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February 11, 2013
No. 357
State and Local Sales Tax Rates in 2013
By
Scott Drenkard
Introduction
Retail sales taxes are one of the more transparent ways to collect tax revenue. While graduated income tax
rates and brackets are complex and confusing to many taxpayers, the sales tax is easier to understand: people
can reach into their pocket and see the rate printed on a receipt.
Less known, however, are the local sales taxes collected in 37 states. These rates can be substantial, so a state
with a moderate statewide sales tax rate could actually have a very high combined state-local rate compared
to other states. This report provides a population-weighted average of local sales taxes in each state in an
attempt to give a sense of the statutory local rate for each state. See Table 1 at the end of this Fiscal Fact for
the full state-by-state listing of state and local sales tax rates.
Combined Rates
Five states do not have a statewide sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon. Of
these, Alaska and Montana allow localities to charge local sales taxes.1
In Alaska, high local rates in populous places like Juneau and Kodiak (5 and 6 percent, respectively)
certainly increase the average local rate, but not enough to give Alaskans a higher combined rate than any
state that charges a statewide rate.
The five states with the highest average combined rates are Tennessee (9.44 percent), Arizona (9.16 percent),
Louisiana (8.87 percent), Washington (8.86 percent), and Oklahoma (8.67 percent).
The five states with the lowest average combined rates are Alaska (1.69 percent), Hawaii (4.35 percent),
Maine (5 percent), Virginia (5 percent), and Wyoming (5.34 percent).
The author would like to thank Ellen Kant for her assistance on this report.
1 Due to data limitations, this study does not include local sales taxes in resort areas in Montana.](ViewImageLocal?handle=hein.taxfoundation/ffdfhxz0001&div=1&collection=&method=preview&ext=.png&size=3)