoma, Washington claimed the dubious distinction of imposing the nation’s highest combined state and local sales tax rate when a voter-approved 0.1 percentage point rate increase, raising the rate from 10.2 to 10.3 percent, went into effect.[3] Chicago, Illinois, and Long Beach, California, which laid claim to the nation’s then-highest major city sales tax rate of 10.25 percent until this year, got company in the second-place spot this year. A 1 percentage point tax increase in Alameda County, California raised combined rates in Fremont and Oakland to 10.25 percent as well, and a 0.15 percentage point increase in Seattle also resulted in a 10.25 percent combined rate. Chicago and Long Beach saw their rates rise to current levels in 2016 and 2017, respectively.[4]
One other major city, Birmingham, Alabama (10 percent), also features a double-digit sales tax rate. Birmingham also has the highest local option sales tax rate among major cities, at 6 percent, with Denver, Colorado (5.91 percent), Baton Rouge, Louisiana (5.50 percent), and St. Louis, Missouri (5.454 percent) close behind. Both Baton Rouge and New Orleans, Louisiana previously had combined rates of 10 percent, but these cities’ rates dropped slightly with the partial sunset of a temporary state sales tax increase in 2018.[5]
Portland, Oregon, and Anchorage, Alaska have neither a state nor a local sales tax. Honolulu, Hawaii has the third lowest sales tax among major cities with a rate of 4.5 percent. However, Hawaii’s overly broad sales tax makes this not strictly comparable with other states. Madison and Milwaukee (both 5.5 percent), Wisconsin also impose low combined state and local sales tax rates. Richmond, Virginia had a 5.3 percent rate until October 1, 2020, when the Central Virginia region became the state’s third region subject to the 0.7 percent regional state tax.[6] Fourteen cities with populations of 200,000 or more do not impose local sales taxes, though some have state sales taxes as high as 7 percent (Fort Wayne and Indianapolis, Indiana). The median combined rate for major cities is 8.04 percent.
Sales Tax Rate Changes in Major Cities
Fifteen major cities saw an increase of 0.25 percentage points or more in their combined state and local sales tax rates over the past two years, including eight with increases in the first half of 2021. Nearly all of these increases stemmed from ballot measures, though the Virginia General Assembly authorized a rate increase in central Virginia, including the capital city of Richmond, in 2020.[7] Tampa, Florida decreased its sales tax rate by 1 percentage point to 7.5 percent earlier in 2021, when county commissioners voted to remove the 1 percent transportation tax that was approved in 2018.[8]
The largest increases in the past two years came in Oxnard, California (1.5 percent),[9] the Alameda County, California cities of Fremont and Oakland (1 percent),[10] and Des Moines, Iowa (also 1 percent). Des Moines voters approved a 1 percent local option sales tax in 2019, bringing its total sales tax rate to 7 percent.[11]
The Role of Competition in Sales Tax
Sales tax avoidance is most likely to occur in areas where there is a significant difference between two jurisdictions’ sales tax 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, strong evidence exists that Chicago-area consumers make major purchases in surrounding suburbs or online to avoid Chicago’s high sales tax rates.[13] At the statewide level, businesses sometimes locate just outside the borders of high sales tax areas to avoid being subjected to their rates. Delaware actually uses its state border welcome sign to remind motorists that Delaware is the “Home of Tax-Free Shopping.”[14] State and local governments should be cautious about raising rates too high relative to their neighbors because doing so may lead to revenue losses despite the higher tax rate.
Sales Tax Bases: The Other Half of the Equation
This report ranks states and cities based on tax rates and does not account for differences in tax bases (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. The taxation of services and business-to-business transactions also varies widely by state.[15]
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.[16] 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.[17]
Hawaii has the broadest sales tax in the United States, taxing many products multiple times and, by one estimate, ultimately taxing more than 100 percent of the state’s personal income. This base is far wider than the national median, where the sales tax baseThe 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. applies to 36.3 percent of personal income.[18]
Conclusion
Sales taxes are just one part of the overall tax structure and should be considered in context. For example, Washington State has high sales taxes but no income tax, whereas Oregon has no sales tax but high income taxes. While many factors influence business location and investment decisions, sales taxes are something within policymakers’ control that can have immediate impacts—especially as a growing number of major cities (now 23) have combined rates north of 9 percent.
