State And Local Sales Tax Rates, 2020
State and Local Sales Tax Rates, 2020FISCALFACTNo. 686Jan. 2020The Tax Foundation is the nation’sleading independent tax policyresearch organization. Since 1937,our research, analysis, and expertshave informed smarter tax policyat the federal, state, and globallevels. We are a 501(c)(3) nonprofitorganization. 2020 Tax FoundationDistributed underCreative Commons CC-BY-NC 4.0Editor, Rachel ShusterDesigner, Dan CarvajalTax Foundation1325 G Street, NW, Suite 950Washington, DC 20005202.464.6200taxfoundation.orgJanelle CammengaPolicy AnalystKey Findings Forty-five states and the District of Columbia collect statewide sales taxes. Local sales taxes are collected in 38 states. In some cases, they can rival oreven exceed state rates. The five states with the highest average combined state and local sales taxrates are Tennessee (9.53 percent), Louisiana (9.52 percent), Arkansas (9.47percent), Washington (9.21 percent), and Alabama (9.22 percent). No state rates have changed since Utah increased the state-collected share ofits sales tax from 5.95 percent to 6.1 percent in April 2019. Sales tax rates differ by state, but sales tax bases also impact how muchrevenue is collected from a tax and how the tax affects the economy. Sales tax rate differentials can induce consumers to shop across borders orbuy products online.
TA X FOUNDATION 2IntroductionRetail sales taxes are one of the more transparent ways to collect tax revenue. While graduatedincome tax rates and brackets are complex and confusing to many taxpayers, sales taxes are easier tounderstand; consumers can see their tax burden printed directly on their receipts.In addition to state-level sales taxes, consumers also face local sales taxes in 38 states. These ratescan be substantial, so a state with a moderate statewide sales tax rate could actually have a very highcombined state and local rate compared to other states. This report provides a population-weightedaverage of local sales taxes as of January 1, 2020, to give a sense of the average local rate for eachstate. Table 1 provides a full state-by-state listing of state and local sales tax rates.Combined RatesFive states do not have statewide sales taxes: Alaska, Delaware, Montana, New Hampshire, andOregon. Of these, Alaska allows localities to charge local sales taxes.1The five states with the highest average combined state and local sales tax rates are Tennessee (9.53percent), Louisiana (9.52 percent), Arkansas (9.47 percent), Washington (9.21 percent), and Alabama(9.22 percent). The five states with the lowest average combined rates are Alaska (1.76 percent),Hawaii (4.44 percent), Wyoming (5.34 percent), Wisconsin (5.46 percent), and Maine (5.50 percent).How High are Sales Taxes in Your State?Combined State & Average Local Sales Tax Rates, January 1 00%#38IN7.00%#24Sources: Sales Tax Clearinghouse; Tax Foundation calculations; State Revenue DepartmentwebsitesTAX FOUNDATIONSpecialtaxes in Montana’s resort areas are not included in our analysis.PA6.34%#34LA9.52% #2City, county and municipal rates vary. These rates are weighted by population to compute anaverage local tax rate.The sales taxes in Hawaii, New Mexico, North Dakota, and South Dakotahave broad bases that include many business-to-business services. D.C's rank does not affectstates' ranks, but the figure in parentheses indicates where it would rank if included.ME5.50%#42NY8.52%#10OH7.17%#21 WV6.41% VAMO#31 5.65%KY8.18%#416.00% #38#14NCTN6.97% #269.53% #1ARSC7.46%9.47%#17GAAL#3MS7.31%7.07% 9.22%#19#4#22IL9.08%#6MA6.25% #35RI7.00% #24CT6.35% #33NJ6.60% #30DEMDFL7.05%#23HI4.44%#451NH6.22% #366.00% #38DC6.00%(#38)Combined State & Average Local Sales Tax RatesLowerHigher
