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Yearly Archives: 2016

State and Local Sales Tax Rates, Midyear 2016

ByJared Walczak,
Scott Drenkard

FISCAL FACT No. 515: State and Local Sales Tax Rates, Midyear 2016 (PDF)

Key Findings

∙ Forty-five states and the District of Columbia collect statewide sales taxes.

∙ Local sales taxes are collected in 38 states.

∙ The five states with the highest average combined state and local sales tax rates are Louisiana (9.99 percent), Tennessee (9.45 percent), Arkansas (9.30 percent), Alabama (8.97 percent), and Washington (8.92 percent).

∙ Sales tax rates differ by state, but sales tax bases also impact how much revenue is collected from a tax and how the tax affects the economy.

∙  Sales tax rate differentials can induce consumers to shop across borders or buy products online.


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, sales taxes are easier to understand; consumers can see their tax burden printed directly on their receipts.

In addition to state-level sales taxes, consumers also face local sales taxes in 38 states. These rates can be substantial, so a state with a moderate statewide sales tax rate could actually have a very high combined state and local rate compared to other states. This report provides a population-weighted average of local sales taxes as of July 1, 2016, in an attempt to give a sense of the average local rate for each state. Table 1 provides a full state-by-state listing of state and local sales tax rates.

Combined Rates

Five states do not have statewide sales taxes: Alaska, Delaware, Montana, New Hampshire, and Oregon. Of these, Alaska and Montana allow localities to charge local sales taxes.[1]

The five states with the highest average combined state and local sales tax rates are Louisiana (9.99 percent), Tennessee (9.45 percent), Arkansas (9.30 percent), Alabama (8.97 percent), and Washington (8.92 percent).

The five states with the lowest average combined rates are Alaska (1.78 percent), Hawaii (4.35 percent), Wisconsin (5.41 percent), Wyoming (5.42 percent), and Maine (5.5 percent).

State Rates

California has the highest state-level sales tax rate, at 7.5 percent.[2] Five states tie for the second-highest statewide rate, at 7 percent: Indiana, Mississippi, New Jersey, Rhode Island, and Tennessee.

The lowest non-zero, state-level sales tax is in Colorado, which has a rate of 2.9 percent. Five states follow with 4 percent rates: Alabama, Georgia, Hawaii, New York, and Wyoming.[3]

Two other states began the year with rates of 4 percent, but increased them in the first six months of the year. Louisiana increased its state-level tax rate to 5 percent, which, combined with its average local tax rate of 4.99 percent, gives it the highest state and local combined sales tax rate in the nation, up from third at the beginning of the year. South Dakota’s state sales tax rate rose half a percentage point to 4.5 percent, shifting the state eight places in the overall rankings. No other states increased their state-level sales tax in the first half of 2016.

Local Rates

The five states with the highest average local sales tax rates are Louisiana (4.99 percent), Alabama (4.98 percent), Colorado (4.60 percent), New York (4.50 percent), and Oklahoma (4.44 percent). Although Cook County, Illinois (home to Chicago), and Clark County, Nevada (home to Las Vegas), both increased sales tax rates on January 1 of this year, no major cities have raised their local sales tax rates since. With rate revisions limited to smaller municipalities, fluctuations in average local sales tax rates were modest for the first half of 2016.

The border county of Salem County, New Jersey, is exempt from collecting the 7 percent statewide sales tax and instead collects a 3.5 percent local tax, a policy designed to help local retailers compete with neighboring Delaware, which foregoes a sales tax. We represent this anomaly as a negative 0.03 percent statewide average local rate (adjusting for population as described in the methodology section below), and the combined rate reflects this subtraction. Despite the slightly favorable impact on the overall rate, this lower rate represents an implicit acknowledgment by New Jersey officials that their 7 percent statewide rate is uncompetitive with neighboring Delaware, which has no sales tax.