| Rates in Cities with Populations Above 200,000, as of July 1, 2021 | ||||
|---|---|---|---|---|
| City | State | Local | Total | Rank |
| Tacoma, WA | 6.500% | 3.800% | 10.300% | 1 |
| Chicago, IL | 6.250% | 4.000% | 10.250% | 2 |
| Fremont, CA (a) | 6.000% | 4.250% | 10.250% | 2 |
| Long Beach, CA (a) | 6.000% | 4.250% | 10.250% | 2 |
| Oakland, CA (a) | 6.000% | 4.250% | 10.250% | 2 |
| Seattle, WA | 6.500% | 3.750% | 10.250% | 2 |
| Birmingham, AL (b) | 4.000% | 6.000% | 10.000% | 7 |
| Baton Rouge, LA | 4.450% | 5.500% | 9.950% | 8 |
| Memphis, TN | 7.000% | 2.750% | 9.750% | 9 |
| St. Louis, MO | 4.225% | 5.454% | 9.679% | 10 |
| Los Angeles, CA (a) | 6.000% | 3.500% | 9.500% | 11 |
| Santa Clarita, CA (a) | 6.000% | 3.500% | 9.500% | 11 |
| New Orleans, LA | 4.450% | 5.000% | 9.450% | 13 |
| San Jose, CA (a) | 6.000% | 3.375% | 9.375% | 14 |
| Nashville, TN | 7.000% | 2.250% | 9.250% | 15 |
| Oxnard, CA (a) | 6.000% | 3.250% | 9.250% | 15 |
| Santa Ana, CA (a) | 6.000% | 3.250% | 9.250% | 15 |
| Glendale, AZ | 5.600% | 3.600% | 9.200% | 18 |
| Overland Park, KS | 6.500% | 2.600% | 9.100% | 19 |
| Huntsville, AL | 4.000% | 5.000% | 9.000% | 20 |
| Spokane, WA | 6.500% | 2.500% | 9.000% | 20 |
| Stockton, CA (a) | 6.000% | 3.000% | 9.000% | 20 |
| Atlanta, GA (c) | 4.000% | 4.900% | 8.900% | 23 |
| New York City, NY | 4.000% | 4.875% | 8.875% | 24 |
| Yonkers, NY | 4.000% | 4.875% | 8.875% | 24 |
| Kansas City, MO (d) | 4.225% | 4.625% | 8.850% | 26 |
| Denver, CO | 2.900% | 5.910% | 8.810% | 27 |
| Buffalo, NY | 4.000% | 4.750% | 8.750% | 28 |
| Chula Vista, CA (a) | 6.000% | 2.750% | 8.750% | 28 |
| Riverside, CA (a) | 6.000% | 2.750% | 8.750% | 28 |
| Sacramento, CA (a) | 6.000% | 2.750% | 8.750% | 28 |
| San Bernardino, CA (a) | 6.000% | 2.750% | 8.750% | 28 |
| Tucson, AZ | 5.600% | 3.100% | 8.700% | 33 |
| Oklahoma City, OK (e) | 4.500% | 4.125% | 8.625% | 34 |
| San Francisco, CA (a) | 6.000% | 2.625% | 8.625% | 34 |
| Phoenix, AZ | 5.600% | 3.000% | 8.600% | 36 |
| Tulsa, OK | 4.500% | 4.017% | 8.517% | 37 |
| Henderson, NV | 6.850% | 1.525% | 8.375% | 38 |
| Las Vegas, NV | 6.850% | 1.525% | 8.375% | 38 |
| North Las Vegas, NV | 6.850% | 1.525% | 8.375% | 38 |
| Spring Valley, NV | 6.850% | 1.525% | 8.375% | 38 |
| Fresno, CA (a) | 6.000% | 2.350% | 8.350% | 42 |
| Mesa, AZ | 5.600% | 2.700% | 8.300% | 43 |
| Reno, NV | 6.850% | 1.415% | 8.265% | 44 |
| Corpus Christi, TX | 6.250% | 2.000% | 8.250% | 45 |
| Frisco, TX | 6.250% | 2.000% | 8.250% | 45 |
| Laredo, TX | 6.250% | 2.000% | 8.250% | 45 |
| Lubbock, TX | 6.250% | 2.000% | 8.250% | 45 |
| McKinney, TX | 6.250% | 2.000% | 8.250% | 45 |
| San Antonio, TX | 6.250% | 2.000% | 8.250% | 45 |
| Austin, TX | 6.250% | 2.000% | 8.250% | 51 |
| Bakersfield, CA (a) | 6.000% | 2.250% | 8.250% | 51 |
| Dallas, TX | 6.250% | 2.000% | 8.250% | 51 |
| El Paso, TX | 6.250% | 2.000% | 8.250% | 51 |
| Fort Worth, TX | 6.250% | 2.000% | 8.250% | 51 |