TA X FOUNDATION 3State RatesCalifornia has the highest state-level sales tax rate, at 7.25 percent. 2 Four states tie for the secondhighest statewide rate, at 7 percent: Indiana, Mississippi, Rhode Island, and Tennessee. The lowestnon-zero state-level sales tax is in Colorado, which has a rate of 2.9 percent. Five states follow with 4percent rates: Alabama, Georgia, Hawaii, New York, and Wyoming. 3No state rates have changed since April 2019, when Utah’s state-collected rate increased from5.95 percent to 6.1 percent. (The state rate is now officially 4.85 percent, but the state collects anadditional 1.25 percent in mandatory taxes that are distributed to local governments, in addition tolocal option taxes imposed by localities. 4)Local RatesThe five states with the highest average local sales tax rates are Alabama (5.22 percent), Louisiana(5.07 percent), Colorado (4.75 percent), New York (4.52 percent), and Oklahoma (4.44 percent).Average local rates rose the most in Illinois, changing the state’s combined ranking from 7th highest to6th highest. Part of this increase can be traced to the city of Evanston, which raised its city tax from1 percent to 1.25 percent, 5 and to Marion City, which raised its sales tax from 8.75 percent to 9.5percent in an attempt to pay down city-levied property taxes. 6Louisiana moved from third to second highest when East Baton Rouge increased its parish sales taxby half a percent.7 This new rate kicked in on April 1. 8 Meanwhile, a 1 percent increase in Tuscaloosa’slocal sales tax helped take Alabama’s combined rank from 5th to 4th.9Nevada’s combined ranking moved from 14th to 12th. The biggest driver of this change was a 0.125percentage-point increase in Clark County, home to Las Vegas.10 Iowa’s rank moved from 29th to 27thlargely due to new 1 percent local sales taxes in the cities of Bondurant, Clive, Grimes, Johnston, andUrbandale.112This number includes mandatory add-on taxes which are collected by the state but distributed to local governments. Because of this, some sources willdescribe California’s sales tax as 6.0 percent. A similar situation exists in Utah and Virginia.3The sales taxes in Hawaii and South Dakota have bases that include many services and so are not strictly comparable to other sales taxes.4This rate includes two levies, summing 1.25 percentage points, which are imposed statewide but distributed to localities. See “Second Quarter 2019Changes,” Tax.Utah.gov, Apr. 1, 2019, https://tax.utah.gov/sales/ratechanges.5Joshua Irvine, “Aldermen vote to raise sales tax,” The Daily Northwestern, Sept. 24, 2019, rmen-vote-to-raise-sales-tax/.6Brittany Jacob, “Marion City Council unanimously passes sales tax increase and a property tax decrease,” KFVS-TV, Sept. 23, 2019, -tax-decrease/.7Terry L. Jones and Steve Hardy, “East Baton Rouge’s new sales tax starts Monday; See early plans for ambitious MovEBR projects,” The (Baton Rouge)Advocate, Mar. 30, 2019, https://www.theadvocate.com/baton rouge/news/article c6e53086-5232-11e9-a35f-d313e11c123b.html.8Due to data limitations, this rate was not included in the Midyear 2019 update.9Jason Morton, “Tuscaloosa sales tax increase coming Tuesday,” The Tuscaloosa News, Sept. 28, 2019, loosa-sales-tax-increase-coming-tuesday.10Michael Lyle, “Clark County approves raising sales tax of 1/8 of a cent,” Nevada Current, Sept. 3, 2019, �New Iowa Local Option Tax Jurisdictions,” Iowa Department of Revenue, Jan. 1, 2020, -tax/new-iowa-local-option-tax-jurisdictions.