State and Local Sales Tax Rates as of July 1, 2016
State State Tax Rate Rank Avg. Local Tax Rate (a) Combined Rate Combined Rank Max Local Tax Rate
Alabama 4.00% 40 4.97% 8.97% 4 7.00%
Alaska 0.00% 46 1.78% 1.78% 46 7.50%
Arizona 5.60% 28 2.65% 8.25% 11 5.30%
Arkansas 6.50% 9 2.80% 9.30% 3 5.13%
California (b) 7.50% 1 0.98% 8.48% 10 2.50%
Colorado 2.90% 45 4.60% 7.50% 16 8.00%
Connecticut 6.35% 12 0.00% 6.35% 31 0.00%
Delaware 0.00% 46 0.00% 0.00% 47 0.00%
Florida 6.00% 16 0.66% 6.66% 30 1.50%
Georgia 4.00% 40 3.00% 7.00% 23 4.00%
Hawaii (c) 4.00% 40 0.35% 4.35% 45 0.50%
Idaho 6.00% 16 0.03% 6.03% 37 3.00%
Illinois 6.25% 13 2.40% 8.65% 7 4.75%
Indiana 7.00% 2 0.00% 7.00% 21 0.00%
Iowa 6.00% 16 0.80% 6.80% 27 1.00%
Kansas 6.50% 9 2.11% 8.61% 8 4.00%
Kentucky 6.00% 16 0.00% 6.00% 38 0.00%
Louisiana 5.00% 33 4.98% 9.98% 1 7.00%
Maine 5.50% 29 0.00% 5.50% 42 0.00%
Maryland 6.00% 16 0.00% 6.00% 38 0.00%
Massachusetts 6.25% 13 0.00% 6.25% 35 0.00%
Michigan 6.00% 16 0.00% 6.00% 38 0.00%
Minnesota 6.88% 7 0.43% 7.31% 17 1.50%
Mississippi 7.00% 2 0.07% 7.07% 20 1.00%
Missouri 4.23% 39 3.64% 7.87% 14 5.00%
Montana (d) 0.00% 46 0.00% 0.00% 47 0.00%
Nebraska 5.50% 29 1.37% 6.87% 26 2.00%
Nevada 6.85% 8 1.13% 7.98% 13 1.30%
New Hampshire 0.00% 46 0.00% 0.00% 47 0.00%
New Jersey (e) 7.00% 2 -0.03% 6.97% 24 3.50%
New Mexico (c) 5.13% 32 2.42% 7.55% 15 3.56%
New York 4.00% 40 4.49% 8.49% 9 4.88%
North Carolina 4.75% 36 2.15% 6.90% 25 2.75%
North Dakota 5.00% 33 1.78% 6.78% 28 3.50%
Ohio 5.75% 27 1.39% 7.14% 19 2.25%
Oklahoma 4.50% 37 4.35% 8.85% 6 6.50%
Oregon 0.00% 46 0.00% 0.00% 47 0.00%
Pennsylvania 6.00% 16 0.34% 6.34% 33 2.00%
Rhode Island 7.00% 2 0.00% 7.00% 21 0.00%
South Carolina 6.00% 16 1.23% 7.23% 18 2.50%
South Dakota (c) 4.50% 37 1.84% 6.34% 32 2.00%
Tennessee 7.00% 2 2.45% 9.45% 2 2.75%
Texas 6.25% 13 1.92% 8.17% 12 2.00%
Utah (b) 5.95% 26 0.81% 6.76% 29 2.15%
Vermont 6.00% 16 0.17% 6.17% 36 1.00%
Virginia (b) 5.30% 31 0.33% 5.63% 41 0.70%
Washington 6.50% 9 2.42% 8.92% 5 3.40%
West Virginia 6.00% 16 0.29% 6.29% 34 1.00%
Wisconsin 5.00% 33 0.41% 5.41% 44 1.75%
Wyoming 4.00% 40 1.42% 5.42% 43 2.00%
D.C. 5.75% N/A 0.00% 5.75% N/A 0.00%
(a) City, county and municipal rates vary. These rates are weighted by population to compute an average local tax rate.
(b) Three states levy mandatory, statewide, local add-on sales taxes: California (1%), Utah (1.25%), Virginia (1%). We include these in their state sales taxes.
(c) The sales taxes in Hawaii, New Mexico and South Dakota have broad bases that include many services.
(d) Due to data limitations, this table does not include sales taxes in local resort areas in Montana.
(e) Salem County is not subject to the statewide sales tax rate and collects a local rate of 3.5%. New Jersey’s average local score is represented as a negative.
Sources: Sales Tax Clearinghouse, Tax Foundation calculations, State Revenue Department websites

The Role of Competition in Setting Sales Tax Rates

Avoidance of sales tax is most likely to occur in areas where there is a significant difference between two jurisdictions’ sales tax rates. Research indicates that consumers can and do leave high-tax areas to make major purchases in low-tax areas, such as from cities to suburbs.[4] For example, evidence suggests that Chicago-area consumers make major purchases in surrounding suburbs or online to avoid Chicago’s 10.25 percent sales tax rate.[5]

