What do you pay for sales taxes in your state? How does it compare to other states?
A recent report from the Tax Foundation breaks down the combined state and average local sales tax rates for all 50 states.
The top 5 highest tax states are:
- Tennessee (9.46%)
- Arkansas (9.30%)
- Louisiana (9.0%)
- Alabama (8.97%)
- Washington (8.90%)
And those with the lowest rates are:
- Alaska (1.78%)
- Hawaii (4.35%)
- Wisconsin (5.41%)
- Wyoming (5.4%)
- Maine (5.50%)
The map below shows the complete state-by-state breakdown (click the image to view full size).
You can also see the full report on the Tax Foundation’s website.
The report also details the average local sales tax rates levied in 38 states. These local rates, when combined with the statewide rates, can result in substantially larger tax bills. For instance, Alabama has the 38th highest state tax rate at 4.00%, but the average local rate tacks on an additional 4.97%, resulting in the 4th highest combined rate in the country.
The tax structure is a factor as well. According to Tax Foundation Economist Nicole Kaeding, “Sales taxes are just one part of an 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.”