2022 Sales Tax Rates by State: A Comprehensive Guide

You’ll pay many types of taxes over your lifetime, but the one you’re probably most familiar with is sales taxes. When you purchase a product or service, most states impose this tax to generate revenue. And this helps keep essential programs, like education, running.

The amount of sales tax you're required to pay varies by state. Five states don’t charge any sales taxes. Plus, some states allow local governments to collect additional taxes. We’ll cover what sales tax is and how much sales tax rates are by state below.

What Is A Sales Tax?

A sales tax is levied by the government on the sale of goods and services. When you purchase a good or service, the sales tax is the amount of money that’s added when you pay at checkout.

The specific goods and services subject to sales tax vary by state. For instance, some states do not apply sales tax to food purchases. Check with your state government to determine which sales tax rates apply to you.

Retail businesses bear the responsibility of tracking and collecting this sales tax from shoppers, and paying it out to their state government on a recurring basis.

Sales Tax Rate

The sales tax rate is the percentage of the purchase price that’s taxed. State governments set the state sales tax rates, decide whether local governments can collect additional taxes and determine what types of products and services are taxed.

Types Of Taxes

There are several types of taxes, including income taxes and excise taxes. Unlike sales tax, you pay income tax on money earned from working, interest earned on bank accounts, royalties and other sources.

While you can pay sales tax on all types of goods and services, an excise tax only applies to certain goods and services, such as cigarettes and gambling. A business or merchant usually pays this tax to the federal government (or state and local governments) and then passes it down to consumers.

Use Tax

Residents who live by a state’s border where one state has a lower sales tax tend to prefer shopping in the neighboring state. As a result, it can cause the state that has a higher sales tax to miss out on tax revenue.

To discourage this behavior, some states impose use taxes. This allows a state to collect sales taxes from a person or business that purchases certain goods or services in another state or online without paying sales tax.

For instance, if your state has a use tax and you purchase an item from an online retailer or state that doesn't collect sales taxes, you may owe use taxes. You typically pay this tax when you file your state tax return.

What About Local Sales Tax?

Most states allow local governments to levy sales tax, and these local governments decide how much the sales tax should be. That said, 13 states and the District of Columbia don’t allow local sales taxes.

5 States Without Sales Tax

These five states don’t charge sales taxes:

• Alaska (Though some jurisdictions do charge local sales taxes. The average local sales tax is 1.76% across the state.)
• Delaware
• Montana
• New Hampshire
• Oregon

Can I be charged a sales tax by both the city and the borough?

It is possible. State law allows both cities and boroughs to levy a sales tax. In many boroughs that levy a sales tax, it is not unusual for a city within that borough to also levy a tax. Please refer to Alaska Taxable, Table 2-Boroughs or Table 2-Cities as a reference guide on local sales tax levies. ( AS 29.45.650 and AS 29.45.700).

5 States With Highest Sales Tax

These five states have the highest average state sales tax: 

• California (7.25%)
• Indiana (7.00%)
• Mississippi (7.00%)
• Rhode Island (7.00%)
• Tennessee (7.00%)

5 States With The Lowest Sales Tax

Colorado had the lowest sales tax rate in the U.S. at 2.9%. And there’s a five-way tie between these states at 4%:

• Alabama
• Georgia
• Hawaii
• New York
• Wyoming

5 States With The Highest Average Combined State And Local Sales Tax Rates

These five states have the highest average combined state and local sales tax:

• Louisiana (9.55%)
• Tennessee (9.55%)
• Arkansas (9.47%
• Washington (9.29%)
• Alabama (9.24%)

Sales Tax Rates By States

Do you know what the tax rate is for your state? Here’s a table that shows the state sales tax rate, average local sales tax rate and combined tax rates for the rest of America.

STATE NAME	STATE SALES TAX RATE	AVG. LOCAL SALES TAX RATE	COMBINED STATE AND LOCAL TAX RATE
Alabama	4.00%	5.24%	9.24%
Alaska	0.00%	1.76%	1.76%
Arizona	5.60%	2.80%	8.40%
Arkansas	6.50%	2.97%	9.47%
California	7.25%	1.57%	8.82%
Colorado	2.90%	4.87%	7.77%
Connecticut	6.35%	0.00%	6.35%
D.C.	6.00%	0.00%	6.00%
Florida	6.00%	1.01%	7.01%
Georgia	4.00%	3.35%	7.35%
Hawaii	4.00%	0.44%	4.44%
Idaho	6.00%	0.02%	6.02%
Illinois	6.25%	2.56%	8.81%
Indiana	7.00%	0.00%	7.00%
Iowa	6.00%	0.94%	6.94%
Kansas	6.50%	2.20%	8.70%
Kentucky	6.00%	0.00%	6.00%
Louisiana	4.45%	5.10%	9.55%
Maine	5.50%	0.00%	5.50%
Maryland	6.00%	0.00%	6.00%
Massachusetts	6.25%	0.00%	6.25%
Michigan	6.00%	0.00%	6.00%
Minnesota	6.88%	0.61%	7.49%
Mississippi	7.00%	0.07%	7.07%
Missouri	4.23%	4.06%	8.29%
Nebraska	5.50%	1.44%	6.94%
Nevada	6.85%	1.09%	7.94%
New Jersey	6.63%	0.00%	6.63%
New Mexico	5.13%	2.71%	7.84%
New York	4.00%	4.52%	8.52%
North Carolina	4.75%	2.23%	6.98%
North Dakota	5.00%	1.96%	6.96%
Ohio	5.75%	1.47%	7.22%
Oklahoma	4.50%	4.47%	8.97%
Pennsylvania	6.00%	0.34%	6.34%
Rhode Island	7.00%	0.00%	7.00%
South Carolina	6.00%	1.44%	7.44%
South Dakota	4.50%	1.90%	6.40%
Tennessee	7.00%	2.55%	9.55%
Texas	6.25%	1.95%	8.20%
Utah	6.10%	1.09%	7.19%
Vermont	6.00%	0.24%	6.24%
Virginia	5.30%	0.45%	5.75%
Washington	6.50%	2.79%	9.29%
West Virginia	6.00%	0.52%	6.52%
Wisconsin	5.00%	0.43%	5.43%
Wyoming	4.00%	1.22%	5.22%

* Based on data organized by The Tax Foundation

The Bottom Line: Sales Taxes Are An Important Component Of Your Overall Tax Burden

Since most states charge sales tax, it’s likely you’ll have to pay them when you purchase a good or service. If you plan on visiting a low sales tax rate state, you probably won’t be asked to pay use taxes for lower price purchases. But keep in mind you’ll have to pay sales tax if you purchase a higher value item, like a vehicle.

Are you considering moving to a state with a lower tax burden? Read our article on states that have no tax income.