Highest and Lowest Tax Rates – 2014 State and Local Taxes

Highest and Lowest Tax Rates – 2014 State and Local Taxes

State and local retail sales tax rates can have an effect on an area’s population as well as its ability to attract businesses. There is a lot to be read from the tax data that is gathered around the country and there is a lot of important information that is revealed when you take a long look at how much others pay to live in an area.

What Does The Data Tell Us?

When we examine retail tax rates for any given state, it is incorrect to judge a state simply by its overall tax rate. There are tax laws on the books in many states that allow certain municipalities the right to create their own retail tax rate. For example, the retail tax rate in the state of New York varies from county to county and is a combination of the state rate and the local rate.

State and local tax data, when grouped together, will give us an indication of what the true retail sales tax rates are in an area. This can often be in great contrast to the numbers that are generated by only looking at state tax rates.

Analyzing State Retail Tax Rates

Alaska, Delaware, Montana, New Hampshire and Oregon do not have a mandated state retail sales tax. But only Montana and Alaska allow local municipalities to impose a retail sales tax. Tax revenue for these areas is generated through other means.

The highest state retail sales tax rate is found in California, where the retail sales tax is 7.5 percent. The state with the lowest applied retail sales tax (not counting the states that have no retail sales tax) is Colorado at 2.9 percent.

Local Sales Tax Rates

The sales tax rates in some states can vary widely from one municipality to the next. In New York State, Niagara County’s sales tax rate is eight percent, while the rate in neighboring Erie County is 8.75 percent. Both counties utilize the New York State retail tax rate of four percent as the foundation for their numbers.

Louisiana is the state that has the highest average municipality retail sales tax rate at 4.89 percent, with Mississippi having the lowest local tax average at an impressive 0.004 percent. Once again, this does not include municipalities that charge no retail sales tax of their own.

Combined Retail Sales Tax

The true indicator for the amount of retail sales tax that is charged in a region is the rate that combines the state rate with the local rate. The Niagara County rate of eight percent is made up of a four percent state tax and a four percent county tax.

Throughout the entire country, the state of Tennessee has the highest combined retail sales tax at a rate of 9.45 percent. This is the average retail sales tax rate that consumers can expect to pay when purchasing goods or services in the state of Tennessee. Despite having the highest state retail sales tax rate, California is eighth in the country with a combined state and local sales tax average of 8.41 percent.

The state with the lowest combined retail sales tax average is Alaska at 1.68 percent. The next lowest would be Hawaii at 4.35 percent. Alaska does not have a state sales tax, while Hawaii does.

Use Retail Sales Tax Data to Your Advantage

Consumers in all 50 American states purchase products and services on a regular basis. But if you plan on offering products to people all over the country, then you may want to become familiar with the state and local retail sales tax rates before you decide on a location for your organization.