New State and Local Sales Tax Data: Midyear 2015

Richard Borean

Friday, July 10th, 2015

This morning, the Tax Foundation released its bi-annual report on state and local sales tax rates throughout the U.S. The report details the significant recent changes that have taken place in states’ treatments of sales taxes. Using a population-weighted average of local sales taxes, the report also details the combined state and local sales tax rates for each state and explains how sales taxes fit into a state’s overall tax structure.

  • 45 states and the District of Columbia collect statewide sales taxes.
  • Local sales taxes are collected in 38 states.
  • The five states with the highest average combined state and local sales tax rates are Tennessee (9.46 percent), Arkansas (9.27 percent), Louisiana (9.01 percent), Alabama (8.93 percent), and Washington (8.90 percent).
  • 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.
  • Differences in sales tax rates cause consumers to shop across borders or buy products online.

 “Sales taxes are some of the most easily understood taxes because every time a consumer makes a purchase, they can see the rate on the receipt” says Tax Foundation economist Scott Drenkard. “However, although many shoppers are aware of their state’s sales tax rate, local add-on levies can catch consumers by surprise.

 “Of course, sales taxes are just one part of an overall tax structure and should be considered in context,” adds Drenkard. “For example, Washington State has high sales taxes but no income tax; 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.”

Full report: State and Local Sales Tax Rates Midyear 2015