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- Four states tie for the second-highest statewide rate, at 7 percent: Indiana, Mississippi, Rhode Island, and Tennessee.
- The lowest non-zero state-level sales tax is in Colorado, which has a rate of 2.9 percent.
- Five states do not impose a state sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon.
- Sales tax rates impact revenue collection and the economy.
Sales Tax Rules and Exemptions
- Some states exempt goods purchased for further manufacturing from sales tax.
- States impose a tax on buyers of taxable property or services if sales tax is not paid.
Global Comparison of Sales Tax Rates
- The highest sales tax rates are found in India, at rates up to 28 percent. Hungary follows with a standard rate of 27 percent, and Brazil comes in third with a maximum rate of 25 percent.
Overview of US State Sales Tax System
- Sales tax rates in the US typically range from 2% to 7% or more, set by each state.
- Some local governments may also impose additional sales taxes.
State Variations in Sales Tax Regulations
- States create their own sales tax rules and exemptions, affecting which goods and services are taxed.
- Some states have tax-free weekends or weeks, commonly around back-to-school times.
- Additionally, counties and municipalities may impose additional surtaxes on specific goods and services.
State Tax Rates and Analysis
- The average sales tax in the US is 5.09%, with California having the highest rate at 7.25%.
- Nine states have no income tax, and state income tax rates for 2023 range from 0% to 13.3%.
- State sales tax rates range from 0% to 7.25%, averaging 5.09% nationally.
WalletHub Analysis of State Tax Rates
- WalletHub analyzed state and local tax rates across the 50 states.
- They considered four tax types: real estate, vehicle property, income, and sales/excise.
- Alaska, Florida, South Dakota, Wyoming scored highest on the 2023 State Business Tax Climate Index.
