(d) Special taxes in local resort areas are not counted here. (c) The sales taxes in Hawaii, New Mexico, and South Dakota have broad bases that include many business-to-business services. We include these in their state sales tax. (b) Three states levy mandatory, statewide, local add-on sales taxes at the state level: California (1%), Utah (1.25%), and Virginia (1%). These rates are weighted by population to compute an average local tax rate. (a) City, county and municipal rates vary. State & Local Sales Tax Rates, as of JanuState Despite the slightly favorable impact on the overall rate, this lower rate represents an implicit acknowledgment by New Jersey officials that their 6.625 percent statewide rate is uncompetitive with neighboring Delaware, which has no sales tax. We represent this anomaly as a negative 0.03 percent statewide average local rate (adjusting for population as described in the methodology section below), and the combined rate reflects this subtraction. It must be noted that some cities in New Jersey are in “Urban Enterprise Zones,” where qualifying sellers may collect and remit at half the 6.625 percent statewide sales tax rate (3.3125 percent), a policy designed to help local retailers compete with neighboring Delaware, which forgoes a sales tax. Beaufort County, South Carolina, saw the end of its 1 percent transportation tax at the end of 2021, helping improve the state’s rank from 17 th to 18 th. Minnesota moved from 18 th to 17 th highest, largely because of an increase in Washington County’s dedicated Transit Sales and Use Tax from 0.25 to 0.5 percent in October of 2021. No states saw ranking changes of more than one place since July. The five states with the highest average local sales tax rates are Alabama (5.24 percent), Louisiana (5.10 percent), Colorado (4.88 percent), New York (4.52 percent), and Oklahoma (4.47 percent). (The state rate is now officially 4.85 percent, but the state collects an additional 1.25 percent in mandatory taxes that are distributed to local governments, in addition to local option taxes imposed by localities.) Local Sales Tax Rates No state rates have changed since April 2019, when Utah’s state-collected rate increased from 5.95 percent to 6.1 percent. Five states follow with 4 percent rates: Alabama, Georgia, Hawaii, New York, and Wyoming. The lowest non-zero state-level sales tax is in Colorado, which has a rate of 2.9 percent. Four states tie for the second-highest statewide rate, at 7 percent: Indiana, Mississippi, Rhode Island, and Tennessee. The five states with the lowest average combined rates are Alaska (1.76 percent), Hawaii (4.44 percent), Wyoming (5.22 percent), Wisconsin (5.43 percent), and Maine (5.50 percent).Ĭalifornia has the highest state-level sales tax rate, at 7.25 percent. The five states with the highest average combined state and local sales tax rates are Louisiana (9.55 percent), Tennessee (9.547 percent), Arkansas (9.48 percent), Washington (9.29 percent), and Alabama (9.22 percent). Of these, Alaska allows localities to charge local sales taxes. Combined State and Local Sales Tax Ratesįive states do not have statewide sales taxes: Alaska, Delaware, Montana, New Hampshire, and Oregon. Table 1 provides a full state-by-state listing of state and local sales tax rates. This report provides a population-weighted average of local sales taxes as of January 1, 2022, to give a sense of the average local rate for each state. These rates can be substantial, so a state with a moderate statewide sales tax rate could actually have a very high combined state and local rate compared to other states. In addition to state-level sales taxes, consumers also face local sales taxes in 38 states. While graduated income tax rates and brackets are complex and confusing to many taxpayers, sales taxes are easier to understand consumers can see their tax burden printed directly on their receipts. Retail sales taxes are one of the more transparent ways to collect tax revenue.
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