In this video we discuss the states with the highest and lowest sales tax rates in the U.S. We also cover the states that average the highest and lowest local tax rates.
Transcript/notes
States with the highest sales tax rates
The states with the highest sales tax rates start at the top with California at 7.25% and Tennessee, Rhode Island, Mississippi, and Indiana at 7.00%. Here is the top 10 highest states. And, there are 5 states, Oregon, New Hampshire, Montana, Delaware and Alaska that all have a 0% sales tax rate.
Here is a map of all the states with their sales tax rates listed, and the average sales tax rate for a state is 5.09%.
Most states also have an additional sales tax rate, a local sales tax rate. For instance, if you purchase something in Chicago, Illinois, you will pay a 6.25% Illinois state tax rate, and a 4.0% local tax rate. So, say you buy $100 in merchandise, you will pay $10.25 in taxes, $6.25 in state tax, and $4 in local tax.
The average local sales tax rate in the US is 1.45%, with the highest state being Alabama at an average local rate of 5.14%, and 12 states having an average local sales tax of 0%, which are marked on this map.
Now, let’s look at the highest combined rates, that is state sales tax rate plus the average local sales tax rate. The average combined sales tax rate is 6.35% in the US. The highest combined rate is Tennessee at 9.47%, and here is a list of the top 10 states. And there are 4 states, Oregon, New Hampshire, Montana and Delaware that have 0.0% combined sales tax rates.
A couple of notes, these tax rates are general rates, as many states have different rates for different types of items. For instance, many states do not tax groceries, some states tax groceries at a lower state sales tax rate and some states tax groceries at the full state rate.