Sales tax

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Sales tax is one of the primary taxes levied by state governments. Sales tax is applied to goods and services at the point of purchase. It is most often collected by the seller of the good or service and then transferred to the taxing authority.[1]

Historically, general sales or use tax has been a chief element of state revenue systems. Presently, sales tax revenue comprises roughly one third of the total tax revenue collected by the states. The lucrativeness of the sale tax for states has, however, diminished somewhat in recent years. In 1998, for the first time since the Great Depression, sales tax accounted for a smaller share of the states' tax collections than personal income tax.[2]

Some have claimed that the sales tax is unfair, unduly burdening the poor because they pay a larger percentage of their income in sales tax than people with higher incomes. Nonetheless, two surveys conducted in 1993 and 2000 showed that citizens view consumption taxes (sales and use tax, as well as specialized sales taxes, or excise taxes) as "the most acceptable forms of taxation."[2]

Sales tax rates

2015

Combined tax rates

Almost all states employ a statewide sales tax, which ranges from 2.9 percent in Colorado to 7.5 percent in California. Only five states do not have a state-wide sales tax. Additionally, many states allow the levying of additional local sales taxes, which are then added to the state's tax. The table below displays the state tax rates, average local tax rates, and combined tax rates for all 50 states and the District of Columbia.

The column labeled "Ranking" lists the rank of each state's combined sales tax from one to 47. The number one ranking indicates the state with the highest combined sales tax rate (Tennessee, in this case) while the 46th ranking indicates the state with the lowest sales tax (here, Alaska). The ranking of 47th was given to the four states that do not have any form of sales tax.

Combined sales tax rates, 2015
State State sales tax Average local sales tax (a) Combined Ranking
Alabama 4.00% 4.91% 8.91% 3
Alaska None 1.76% 1.76% 46
Arizona 5.60% 2.57% 8.17% 11
Arkansas 6.50% 2.76% 9.26% 2
California (b) 7.50% 0.94% 8.44% 8
Colorado 2.90% 4.54% 7.44% 15
Connecticut 6.35% None 6.35% 31
Delaware None None None 47
Florida 6.00% 0.65% 6.65% 29
Georgia 4.00% 2.96% 6.96% 24
Hawaii (c) 4.00% 0.35% 4.35% 45
Idaho 6.00% 0.01% 6.01% 36
Illinois 6.25% 1.94% 8.19% 10
Indiana 7.00% None 7.00% 21
Iowa 6.00% 0.78% 6.78% 27
Kansas 6.15% 2.05% 8.20% 9
Kentucky 6.00% None 6.00% 37
Louisiana 4.00% 4.91% 8.91% 4
Maine 5.50% None 5.50% 42
Maryland 6.00% None 6.00% 37
Massachusetts 6.25% None 6.25% 33
Michigan 6.00% None 6.00% 37
Minnesota 6.88% 0.33% 7.20% 17
Mississippi 7.00% 0.07% 7.07% 20
Missouri 4.23% 3.58% 7.81% 14
Montana (d) None None None 47
Nebraska 5.50% 1.30% 6.80% 26
Nevada 6.85% 1.09% 7.94% 13
New Hampshire None None None 47
New Jersey (e) 7.00% -0.03% 6.97% 23
New Mexico (c) 5.13% 2.22% 7.35% 16
New York 4.00% 4.48% 8.48% 7
North Carolina 4.75% 2.15% 6.90% 25
North Dakota 5.00% 1.56% 6.56% 30
Ohio 5.75% 1.35% 7.10% 19
Oklahoma 4.50% 4.27% 8.77% 6
Oregon None None None 47
Pennsylvania 6.00% 0.34% 6.34% 32
Rhode Island 7.00% None 7.00% 21
South Carolina 6.00% 1.13% 7.13% 18
South Dakota (c) 4.00% 1.83% 5.83% 40
Tennessee 7.00% 2.45% 9.45% 1
Texas 6.25% 1.80% 8.05% 12
Utah (b) 5.95% 0.73% 6.68% 28
Vermont 6.00% 0.14% 6.14% 34
Virginia (b) 5.30% 0.33% 5.63% 41
Washington 6.50% 2.39% 8.89% 5
West Virginia 6.00% 0.07% 6.07% 35
Wisconsin 5.00% 0.43% 5.43% 44
Wyoming 4.00% 1.47% 5.47% 43
Washington, D.C. 5.75% None 5.75% N/A
"(a) City, county, and municipal rates vary. These rates are weighted by population to compute an average local tax rate.

