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States With Highest and Lowest Sales Tax Rates

Tennessee tops list, while 5 states have no statewide tax

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En español | Many people weigh state income taxes when they consider where they want to relocate or live in retirement. But income taxes are just part of the picture: State and local sales taxes can take a bite out of your income, too.

California has the highest statewide sales tax, at 7.25 percent, but comes in ninth when you combine state and local sales tax, according to newly released 2020 data from the Tax Foundation, an independent tax policy think tank. Tennessee leads the pack, at 9.53 percent combined taxes — 7 percent state sales tax and 2.53 percent average local sales tax. The Volunteer State has no statewide income tax.

Louisiana, which has a combined state and local sales tax of 9.52 percent, has the second-highest rate, followed by Arkansas (9.47 percent), Alabama (9.22 percent) and Washington (9.21 percent). The Tax Foundation averages local taxes and weights them by the number of people who pay them.

Oregon, Montana, New Hampshire, Delaware and Alaska have no statewide sales taxes. The five states with the lowest average combined state and local rates are Alaska (1.76 percent), Hawaii (4.44 percent), Wyoming (5.34 percent), Wisconsin (5.46 percent) and Maine (5.5 percent).

How High are Sales Taxes in Your State?

Combined state and average local sales tax rates, January 1, 2020

 

state and average local sales tax rates as of  1-1-20

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State sales taxes tend to be quirky. Hawaii, New Mexico and South Dakota, for example, tax business-to-business transactions. This widens the tax base but means some products can be taxed multiple times.

Most states exempt food from sales tax, although many of those exclude soda and candy from the exemption. Louisiana, however, taxes bottled water but not soda or candy.

Groceries bought under the Supplemental Nutrition Assistance Program (SNAP), often referred to as food stamps, aren't subject to state sales tax either, says Janelle Cammenga, a policy analyst for the Tax Foundation.

All states except Illinois exempt prescription drugs from sales tax, and Illinois taxes them at just 1 percent, compared with 6.25 percent for its statewide sales tax. A few states — Florida, Maryland, Minnesota, New Jersey, New York, Pennsylvania, Texas, Vermont, Virginia and the District of Columbia — don't charge sales taxes on nonprescription drugs.

Although states with low or no income taxes are likely candidates for high sales taxes, that's not always the case, Cammenga says. Wyoming, for example, has no state income tax and no corporate income tax, but gets much of its revenue from oil and mineral producers.

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