If you’re considering moving to another state, you’ve probably factored state income taxes into your decision. But state and local sales taxes will cut into your budget as well.
Lowest and highest sales tax states
Four states — Delaware, Montana, New Hampshire and Oregon — have no statewide sales tax, or local sales taxes, either.
Alaska has no statewide sales tax, but it allows cities and towns to levy sales taxes. The Tax Foundation, an independent think tank, weights local sales taxes by population and adds them to statewide sales taxes. It calculates Alaska’s sales tax at 1.81 percent, still well below the national average of 6.59 percent. The lowest state and local sales taxes after Alaska’s are in Hawaii (4.44 percent), Wyoming (5.44 percent), Wisconsin (5.43 percent) and Maine (5.5 percent).
On the other end of the spectrum is Louisiana and Tennessee, whose combined state and local sales tax weighs in at 9.55 percent. Tennessee, whose state sales tax is 9.547 percent, trails Louisiana by a fraction. Following Tennessee are Arkansas (9.44 percent), Washington (9.24 percent) and Alabama (9.24 percent).
States have to get revenue from somewhere, and sometimes states with low income taxes have high sales taxes. “Tennessee has a very high sales tax but a very low income tax,” says Janelle Fritts, policy analyst at the Tax Foundation. “In fact, Tennessee doesn’t tax wage income at all; it just taxes dividends and capital gains.” Washington and Texas, which don’t have income taxes, also have above-average sales taxes.
Some states with low sales taxes, such as Alaska and Montana, get significant income from natural resource taxes.