TA X FOUNDATION 4Any state whose ranking improved did so only in comparison to those who enacted rate increases. Sixstates (Arkansas, Missouri, Nebraska, North Dakota, Texas, and Washington) actually saw small localincreases while still improving their rankings.Georgia saw a small decrease in its average local rates, but it continues to levy the 19th highestcombined sales taxes. Johnson County’s special purpose local option sales tax (SPLOST) expired inSeptember, taking the county’s combined sales tax down from 8 percent to 7 percent.12It must be noted that some cities in New Jersey are in “Urban Enterprise Zones,” where qualifyingsellers may collect and remit at half the 6.625 percent statewide sales tax rate (3.3125 percent), apolicy designed to help local retailers compete with neighboring Delaware, which forgoes a salestax. We represent this anomaly as a negative 0.03 percent statewide average local rate (adjustingfor population as described in the methodology section below), and the combined rate reflects thissubtraction. Despite the slightly favorable impact on the overall rate, this lower rate representsan implicit acknowledgment by New Jersey officials that their 6.625 percent statewide rate isuncompetitive with neighboring Delaware, which has no sales tax.The Role of Competition in Setting Sales Tax RatesAvoidance of sales tax is most likely to occur in areas where there is a significant difference betweenjurisdictions’ rates. Research indicates that consumers can and do leave high-tax areas to make majorpurchases in low-tax areas, such as from cities to suburbs.13 For example, evidence suggests thatChicago-area consumers make major purchases in surrounding suburbs or online to avoid Chicago’s10.25 percent sales tax rate.14At the statewide level, businesses sometimes locate just outside the borders of high sales-tax areasto avoid being subjected to their rates. A stark example of this occurs in New England, where eventhough I-91 runs up the Vermont side of the Connecticut River, many more retail establishmentschoose to locate on the New Hampshire side to avoid sales taxes. One study shows that per capitasales in border counties in sales tax-free New Hampshire have tripled since the late 1950s, whileper capita sales in border counties in Vermont have remained stagnant.15 Delaware actually uses itshighway welcome sign to remind motorists that Delaware is the “Home of Tax-Free Shopping.”16State and local governments should be cautious about raising rates too high relative to theirneighbors because doing so will yield less revenue than expected or, in extreme cases, revenue lossesdespite the higher tax rate.12“Sales Tax Rates – General,” Georgia Department of Revenue, January 2020, Mehmet Serkan Tosun and Mark Skidmore, “Cross-Border Shopping and the Sales Tax: A Reexamination of Food Purchases in West Virginia,” ResearchPaper 2005-7, Regional Research Institute, West Virginia University, September 2005, nwp2005-7.pdf. See also T. Randolph Beard, Paula A. Gant, and Richard P. Saba, “Border-Crossing Sales, Tax Avoidance, and State Tax Policies: An Application toAlcohol,” Southern Economic Journal 64:1 (July 1997), 293-306.14Susan Chandler, “The sales tax sidestep,” Chicago Tribune, July 20, 2008, ness/0807190001 1 sales-tax-tax-avoidance-tax-landscape.15Arthur Woolf, “The Unintended Consequences of Public Policy Choices: The Connecticut River Valley Economy as a Case Study,” Northern EconomicConsulting, Inc., November 2010, n Lazarick, “Raise taxes, and they’ll move, constituents tell one delegate,” Marylandreporter.com, Aug. 3, 2011, -and-theyll-move-constituents-tell-one-delegate/.
TA X FOUNDATION 5State & Local Sales Tax RatesAs of January 1, 2020StateAla.AlaskaAriz.Ark.Calif. (b)Colo.Conn.D.C.Del.Fla.Ga.Hawaii inn.Miss.Mo.Mont. (d)N.C.N.D.N.H.N.J. (e)N.M. (c)N.Y.Nebr.Nev.OhioOkla.Ore.Pa.R.I.S.C.S.D. (c)Tenn.Tex.Utah (b)Va. (b)Vt.W.Va.Wash.Wis.Wyo.State Tax 1171793340Avg. Local Tax 0.46%1.34%Combined 63154344Max Local Tax 4.00%1.75%2.00%(a) City, county and municipal rates vary. These rates are weighted by population to compute an average local tax rate.(b) Three states levy mandatory, statewide, local add-on sales taxes at the state level: California (1%), Utah (1.25%), and Virginia(1%). We include these in their state sales tax.(c) The sales taxes in Hawaii, New Mexico, and South Dakota have broad bases that include many business-to-business services.(d) Special taxes in local resort areas are not counted here.(e) Salem County, N.J., is not subject to the statewide sales tax rate and collects a local rate of 3.3125%. New Jersey's local scoreis represented as a negative.Sources: Sales Tax Clearinghouse; Tax Foundation calculations; State Revenue Department websites
