States with Highest Sales Tax Rates
The highest state sales tax rate is 7.25% in California. Four other states also charge 7% sales tax – Indiana, Mississippi, Rhode Island, and Tennessee. Rates over 7% exist in almost 20 states. Sales tax is added to prices of goods and collected from buyers. California relies heavily on sales tax revenue to fund state services like education and healthcare. Its large population generates significant revenue. As a business, you must collect and remit sales taxes set by governments. New Jersey has high property taxes but lower sales tax. Local governments can add local sales taxes. Five states – Alaska, Delaware, Montana, New Hampshire, and Oregon – currently have no statewide sales tax.
State with Lowest Tax Burden
The state with the highest tax burden is California, with a personal income tax of 9.3% and sales tax of 7.3%. Alaska is renowned for having the lowest tax burden among all states. With no state income tax or state sales tax, Alaskans enjoy keeping more of their earnings. As of 2023, Arizona has a flat income tax of 2.5 percent. California had the nation’s ninth highest tax burden, while Texas ranked 34th in a 2022 survey. These state figures represent averages – at the individual level, tax contributions are heavily dependent on income. Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming have no state personal income tax. The majority of U.S. states impose a personal income tax on residents. New Hampshire and Tennessee also have no income tax, but they tax interest and dividends.
Tax Information by State
California has the highest average tax of any state at 10.4%. Tennessee has no state income tax, is in the lowest 10 states for property tax, but has the second-highest combined sales tax rate at 9.548%. Coming in as the cheapest state to live in the United States is Mississippi with a cost of living index score of 83.3. Nine states don’t tax retirement plan income: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming.