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On or before April 15, millions of Americans will file their taxes.
Though the focus this time of year tends to be on income taxes, Americans also pay thousands of dollars each year in state and local sales taxes.
Sales tax rates and sales tax bases, which vary considerably between states, change how much tax revenue state and local governments collect. Generally, the states with the best economies have more affluent populations, and collect more taxes per capita as a result.
Americans pay between 0% and 11.6% of the price of the goods they buy in sales taxes — depending on state of purchase. Five states levy no sales tax whatsoever. On average, across all states, state and local general sales tax collections come to $1,145 per capita, compared to $1,518 in state and local property taxes per capita and $1,144 in state and local individual income taxes.
Many believe sales taxes do more harm than good because, unlike property taxes, income taxes, or corporate taxes, they are not taxed on a scale but as a flat percentage. This system is referred to as a regressive tax because its burden is higher on lower-income taxpayers.
Some tax policy experts, on the other hand, favor sales tax for its transparency. Regarding graduated income tax rates as complex and confusing to many taxpayers, sales tax proponents argue that sales taxes are easier to understand.
Click here to see the states with the highest and lowest sales taxes.
Methodology
To determine the states with the highest and lowest sales taxes, 24/7 Wall St. reviewed sales tax rates from the Tax Foundation’s State and Local Sales Tax Rates in 2019 report.
The report used a population-weighted average of local sales taxes as of Jan. 1, 2019 to compare the average local rate of each state.
Combined sales tax figures include statewide sales tax rates as well as the average local sales tax rates for residents as of Jan. 1, 2019. Regional price parity data comes from the Bureau of Economic Analysis and is for 2016. Personal income per capita is also from the BEA and is for the third quarter of 2018. In New Jersey, the average local tax is -0.03% because businesses in Salem County are exempt from collecting state sales taxes.
1. Tennessee
> Combined sales tax rate: 9.5%
> State sales tax rate: 7.0%
> Avg. local sales tax: 2.5%
> Cost of living: 9.8% less than the national average (11th lowest)
> Personal income per capita: $47,134 (17th lowest)
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2. Louisiana
> Combined sales tax rate: 9.5%
> State sales tax rate: 4.5%
> Avg. local sales tax: 5.0%
> Cost of living: 9.6% less than the national average (14th lowest)
> Personal income per capita: $45,449 (10th lowest)
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3. Arkansas
> Combined sales tax rate: 9.4%
> State sales tax rate: 6.5%
> Avg. local sales tax: 2.9%
> Cost of living: 13.1% less than the national average (3rd lowest)
> Personal income per capita: $42,373 (5th lowest)
4. Washington
> Combined sales tax rate: 9.2%
> State sales tax rate: 6.5%
> Avg. local sales tax: 2.7%
> Cost of living: 5.5% greater than the national average (9th highest)
> Personal income per capita: $61,085 (8th highest)
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5. Alabama
> Combined sales tax rate: 9.1%
> State sales tax rate: 4.0%
> Avg. local sales tax: 5.1%
> Cost of living: 13.4% less than the national average (2nd lowest)
> Personal income per capita: $42,380 (6th lowest)
6. Oklahoma
> Combined sales tax rate: 8.9%
> State sales tax rate: 4.5%
> Avg. local sales tax: 4.4%
> Cost of living: 11.0% less than the national average (7th lowest)
> Personal income per capita: $46,178 (14th lowest)
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7. Illinois
> Combined sales tax rate: 8.7%
> State sales tax rate: 6.3%
> Avg. local sales tax: 2.5%
> Cost of living: 1.1% less than the national average (18th highest)
> Personal income per capita: $56,850 (13th highest)
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8. Kansas
> Combined sales tax rate: 8.7%
> State sales tax rate: 6.5%
> Avg. local sales tax: 2.2%
> Cost of living: 9.5% less than the national average (16th lowest)
> Personal income per capita: $50,121 (23rd highest)
9. California
> Combined sales tax rate: 8.6%
> State sales tax rate: 7.3%
> Avg. local sales tax: 1.3%
> Cost of living: 14.4% greater than the national average (3rd highest)
> Personal income per capita: $62,572 (6th highest)
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10. New York
> Combined sales tax rate: 8.5%
> State sales tax rate: 4.0%
> Avg. local sales tax: 4.5%
> Cost of living: 15.6% greater than the national average (2nd highest)
> Personal income per capita: $67,859 (3rd highest)
11. Arizona
> Combined sales tax rate: 8.4%
> State sales tax rate: 5.6%
> Avg. local sales tax: 2.8%
> Cost of living: 4.1% less than the national average (25th lowest)
> Personal income per capita: $43,847 (9th lowest)
