HomeTaxSales Tax by State: A Guide to Sales Taxes in 2022

Sales Tax by State: A Guide to Sales Taxes in 2022

Last updated 25th Nov 2022
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Sales tax by state is one of the most important points to consider when evaluating the impact of tax revenue in regions across the US.

While many types of tax, such as income and corporate tax, can be difficult to understand, sales tax can be a little more straightforward, as you’ll see it printed on the receipt for any product or service you buy. Notably, however, the sales tax you pay can vary depending on a number of factors.

Some states in the US have no sales tax, while others have not only a federal sales tax rate but local taxes to consider per city and county too.

Here’s what you need to know about sales tax in the US by state.

Understanding US Sales Tax by State

When it comes to evaluating sales tax rates by state across America, it’s important to note that different regions approach taxes in different ways. Some states don’t charge sales tax at all, while others charge sales tax but no “local sales tax.”

The addition of a local sales tax on top of a state sales tax can significantly increase the price of goods for customers and cause problems for businesses, which is why many entrepreneurs deliberately seek out low-tax states.

When sales taxes by state are increased by local tax, there’s usually a maximum limit on how much tax can be charged in each sale. For instance, Colorado has the highest maximum local tax rate at 8.30%.

Sales Tax Comparison by State

The sales tax requirements by state can vary drastically depending on where you live. Let’s take a closer look at some of the state and local rates right now.

StateState Tax RateLocal State TaxCombined TaxAlabama4.00%5.24%9.24%Alaska0.00%1.76%1.76%Arizona5.60%2.80%8.40%Arkansas6.50%2.97%9.47%California7.25%1.57%8.82%Colorado2.90%4.87%7.77%Connecticut6.35%0.00%6.35%Delaware0.00%0.00%0.00%D.C.6.00%0.00%6.000%Florida6.00%1.01%7.01%Georgia4.00%3.35%7.35%Hawaii4.00%0.44%4.44%Idaho6.00%0.02%6.02%Illinois6.25%2.56%8.81%Indiana7.00%0.00%7.00%Iowa6.00%0.94%6.94%Kansas6.50%2.20%8.70%Kentucky6.00%0.00%6.00%Louisiana4.45%5.10%9.55%Maine5.50%0.00%5.50%Maryland6.00%0.00%6.00%Massachusetts6.25%0.00%6.25%Michigan6.00%0.00%6.00%Minnesota6.875%0.61%7.49%Mississippi7.00%0.07%7.07%Missouri4.225%4.06%8.29%Montana0.00%0.00%0.00%Nebraska5.50%1.44%6.94%Nevada6.85%1.38%8.23%New Hampshire0.00%0.00%0.00%New Jersey6.625%-0.03%6.60%New Mexico5.125%2.71%7.84%New York4.00%4.52%8.52%North Carolina4.75%2.23%6.98%North Dakota5.00%1.96%6.96%Ohio5.75%1.47%7.22%Oklahoma4.50%4.47%8.97%Oregon0.00%0.00%0.00%Pennsylvania6.00%0.34%6.34%Rhode Island7.00%0.00%7.00%South Carolina6.00%1.44%7.44%South Dakota4.50%1.90%6.40%Tennessee7.00%2.55%9.55%Texas6.25%1.95%8.20%Utah6.10%1.09%7.19%Vermont6.00%0.24%6.24%Virginia5.30%0.45%5.75%Washington6.50%2.79%9.29%West Virginia6.00%0.52%6.52%Wisconsin5.00%0.43%5.43%

As you can see from the table above, the sales tax percentage by state can vary drastically depending on where in America you are. However, these taxes aren’t the only factor worth looking at when determining the cost of living in a particular state.

The states with the lowest sales tax could also have higher income tax and other fees to consider. For instance, Tennessee has a higher than usual sales tax at 7%, but people living here benefit from no income tax. Alternatively, states like Oregon have high-income taxes but no sales tax.

FAQ

Which state in the US has no sales tax?

There are currently five states with no state-wide sales tax rates, including Montana, New Hampshire, Delaware, Oregon, and Alaska. However, Alaska does allow local regions to charge their own local sales taxes on purchases.

Which state has the highest sales tax?

Currently, California has the highest sales tax at a state level, at 7.25%, followed by Indiana, Mississippi, Rhode Island, and Tennessee, which all charge 7%. The state with the highest combined and local state tax is Louisiana at 9.55%.

Where is the cheapest sales tax in the USA?

The lowest sales tax in the US by state for a state which uses sales taxes is Colorado, at 2.9%. However, Hawaii has the lowest combined sales and local tax at 4.44% on average.


Rebekah Carter

Rebekah Carter

Rebekah Carter is a dedicated online marketing professional and writer. With experience in the world of entrepreneurial development, business growth, communication and collaboration, and even health and fitness, Rebekah is constantly looking for ways to expand her expertise, and share her knowledge with the digital world.