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Few topics are as hotly contested as taxes.
Much of the attention is on paying income taxes, largely overshadowing the most common method of taxation: sales tax. But depending on where you live or do your shopping, your sales tax rate can vary drastically, from zero to over 12%.
That’s because our current sales tax system is a patchwork apparatus with tax rates differing widely by state — and with several states collecting no sales tax whatsoever. States often heavily rely on revenue generated from sales tax, and some localities levy additional sales tax on top of the state rate, which can further jack up the ultimate price consumers pay at the checkout counter.
For example, in Gillham, Arkansas, residents pay 6.125% in local sales taxes on top of their state's 6.5% rate — for a grand total sales tax rate of 12.625%, the highest in the country.
Here’s a look at the states with the highest and lowest sales tax rates in 2023, according to an analysis from the Tax Foundation. (Money also has a map showing sales tax rates in every state.) Bear in mind that the sales tax you ultimately pay on purchases can be higher than the state-level rates listed below if there are local taxes tacked on.
States with the highest sales tax
- California: 7.25% sales tax rate
- Indiana: 7% sales tax rate
- Mississippi: 7% sales tax rate
- Rhode Island 7% sales tax rate
- Tennessee: 7% sales tax rate
- Minnesota: 6.875% sales tax rate
- Nevada: 6.85% sales tax rate
- New Jersey: 6.625% sales tax rate
- Arkansas: 6.50% sales tax rate
- Kansas: 6.50% sales tax rate
States with the lowest sales tax
- Georgia: 4% sales tax rate
- Hawaii 4% sales tax rate
- New York: 4% sales tax rate
- Wyoming: 4% sales tax rate
- Colorado: 2.9% sales tax rate
- Alaska: no sales tax
- Delaware: no sales tax
- Montana: no sales taxes
- New Hampshire: no sales tax
- Oregon: no sales tax
What the experts say
Sales tax is what’s known as a “regressive tax” because research shows that it disproportionately burdens lower-income earners. According to the left-leaning Economic Policy Institute, regressive taxes increase inequality.
- “Sales taxes are levied on what people buy, as opposed to what they earn,” an EPI report states. “Since poor and middle-income families have to spend more of what they earn just to get by, they are paying a greater share of their income in sales taxes. That’s what we mean when we say sales taxes are regressive.”
The drastic difference in sales tax rates among states means that some folks have to pay hefty taxes on the goods they buy at the store, while folks a few miles away in a neighboring state may pay no sales tax at all. These differences spur some consumers to avoid sales tax by trekking to an area that offers a lower rate.
- In New Jersey, for example, the sales tax rate is 6.625% while the rate in neighboring Delaware is zero.
- “Research indicates that consumers can and do leave high-tax areas to make major purchases in low-tax areas, such as from cities to suburbs,” the Tax Foundation report states.
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FAQs
The five states with the highest average combined state and local sales tax rates are Louisiana (9.56 percent), Tennessee (9.55 percent), Arkansas (9.45 percent), Washington (9.38 percent), and Alabama (9.29 percent).
What place in the US has the lowest sales tax? ›
Which States Have the Lowest Sales Tax?
- As of 2024, five states impose a 0.000% sales tax including Alaska, Delaware, Montana, New Hampshire, and Oregon. ...
- Whether or not a state imposes a state sales tax, local municipalities and counties may impose excise or surtaxes.
The long-troubled West African country, Ivory Coast, has the highest income tax rate in the world. People living there are giving away a whopping 60% of their income to the government.
What place in America has the highest tax rate? ›
1. Bridgeport, Connecticut. As one of the wealthiest cities in America, Bridgeport carries the highest overall tax rate in the nation. Wealthy taxpayers earning over $150,000 per year are on the hook for up to 22% in state and local taxes.
Which state has the highest and lowest sales tax? ›
The states with the lowest sales tax rates are Alaska, Delaware, Montana, New Hampshire, and Oregon, all of which charge no sales tax. On the other hand, California has the highest sales tax rate at 7.25%, followed closely by Tennessee, Rhode Island, Mississippi, and Indiana, all of which have a sales tax rate of 7%.
What city pays the highest sales tax? ›
Among major cities, Tacoma, Washington imposes the highest combined state and local sales tax. rate, at 10.30 percent. Five other cities—Fremont, Los Angeles, and Oakland, California; Chicago, Illinois; and Seattle, Washington—are tied for the second highest rate of 10.25 percent.
What city has the cheapest sales tax? ›
Portland, Oregon, and Anchorage, Alaska, have no state or local sales taxes. Richmond, Virginia has 5.3 percent state sales tax. Honolulu, Hawaii, has a low sales tax rate of 4.5 percent, but the tax applies broadly to goods and services when compared with sales tax from other locations.
What 10 states have the lowest sales tax? ›
States with the lowest sales tax
- New York: 4% sales tax rate.
- Wyoming: 4% sales tax rate.
- Colorado: 2.9% sales tax rate.
- Alaska: no sales tax.
- Delaware: no sales tax.
- Montana: no sales taxes.
- New Hampshire: no sales tax.
- Oregon: no sales tax.
There are five states with no general statewide sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon.
What is the most tax-friendly state to live in? ›
According to the updated MoneyGeek analysis, the most “tax friendly” state overall was Nevada, where the median family owes about 3% of its income in taxes. Meanwhile, 13 states earned either a D or F grade for tax burdens. For some of those states, like Oregon, high personal income tax rates are to blame.
- Alaska. #1 in Low Tax Burden. #45 in Best States Overall. ...
- Florida. #2 in Low Tax Burden. #9 in Best States Overall. ...
- South Dakota. #3 in Low Tax Burden. ...
- Wyoming. #4 in Low Tax Burden. ...
- Tennessee. #5 in Low Tax Burden. ...
- New Hampshire. #6 in Low Tax Burden. ...
- Texas. #7 in Low Tax Burden. ...
- Oklahoma. #8 in Low Tax Burden.
Some states do not tax Social Security or income, which could appeal to retirees. Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington and Wyoming stand out for their tax-friendly policies and other amenities that retirees may enjoy.
What are the most tax friendly states for retirees? ›
In addition, states in this category have friendly sales, property, estate and inheritance tax rates.
- Alaska.
- Florida.
- Georgia.
- Mississippi.
- Nevada.
- South Dakota.
- Wyoming.
Texas places four major metros in the top 15, while three New York metros are represented—including Rochester, which has the nation's highest property taxes at a 2.4% effective rate. The data used in this analysis is from the U.S. Census Bureau.
What states have the worst sales tax? ›
As of 2017, 5 states (Alaska, Delaware, Montana, New Hampshire and Oregon) do not levy a statewide sales tax. California has the highest base sales tax rate, 7.25%. Including county and city sales taxes, the highest total sales tax as of September 1, 2013, was in Arab, Alabama, 13.50%.
What state has the highest sales tax on groceries? ›
Of seven states that levy ordinary sales tax rates on groceries, four states: Hawaii, Idaho, Kansas, and Oklahoma, offer credit to low-income households. Mississippi charges the highest sales tax rate on groceries (7%) with no credits. Arkansas charges the lowest sales tax rates on groceries (0.125%).
What state has no sales tax? ›
There are five states with no general statewide sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon.
Does Florida have the highest sales tax? ›
Florida has a 5.50 percent corporate income tax. Florida has a 6.00 percent state sales tax rate, a max local sales tax rate of 2.00 percent, and an average combined state and local sales tax rate of 7.002 percent. Florida's tax system ranks 4th overall on our 2024 State Business Tax Climate Index.