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12. Texas
> Combined sales tax rate: 8.2%
> State sales tax rate: 6.3%
> Avg. local sales tax: 1.9%
> Cost of living: 3.1% less than the national average (24th highest)
> Personal income per capita: $49,245 (24th lowest)
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13. Nevada
> Combined sales tax rate: 8.1%
> State sales tax rate: 6.9%
> Avg. local sales tax: 1.3%
> Cost of living: 2.6% less than the national average (22nd highest)
> Personal income per capita: $48,006 (20th lowest)
14. Missouri
> Combined sales tax rate: 8.1%
> State sales tax rate: 4.2%
> Avg. local sales tax: 3.9%
> Cost of living: 10.5% less than the national average (9th lowest)
> Personal income per capita: $46,703 (16th lowest)
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15. New Mexico
> Combined sales tax rate: 7.8%
> State sales tax rate: 5.1%
> Avg. local sales tax: 2.7%
> Cost of living: 6.4% less than the national average (23rd lowest)
> Personal income per capita: $41,313 (3rd lowest)
16. Colorado
> Combined sales tax rate: 7.6%
> State sales tax rate: 2.9%
> Avg. local sales tax: 4.7%
> Cost of living: 3.0% greater than the national average (11th highest)
> Personal income per capita: $57,079 (11th highest)
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17. Minnesota
> Combined sales tax rate: 7.4%
> State sales tax rate: 6.9%
> Avg. local sales tax: 0.6%
> Cost of living: 2.5% less than the national average (21st highest)
> Personal income per capita: $56,280 (14th highest)
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18. South Carolina
> Combined sales tax rate: 7.4%
> State sales tax rate: 6.0%
> Avg. local sales tax: 1.4%
> Cost of living: 9.7% less than the national average (13th lowest)
> Personal income per capita: $42,726 (7th lowest)
19. Georgia
> Combined sales tax rate: 7.3%
> State sales tax rate: 4.0%
> Avg. local sales tax: 3.3%
> Cost of living: 7.9% less than the national average (19th lowest)
> Personal income per capita: $45,624 (12th lowest)
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20. Ohio
> Combined sales tax rate: 7.2%
> State sales tax rate: 5.8%
> Avg. local sales tax: 1.4%
> Cost of living: 10.7% less than the national average (8th lowest)
> Personal income per capita: $48,230 (22nd lowest)
21. Mississippi
> Combined sales tax rate: 7.1%
> State sales tax rate: 7.0%
> Avg. local sales tax: 0.1%
> Cost of living: 13.6% less than the national average (the lowest)
> Personal income per capita: $37,990 (the lowest)
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22. Florida
> Combined sales tax rate: 7.1%
> State sales tax rate: 6.0%
> Avg. local sales tax: 1.1%
> Cost of living: 0.3% less than the national average (16th highest)
> Personal income per capita: $49,258 (25th lowest)
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23. Rhode Island
> Combined sales tax rate: 7.0%
> State sales tax rate: 7.0%
> Avg. local sales tax: 0.0%
> Cost of living: 0.4% less than the national average (17th highest)
> Personal income per capita: $54,736 (16th highest)
24. Indiana
> Combined sales tax rate: 7.0%
> State sales tax rate: 7.0%
> Avg. local sales tax: 0.0%
> Cost of living: 9.7% less than the national average (13th lowest)
> Personal income per capita: $46,589 (15th lowest)
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25. North Carolina
> Combined sales tax rate: 7.0%
> State sales tax rate: 4.8%
> Avg. local sales tax: 2.2%
> Cost of living: 9.1% less than the national average (17th lowest)
> Personal income per capita: $45,909 (13th lowest)
26. Utah
> Combined sales tax rate: 6.9%
> State sales tax rate: 6.0%
> Avg. local sales tax: 1.0%
> Cost of living: 2.7% less than the national average (23rd highest)
> Personal income per capita: $45,457 (11th lowest)
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27. North Dakota
> Combined sales tax rate: 6.9%
> State sales tax rate: 5.0%
> Avg. local sales tax: 1.8%
> Cost of living: 8.5% less than the national average (18th lowest)
> Personal income per capita: $54,735 (17th highest)
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28. Nebraska
> Combined sales tax rate: 6.9%
> State sales tax rate: 5.5%
> Avg. local sales tax: 1.4%
> Cost of living: 9.5% less than the national average (16th lowest)
> Personal income per capita: $52,000 (20th highest)
29. Iowa
> Combined sales tax rate: 6.8%
> State sales tax rate: 6.0%
> Avg. local sales tax: 0.8%
> Cost of living: 9.8% less than the national average (11th lowest)
> Personal income per capita: $48,743 (23rd lowest)
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30. New Jersey
> Combined sales tax rate: 6.6%
> State sales tax rate: 6.6%
> Avg. local sales tax: 0.0%
> Cost of living: 13.2% greater than the national average (4th highest)
> Personal income per capita: $66,956 (4th highest)
31. South Dakota
> Combined sales tax rate: 6.4%
> State sales tax rate: 4.5%
> Avg. local sales tax: 1.9%
> Cost of living: 11.7% less than the national average (6th lowest)