| Garland, TX | 6.250% | 2.000% | 8.250% | 51 |
| Houston, TX | 6.250% | 2.000% | 8.250% | 51 |
| Irving, TX | 6.250% | 2.000% | 8.250% | 51 |
| Plano, TX | 6.250% | 2.000% | 8.250% | 51 |
| Colorado Springs, CO | 2.900% | 5.300% | 8.200% | 60 |
| Tempe, AZ | 5.600% | 2.500% | 8.100% | 61 |
| Scottsdale, AZ | 5.600% | 2.450% | 8.050% | 62 |
| Minneapolis, MN | 6.875% | 1.150% | 8.025% | 63 |
| Arlington, TX | 6.250% | 1.750% | 8.000% | 64 |
| Aurora, CO (f) | 2.900% | 5.100% | 8.000% | 64 |
| Cleveland, OH | 5.750% | 2.250% | 8.000% | 64 |
| Philadelphia, PA | 6.000% | 2.000% | 8.000% | 64 |
| Rochester, NY | 4.000% | 4.000% | 8.000% | 64 |
| St. Paul, MN | 6.875% | 1.000% | 7.875% | 69 |
| Albuquerque, NM (g) | 5.125% | 2.750% | 7.875% | 70 |
| Modesto, CA (a) | 6.000% | 1.875% | 7.875% | 70 |
| Chandler, AZ | 5.600% | 2.200% | 7.800% | 72 |
| Cincinnati, OH (h) | 5.750% | 2.050% | 7.800% | 72 |
| Gilbert, AZ | 5.600% | 2.200% | 7.800% | 72 |
| Salt Lake City, UT | 4.850% | 2.900% | 7.750% | 75 |
| Anaheim, CA (a) | 6.000% | 1.750% | 7.750% | 76 |
| Fontana, CA (a) | 6.000% | 1.750% | 7.750% | 76 |
| Irvine, CA (a) | 6.000% | 1.750% | 7.750% | 76 |
| Moreno Valley, CA (a) | 6.000% | 1.750% | 7.750% | 76 |
| San Diego, CA (a) | 6.000% | 1.750% | 7.750% | 76 |
| Columbus, OH | 5.750% | 1.750% | 7.500% | 81 |
| Durham, NC | 4.750% | 2.750% | 7.500% | 82 |
| Jacksonville, FL | 6.000% | 1.500% | 7.500% | 82 |
| Wichita, KS | 6.500% | 1.000% | 7.500% | 82 |
| Charlotte, NC | 4.750% | 2.500% | 7.250% | 85 |
| Lincoln, NE | 5.500% | 1.750% | 7.250% | 85 |
| Raleigh, NC | 4.750% | 2.500% | 7.250% | 85 |
| Toledo, OH | 5.750% | 1.500% | 7.250% | 85 |
| Fayetteville, NC | 4.750% | 2.250% | 7.000% | 89 |
| Fort Wayne, IN | 7.000% | 0.000% | 7.000% | 89 |
| Indianapolis, IN | 7.000% | 0.000% | 7.000% | 89 |
| Omaha, NE (i) | 5.500% | 1.500% | 7.000% | 89 |
| Winston-Salem, NC | 4.750% | 2.250% | 7.000% | 89 |
| Des Moines, IA | 6.000% | 1.000% | 7.000% | 94 |
| Hialeah, FL | 6.000% | 1.000% | 7.000% | 94 |
| Miami, FL | 6.000% | 1.000% | 7.000% | 94 |
| Pittsburgh, PA | 6.000% | 1.000% | 7.000% | 94 |
| Port St. Lucie, FL | 6.000% | 1.000% | 7.000% | 94 |
| St. Petersburg, FL | 6.000% | 1.000% | 7.000% | 94 |
| Tampa, FL | 6.000% | 1.000% | 7.000% | 94 |
| Paradise, NV | 6.850% | 0.000% | 6.850% | 101 |
| Greensboro, NC | 4.750% | 2.000% | 6.750% | 102 |
| Jersey City, NJ | 6.625% | 0.000% | 6.625% | 103 |
| Newark, NJ | 6.625% | 0.000% | 6.625% | 103 |
| Cape Coral, FL | 6.000% | 0.500% | 6.500% | 105 |
| Orlando, FL | 6.000% | 0.500% | 6.500% | 105 |
| Boston, MA | 6.250% | 0.000% | 6.250% | 107 |
| Arlington, VA (a) | 5.000% | 1.000% | 6.000% | 108 |
| Chesapeake, VA (a) | 5.000% | 1.000% | 6.000% | 108 |
| Norfolk, VA (a) | 5.000% | 1.000% | 6.000% | 108 |
| Richmond, VA (a) | 5.000% | 1.000% | 6.000% | 108 |
| Virginia Beach, VA (a) | 5.000% | 1.000% | 6.000% | 108 |
