Sales tax rates vary significantly across the United States. Some states levy the highest sales tax rates nationwide, while others have the lowest.
It’s important to keep in mind that sales tax will increase the overall price of your purchases. You may spend more than planned if you don’t factor in sales tax. So, it’s wise to know more about it.
To help you, we’ve compiled a guide detailing the states with the highest and lowest sales tax rates and their combined state and local sales tax rates.
What Items Are Taxable?
As a rule of thumb, all tangible personal property (TPP) is taxable under sales tax laws. It refers to goods that have a physical existence. However, some physical goods are not counted as tangible personal property and are exempt from sales tax requirements.
Most states exempt groceries from TPP because it is a necessity and are frequently purchased by consumers. You must check your state’s Department of Revenue’s website to understand taxable and non-taxable goods.
States with Highest Sales Tax Rates
Some states in the USA charge a higher rate than others, making them some of the most expensive states for consumers. So, which state has the highest sales tax? The following 11 states have the highest state sales tax rates in the US.
States with Lowest Sales Tax Rates
States with the lowest sales taxes have rates below 5.00%. The following have comparatively lower base sales tax rates than others.
States with No Sales Tax
Did you know that some states do not charge state sales tax at all? It includes five US states, of which four have a complete state and local sales tax exemption. The following are the states with no sales tax.
Among these states with zero sales tax, only Alaska has a locally imposed sales tax on some goods and services. However, despite having no statewide sales taxes, businesses must still learn about the unique tax systems in the NOMAD states to stay compliant.
Combined State and Local Sales Tax Rates
When discussing a state’s combined sales tax rate, we consider the following two taxes.
- State Sales Tax: Represents the sales tax levied by the state government on sales of goods and services. Forty-six states, including the District of Columbia, impose a state sales tax.
- Local Sales Tax: Besides the state, the government allows localities to charge local sales tax on sales of taxable products and services. This rate varies from the state sales tax rate and may sometimes exceed it. Thirty-eight states charge local sales tax to customers.
The above lists present state-by-state ranking on the basis of state sales tax. However, local sales tax is an essential factor that you must pay attention to when discussing sales tax.
States with Highest Local Sales Tax Rates
To get any state’s combined sales tax rates, you need to determine the state’s local sales tax rates first. Below are 11 states with the highest average or minimum local sales tax rates.
- Alabama: 5.44%
- Louisiana: 5.11%
- Colorado: 4.96%
- New York: 4.54%
- Oklahoma: 4.55%
- Missouri: 4.19%
- Georgia: 3.44%
- Arkansas: 2.98%
- Washington: 2.97%
- Arizona: 2.92%
- New Mexico: 2.79%
Keep in mind that the average or minimum local sales tax rate is different from the maximum local rate in a state.
For instance, Colorado’s maximum local sales tax rate is 8.30%, which is higher than Alabama’s 8.00% maximum local sales tax rate. However, a state’s combined sales tax rate is typically calculated based on the average local sales tax rate of a state, not by its maximum local rate.
States with Highest Combined Sales Tax
The following states currently have the highest combined sales tax rates, ranging from 10.00% to 8.00%.
- Louisiana: 10.11%
- Tennessee: 9.61%
- Arkansas: 9.48%
- Washington: 9.47%
- Alabama: 9.44%
- Oklahoma: 9.05%
- California: 8.98%
- Illinois: 8.92%
- Kansas: 8.78%
- New York: 8.54%
- Arizona: 8.52%
- Missouri: 8.41%
- Nevada: 8.24%
- Texas: 8.20%
- Minnesota: 8.13%
States with Lowest Combined Sales Tax
- Alaska: 1.82%
- Hawaii: 4.50%
- Maine: 5.50%
- Wyoming: 5.56%
- Wisconsin: 5.72%
- Virginia: 5.77%
States with Gross Receipt Tax
People often compare gross receipts tax with sales tax. Gross receipt tax refers to the levy or tax paid by the seller of the goods. On the other hand, sales tax is levied upon customers or the buyers of the goods.
The following are the states with gross receipt tax.
- Delaware
- Nevada
- Ohio
- Oregon
- Tennessee
- Texas
- Washington
Variation in Sales Tax
Besides state sales tax rates, the base rate also varies among states. What is taxable in one state may not be taxable in another.
For instance, some states like New Jersey exempt
clothing from tax brackets. Meanwhile, some states only set specific sales tax limitations, while others regard clothing as fully taxable goods.
From the rates levied to what is taxable, all 50 states have their own set of laws and statutes. Not only that, these regulations are subject to change. That means states with low tax rates may become high tax-charging states and vice versa.
Therefore, as a business owner, you must always keep track and conduct a comprehensive analysis of various states’ sales tax laws to be compliant.
Sales Tax Rates Frequently Asked Questions
1. What is the highest sales tax rate in the USA?
As of 2025, the highest state sales tax in the USA is 7.25% in California. Meanwhile, the highest average local sales tax in the USA is 5.43% in Alabama. However, Colorado has the highest maximum local sales tax rate of 8.30%. The highest combined sales tax rate in the USA is 10.11% in Louisiana.
2. What is the lowest sales tax rate in the USA?
Colorado has the lowest state sales tax rate of only 2.90% as of 2025. On the other hand, Alaska has the lowest local and combined sales tax rate of 1.89%.
3. Which state has the highest sales tax rate?
California currently holds the title of the state with the highest state sales tax rate, which is 7.25%. Meanwhile, Louisiana has the highest combined sales tax rate of 10.11%.
4. What are sales taxes used for?
Sales taxes are used to finance several public services. It includes improving infrastructure, health, education, and emergency services. The state decides where and how to spend the collected sales tax for the betterment of the people.
5. Are ecommerce sellers required to collect sales tax?
Yes, ecommerce sellers must collect sales tax once they establish a sales tax nexus in a state. A nexus is typically determined by a specific amount of sales or the number of transactions made in a state. To stay compliant, remote sellers must always know the thresholds and other legal requirements of the states where they are doing business.
Need Help with Sales Tax?
Although sales tax is only a part of the complex taxation structure in the USA, it still isn’t very easy to understand and comply with. Thus, it’s always better to rely on experts to ensure error-free sales tax compliance and prevent any penalties.
Book a call with TaxHero and let professionals handle the varying tax rates and compliance requirements in any and every state.
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