> Personal income per capita: $49,980 (24th highest)
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32. West Virginia
> Combined sales tax rate: 6.4%
> State sales tax rate: 6.0%
> Avg. local sales tax: 0.4%
> Cost of living: 12.4% less than the national average (4th lowest)
> Personal income per capita: $40,389 (2nd lowest)
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33. Connecticut
> Combined sales tax rate: 6.4%
> State sales tax rate: 6.4%
> Avg. local sales tax: 0.0%
> Cost of living: 8.7% greater than the national average (6th highest)
> Personal income per capita: $74,076 (the highest)
34. Pennsylvania
> Combined sales tax rate: 6.3%
> State sales tax rate: 6.0%
> Avg. local sales tax: 0.3%
> Cost of living: 1.6% less than the national average (19th highest)
> Personal income per capita: $55,412 (15th highest)
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35. Massachusetts
> Combined sales tax rate: 6.3%
> State sales tax rate: 6.3%
> Avg. local sales tax: 0.0%
> Cost of living: 7.8% greater than the national average (7th highest)
> Personal income per capita: $70,410 (2nd highest)
36. Vermont
> Combined sales tax rate: 6.2%
> State sales tax rate: 6.0%
> Avg. local sales tax: 0.2%
> Cost of living: 1.6% greater than the national average (13th highest)
> Personal income per capita: $54,110 (19th highest)
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37. Idaho
> Combined sales tax rate: 6.0%
> State sales tax rate: 6.0%
> Avg. local sales tax: 0.0%
> Cost of living: 7.0% less than the national average (21st lowest)
> Personal income per capita: $43,155 (8th lowest)
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38. Maryland
> Combined sales tax rate: 6.0%
> State sales tax rate: 6.0%
> Avg. local sales tax: 0.0%
> Cost of living: 9.5% greater than the national average (5th highest)
> Personal income per capita: $62,860 (5th highest)
39. Michigan
> Combined sales tax rate: 6.0%
> State sales tax rate: 6.0%
> Avg. local sales tax: 0.0%
> Cost of living: 6.7% less than the national average (22nd lowest)
> Personal income per capita: $47,810 (19th lowest)
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40. Kentucky
> Combined sales tax rate: 6.0%
> State sales tax rate: 6.0%
> Avg. local sales tax: 0.0%
> Cost of living: 12.2% less than the national average (5th lowest)
> Personal income per capita: $41,889 (4th lowest)
41. Virginia
> Combined sales tax rate: 5.7%
> State sales tax rate: 5.3%
> Avg. local sales tax: 0.4%
> Cost of living: 2.3% greater than the national average (12th highest)
> Personal income per capita: $56,950 (12th highest)
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42. Maine
> Combined sales tax rate: 5.5%
> State sales tax rate: 5.5%
> Avg. local sales tax: 0.0%
> Cost of living: 1.6% less than the national average (19th highest)
> Personal income per capita: $48,198 (21st lowest)
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43. Wisconsin
> Combined sales tax rate: 5.4%
> State sales tax rate: 5.0%
> Avg. local sales tax: 0.4%
> Cost of living: 7.2% less than the national average (20th lowest)
> Personal income per capita: $50,753 (22nd highest)
44. Wyoming
> Combined sales tax rate: 5.4%
> State sales tax rate: 4.0%
> Avg. local sales tax: 1.4%
> Cost of living: 3.3% less than the national average (25th highest)
> Personal income per capita: $60,553 (9th highest)
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45. Hawaii
> Combined sales tax rate: 4.4%
> State sales tax rate: 4.0%
> Avg. local sales tax: 0.4%
> Cost of living: 18.4% greater than the national average (the highest)
> Personal income per capita: $54,411 (18th highest)
46. Alaska
> Combined sales tax rate: 1.4%
> State sales tax rate: 0.0%
> Avg. local sales tax: 1.4%
> Cost of living: 5.4% greater than the national average (10th highest)
> Personal income per capita: $59,647 (10th highest)
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47. New Hampshire
> Combined sales tax rate: 0.0%
> State sales tax rate: 0.0%
> Avg. local sales tax: 0.0%
> Cost of living: 5.9% greater than the national average (8th highest)
> Personal income per capita: $61,856 (7th highest)
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48. Delaware
> Combined sales tax rate: 0.0%
> State sales tax rate: 0.0%
> Avg. local sales tax: 0.0%
> Cost of living: 0.2% greater than the national average (14th highest)
> Personal income per capita: $51,069 (21st highest)
49. Oregon
> Combined sales tax rate: 0.0%
> State sales tax rate: 0.0%
> Avg. local sales tax: 0.0%
> Cost of living: 0.2% less than the national average (15th highest)
> Personal income per capita: $49,948 (25th highest)
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50. Montana
> Combined sales tax rate: 0.0%
> State sales tax rate: 0.0%
> Avg. local sales tax: 0.0%
> Cost of living: 5.9% less than the national average (24th lowest)
> Personal income per capita: $47,196 (18th lowest)
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