| Baltimore, MD | 6.000% | 0.000% | 6.000% | 113 |
| Boise, ID | 6.000% | 0.000% | 6.000% | 113 |
| Detroit, MI | 6.000% | 0.000% | 6.000% | 113 |
| Grand Rapids, MI | 6.000% | 0.000% | 6.000% | 113 |
| Lexington, KY | 6.000% | 0.000% | 6.000% | 113 |
| Louisville, KY | 6.000% | 0.000% | 6.000% | 113 |
| Washington, DC | 6.000% | 0.000% | 6.000% | 113 |
| Madison, WI | 5.000% | 0.500% | 5.500% | 120 |
| Milwaukee, WI | 5.000% | 0.500% | 5.500% | 120 |
| Honolulu, HI (g) | 4.000% | 0.500% | 4.500% | 122 |
| Anchorage, AK | 0.000% | 0.000% | 0.000% | 123 |
| Portland, OR | 0.000% | 0.000% | 0.000% | 123 |
|
(a) California and Virginia levy statewide add-on sales taxes at the local level; these are included in their state sales tax rates. Central Virginia, Northern Virginia, and Hampton Roads, Virginia have an additional 0.7 percent rate for transportation districts, which is treated here as a local tax. (b) Most of Birmingham is in Jefferson County and is subject to a 10 percent sales tax. However, part of the city is in Shelby County and is subject to a total rate of 9 percent. (c) Most of Atlanta is in Fulton and DeKalb Counties and is subject to an 8.9 percent sales tax. However, part of the city is in Cobb County and is subject to a total rate of 6 percent. (d) Most of Kansas City is in Jackson and Platte Counties and is subject to an 8.85 percent sales tax. However, part of the city is in Clay County and is subject to a total rate of 8.725 percent. (e) Most of Oklahoma City is in Oklahoma County and is subject to an 8.625 percent sale tax. However, part of the city is in Cleveland County and is subject to a total rate of 8.875 percent. (f) Most of Aurora is in Araphoe County and is subject to an 8.0 percent sales tax. However, parts of the city are in Adams and Douglas Counties and are subject to 8.5 and 8.75 percent rates respectively. (g) The sales taxes in Hawaii and New Mexico have broad bases that include many services, and tend to pyramid more than taxes elsewhere. (h) Most of Cincinnati is in Hamilton County and is subject to a 7.8 percent sales tax. However, part of the city is in Claremont County and is subject to a total rate of 6.75 percent. (i) Most of Omaha is in Douglas County and is subject to a 7 percent sale tax. However, part of the city is in Sarpy County and is subject to a total rate of 5.5 percent. Sources: Sales Tax Clearinghouse; city ordinances; state revenue and auditing departments. |
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Subscribe[1] As of October 2020, there were 11,253 sales tax jurisdictions in the United States, according to Vertex, Inc. See Janelle Cammenga, “How Many Sales Tax Jurisdictions Does Your State Have?” Oct. 14, 2020, https://www.taxfoundation.org/state-sales-tax-jurisdictions-in-the-us-2020/.
[2] Janelle Cammenga, “State and Local Sales Tax Rates, Midyear 2021,” Tax Foundation, July 8, 2021, https://www.taxfoundation.org/2021-sales-taxes-midyear/.