TA X FOUNDATION 6Sales Tax Bases: The Other Half of the EquationThis 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 inthis regard. For instance, most states exempt groceries from the sales tax, others tax groceries at alimited rate, and still others tax groceries at the same rate as all other products.17 Some states exemptclothing or tax it at a reduced rate.18Tax experts generally recommend that sales taxes apply to all final retail sales of goods andservices but not intermediate business-to-business transactions in the production chain. Theserecommendations 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.19 Despite agreement in theory,the application of most state sales taxes is far from this ideal. 20Hawaii has the broadest sales tax in the United States, but it taxes many products multiple times and,by one estimate, ultimately taxes 105.29 percent of the state’s personal income. 21 This base is farwider than the national median, where the sales tax applies to 34.25 percent of personal income. 22MethodologySales Tax Clearinghouse publishes quarterly sales tax data at the state, county, and city levels by ZIPcode. We weight these numbers according to Census 2010 population figures to give a sense of theprevalence of sales tax rates in a particular state.It is worth noting that population numbers are only published at the ZIP code level every 10 yearsby the U.S. Census Bureau, and that editions of this calculation published before July 1, 2011, do notutilize ZIP code data and are thus not strictly comparable.It should also be noted that while the Census Bureau reports population data using a five-digitidentifier that looks much like a ZIP code, this is actually what is called a ZIP Code Tabulation Area(ZCTA), which attempts to create a geographical area associated with a given ZIP code. This is donebecause a surprisingly large number of ZIP codes do not actually have any residents. For example, theNational Press Building in Washington, D.C., has its own ZIP code solely for postal reasons.17For a list,see Jared Walczak, 2020 State Business Tax Climate Index, Tax Foundation, Oct. 22, 2019, climate-index/.18Liz Malm and Richard Borean, “How Does Your State Sales Tax See That Blue and Black (or White and Gold) Dress?” Tax Foundation, Feb. 27, 2015, ss.19Justin M. Ross, “A Primer on State and Local Tax Policy: Trade-Offs among Tax Instruments,” Mercatus Center at George Mason University, Feb. 25, nts.20For a representative list, see Jared Walczak, 2020 State Business Tax Climate Index, Tax Foundation, Oct. 22, 2019, climate-index/.21Janelle Cammenga, Facts and Figures 2019: How Does Your State Compare? Table 22, Tax Foundation, Mar. 19, 2019, .
TA X FOUNDATION 7For our purposes, ZIP codes that do not have a corresponding ZCTA population figure are omittedfrom calculations. These omissions result in some amount of inexactitude but overall do not havea palpable effect on resultant averages because proximate ZIP code areas which do have ZCTApopulation numbers capture the tax rate of those jurisdictions.ConclusionSales taxes are just one part of an overall tax structure and should be considered in context. Forexample, Tennessee has high sales taxes but no wage income tax, whereas Oregon has no sales taxbut high income taxes. While many factors influence business location and investment decisions,sales taxes are something within policymakers’ control that can have immediate impacts.
its sales tax from 5.95 percent to 6.1 percent in April 2019. 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. Sales tax rate differentials can induce consumers to shop across borders or buy products online. FISCAL FACT No. 686 Jan. 2020
Sales Tax Sales tax – tax on purchased goods and services Tax is determined by? Paid by? Helps fund? Does your state have sales tax? A percentage added to the original price of an item 1.00 item charged 6% sales tax 1.06 Anyone who purchases an item charged with sales tax Some states don’t have sales tax Expenses of state .
Business tax basics Where the money comes from (in billions): 11 0 State retail sales and use tax 4 9 Local retail sales and use tax 2 8 State share property tax 3 2 Other state taxes and fees 4 2 Business and occupation tax 0 4 Other local revenues 26.5 Total state taxes 11 0 State retail sales and use tax 3 2 Other state
2 Basic principles for generating a sales tax code respectively a sales tax transaction. A Sales tax code will only be generated if 2 records are available for a transaction: 1. Sales tax group 2. Item sales tax group Criteria for the Sales tax group: this is information about the customer / vendor.
its sales tax from 5.95 percent to 6.1 percent in April 2019. 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. Sales tax rate differentials can induce consumers to shop across borders or buy products online. FISCAL FACT No. 737 Jan. 2021
Wisconsin . Sales and Use . Tax Information . Includes information regarding — 5% state sales and use tax 0.5% county sales and use tax 0.1% baseball stadium sales and use tax Publication 201 (1/19) Important Change Menominee County tax begins April 1, 2020 Baseball stadium district tax ends March 31, 2020 Outagamie County tax begins January 1, 2020
The tax rate of 5% applies for both the Wisconsin state sales tax and use tax. The sales tax is based upon the sales price from retail sales. The use tax is based upon the purchase price of the product or service purchased. In counties which have adopted the county tax (see Appendix C for a list of these counties), the tax rate is 5.5%
Tennessee Sales and Use Tax County and City Local Tax Rates County City Local Tax Rate Effective Date Situs FIPS Code County City Local Tax Rate Effective Date Situs FIPS Code Anderson 2.75%. Jul-2006: 0100: 001. . Local Tax Rate Effective Date Situs Code City of Kenton City of Sweetwater
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