(b) Three states levy mandatory, statewide, local add-on sales taxes: California (1%), Utah (1.25%), Virginia (1%). We include these in their state sales taxes.
(c) The sales taxes in Hawaii, New Mexico, and South Dakota have broad bases that include many services.
(d) Due to data limitations, this table does not include sales taxes in local resort areas in Montana.
(e) Salem County is not subject to the statewide sales tax rate and collects a total rate of 3.5%. New Jersey's average local rate is represented as a negative."
Source: The Tax Foundation, "State and local sales tax rates, 2015," accessed November 5, 2015

State tax rates

The table below lists the state sales tax rates for all 50 states, as well as the status of items commonly exempted from sales tax. Of the 50 states (and Washington, D.C.), only five do not collect a general sales tax. For the remaining states that do collect sales tax, rates range from 2.9 percent in Colorado to 7.5 percent in California. The numerical rankings listed have been tallied by excluding the states that do not collect sales tax and assigning the same numerical ranking to states with the same rate. Because several states share common rates, the rankings range from 1, indicating the lowest sales tax rate, to 22, which indicates the highest.[3]

Sales tax rates, 2015
State Sales tax rate Exemption status Ranking
Food Prescription drugs Nonprescription drugs
Alabama 4 Taxable Exempt Taxable 2
Alaska No sales tax
Arizona 5.6 Exempt Exempt Taxable 11
Arkansas 6.5 1.54 Exempt Taxable 18
California3 7.5 Exempt Exempt Taxable 22
Colorado 2.9 Exempt Exempt Taxable 1
Connecticut 6.35 Exempt Exempt Taxable 17
Delaware No sales tax
District of Columbia 5.75 Exempt Exempt Exempt 12
Florida 6 Exempt Exempt Exempt 14
Georgia 4 Exempt 4 Exempt Taxable 2
Hawaii 4 Taxable Exempt Taxable 2
Idaho 6 Taxable Exempt Taxable 14
Illinois 6.25 1 1 1 16
Indiana 7 Exempt Exempt Taxable 21
Iowa 6 Exempt Exempt Taxable 14
Kansas 6.15 Taxable Exempt Taxable 15
Kentucky 6 Exempt Exempt Taxable 14
Louisiana 4 Exempt 4 Exempt Taxable 2
Maine 5.5 Exempt Exempt Taxable 9
Maryland 6 Exempt Exempt Exempt 14
Massachusetts 6.25 Exempt Exempt Taxable 16
Michigan 6 Exempt Exempt Taxable 14
Minnesota 6.875 Exempt Exempt Exempt 20
Mississippi 7 Taxable Exempt Taxable 21
Missouri 4.225 1.225 Exempt Taxable 3
Montana No sales tax
Nebraska 5.5 Exempt Exempt Taxable 10
Nevada 6.85 5 Exempt Exempt Taxable 19
New Hampshire No sales tax
New Jersey 7 Exempt Exempt Exempt 21
New Mexico 5.125 Exempt Exempt Taxable 7
New York 4 Exempt Exempt Exempt 2
North Carolina 4.75 Exempt 4 Exempt Taxable 5
North Dakota 5 Exempt Exempt Taxable 6
Ohio 5.75 Exempt Exempt Taxable 12
Oklahoma 4.5 Taxable Exempt Taxable 4
Oregon No sales tax
Pennsylvania 6 Exempt Exempt Exempt 14
Rhode Island 7 Exempt Exempt Taxable 21
South Carolina 6 Exempt Exempt Taxable 14
South Dakota 4 Taxable Exempt Taxable 2
Tennessee 7 5.00% Exempt Taxable 21
Texas 6.25 Exempt Exempt Exempt 16
Utah 5.95 4 1.75 4 Exempt Taxable 13
Vermont 6 Exempt Exempt Exempt 14
Virginia 5.3 2 2.5 2 Exempt Exempt 8
Washington 6.5 Exempt Exempt Taxable 18
West Virginia 6 Exempt Exempt Taxable 14
Wisconsin 5 Exempt Exempt Taxable 6
Wyoming 4 Exempt Exempt Taxable 2
1"Some states tax food but allow a rebate or income tax credit to compensate poor households. They are Hawaii, Idaho, Kansas, Oklahoma, Oklahoma and South Dakota."
2"Includes statewide 1.00 percent tax levied by local governments in Virginia."
3"Tax rate may be adjusted annually according to a formula based on balances in the unappropriated general fund and the school foundation fund."
4"Food sales subject to local taxes. Includes a statewide 1.25 percent tax levied by local governments in Utah."
5"Nevada sales tax rate scheduled to decrease to 6.5 percent on July 1, 2015."
Source: Tax Policy Center, "Sales Tax Rates 2000-2015," accessed September 30, 2015

2014

The table below lists the sales tax rates for all 50 states as of 2014, as well as the status of items commonly exempted from sales tax. Of the 50 states (and Washington, D.C.), only five did not collect a general sales tax. For the remaining states that did collect sales tax, rates ranged from 2.9 percent in Colorado to 7.5 percent in California. The numerical rankings listed were tallied by excluding the states that did not collect sales tax and assigning the same numerical ranking to states with the same rate. Because several states shared common rates, the rankings range from 1, indicating the lowest sales tax rate, to 22, which indicates the highest.[4] <center>

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See also

External links

Footnotes

  1. ↑ Investopedia, "Sales Tax," accessed September 26, 2014
  2. ↑ 2.0 2.1 Brunori, D. (2011). State Tax Policy: A Political Perspective. Washington, D.C.: The Urban Institute Press
  3. ↑ Tax Policy Center, "Sales Tax Rates 2000-2015," accessed September 30, 2015
  4. ↑ Tax Policy Center, "Sales Tax Rates 2000-2014," June 2, 2014

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 Jerrick Adams • Sarah Groat • Taylor Kempema • Adam Vaughn
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