[3] Allison Needles, “Tacoma Approves New Sales Tax for Affordable Housing. Here’s When It Will Start,” The (Tacoma, Washington) News Tribune, Mar. 31, 2021, https://www.thenewstribune.com/news/local/article250313054.html.
[4] Glendale, California, which also levies a 10.25 percent combined rate, was featured in our previous report, but the city’s population has dipped below 200,000 in the latest Census update.
[5] Julia O’Donoghue, “Louisiana, Tennessee in Close Contest for Highest Sales Tax Rate,” The (New Orleans) Times-Picayune, July 9, 2018, https://www.nola.com/news/politics/article_0d01ec8c-0ed0-5474-9056-71886e7d325f.html.
[6] Virginia Department of Taxation, “Sales Tax Increase in Central Virginia Region Beginning Oct. 1, 2020,” https://www.tax.virginia.gov/news/sales-tax-increase-central-virginia-region-beginning-oct-1-2020.
[7] Adrianna Hargrove, Sales Tax Rate Changes in Central Virginia on Oct. 1,” WWBT-TV NBC 12, Sept. 30, 2020, https://www.nbc12.com/2020/09/30/sales-tax-rate-changes-central-virginia-oct/.
[8] Julie Salomone, “Hillsborough County Commissioners Vote to Give Back Sales Tax Money,” WFTS-TV, Mar. 4, 2021, https://www.abcactionnews.com/news/region-hillsborough/hillsborough-county-commissioners-vote-to-give-back-sales-tax-money.
[9] Chris Frost, “Measure E Passes,” Tri County Sentry (Oxnard, California), Nov. 5, 2020, https://tricountysentry.com/Article/Index/f621aebe-7735-4403-925b-e9b043b7aa37.
[10] KTVU-TV Fox 2, “Sales, Gas Taxes Increasing in the Bay Area and California,” July 1, 2021, https://www.ktvu.com/news/sales-gas-taxes-increasing-in-the-bay-area-and-california.
[11] WHO-TV 13, “Sales Tax Increase Goes in Effect Monday for Six Central Iowa Cities,” June 28, 2019, https://who13.com/news/sales-tax-increase-goes-in-effect-monday-for-six-central-iowa-cities/.
[12] Mehmet Serkan Tosun and Mark Skidmore, “Cross-Border Shopping and the Sales Tax: A Reexamination of Food Purchases in West Virginia” (Research Paper), September 2005, http://rri.wvu.edu/wp-content/uploads/2012/11/Tosunwp2005-7.pdf. See also Randolph T. Beard, Paula A. Gant, and Richard P. Saba, “Border-Crossing Sales, Tax Avoidance, and State Tax Policies: An Application to Alcohol,” Southern Economic Journal 64:1 (1997).
[13] Susan Chandler, “The Sales Tax Sidestep,” Chicago Tribune, July 20, 2008, http://articles.chicagotribune.com/2008-07-20/business/0807190001_1_sales-tax-tax-avoidance-tax-landscape.
[14] Len Lazarick, “Raise Taxes, and They’ll Move, Constituents Tell One Delegate,” Marylandreporter.com, Aug. 3, 2011, http://marylandreporter.com/2011/08/03/raise-taxes-and-theyll-move-constituents-tell-one-delegate/.
[15] For representative lists, see Jared Walczak and Janelle Cammenga, 2021 State Business Tax Climate Index, Tax Foundation, Oct. 21, 2020, https://www.taxfoundation.org/2021-state-business-tax-climate-index/.
[16] Justin M. Ross, “A Primer on State and Local Tax Policy: Trade-Offs Among Tax Instruments,” Mercatus Center at George Mason University, Feb. 25, 2014, http://mercatus.org/publication/primer-state-and-local-tax-policy-trade-offs-among-tax-instruments.
[17] For a discussion of sales tax theory in the context of a specific state, see Jared Walczak, “Modernizing Utah’s Sales Tax: A Guide for Policymakers,” Tax Foundation, June 4, 2019, https://www.taxfoundation.org/modernizing-utah-sales-tax.
[18] Jared Walczak, “State Sales Tax Breadth and Reliance, Fiscal Year 2020,” Tax Foundation, Feb. 9, 2021, https://www.taxfoundation.org/sales-tax-base-reliance-2020/.
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