At the statewide level, businesses sometimes locate just outside the borders of high sales tax areas to avoid being subjected to their rates. A stark example of this occurs in New England, where even though I-91 runs up the Vermont side of the Connecticut River, many more retail establishments choose to locate on the New Hampshire side to avoid sales taxes. One study shows that per capita sales in border counties in sales tax-free New Hampshire have tripled since the late 1950s, while per capita sales in border counties in Vermont have remained stagnant.[6]

The state of Delaware actually uses its highway welcome sign to remind motorists that Delaware is the “Home of Tax-Free Shopping.”[7] State and local governments should be cautious about raising rates too high relative to their neighbors because doing so will yield less revenue than expected or, in extreme cases, revenue losses despite the higher tax rate.

Sales Tax Bases: The Other Half of the Equation

This report ranks states based on tax rates and does not account for differences in tax bases (e.g., the structure of sales taxes, defining what is taxable and non-taxable). States can vary greatly in this regard. For instance, most states exempt groceries from the sales tax, others tax groceries at a limited rate, and still others tax groceries at the same rate as all other products.[8] Some states exempt clothing or tax it at a reduced rate.[9]

Tax experts generally recommend that sales taxes apply to all final retail sales of goods and services but not intermediate business-to-business transactions in the production chain. These recommendations would result in a tax system that is not only broad-based but also “right-sized,” applying once and only once to each product the market produces.[10] Despite agreement in theory, the application of most state sales taxes is far from this ideal.[11]

Hawaii has the broadest sales tax in the United States, but it taxes many products multiple times and, by one estimate, ultimately taxes 99.21 percent of the state’s personal income.[12] This base is far wider than the national median, where the sales tax applies to 34.46 percent of personal income.[13]


Sales Tax Clearinghouse publishes quarterly sales tax data at the state, county, and city levels by ZIP code. We weight these numbers according to Census 2010 population figures in an attempt to give a sense of the prevalence of sales tax rates in a particular state.

It is worth noting that population numbers are only published at the ZIP code level every 10 years by the Census Bureau, and that editions of this calculation published before July 1, 2011, do not utilize ZIP data and are thus not strictly comparable.

It should also be noted that while the Census Bureau reports population data using a five-digit identifier that looks much like a ZIP code, this is actually what is called a ZIP Code Tabulation Area (ZCTA), which attempts to create a geographical area associated with a given ZIP code. This is done because a surprisingly large number of ZIP codes do not actually have any residents. For example, the National Press Building in Washington, D.C., has its own ZIP code solely for postal reasons.

For our purposes, ZIP codes that do not have a corresponding ZCTA population figure are omitted from calculations. These omissions result in some amount of inexactitude but overall do not have a palpable effect on resultant averages because proximate ZIP code areas which do have ZCTA population numbers capture the tax rate of those jurisdictions.


Sales taxes are just one part of an overall tax structure and should be considered in context. For example, Washington State has high sales taxes but no income tax, whereas Oregon has no sales tax but high income taxes. While many factors influence business location and investment decisions, sales taxes are something within policymakers’ control that can have immediate impacts

Computer technology leads to innovation in agriculture

It’s not a stretch to say that computer technology has changed almost every business in the world over the last couple of decades.
One industry that is seeing a wave of new innovations involving technology is agriculture. By combining global positioning systems (GPS) and soil sample data, local farmers are going high tech to improve their crops.

“It is about reducing the inputs (of fertilizer and other chemicals) while increasing yields and being better stewards of the environment,” says Blenheim area farmer Pat Rogers.

He is one of several Marlboro County farmers who are working to make the most of computerized farming.

Rogers, after attending an agricultural technology conference last winter, invested in equipment and software to do his own soil sampling and fertilizer application.

“In the past, an entire field would get a blanket coverage of fertilizer, based on an average of a couple of soil samples throughout the field,” said Rogers.

Since the types of soil in each field can vary a great deal, that usually resulted in some areas of the field getting more fertilizer than it needed, while the others were not receiving enough.

More recently, fertilizer companies which offer application services, began using GPS data, allowing them to vary the volume of fertilizer distributed in different parts of each field.

However, Rogers says that the equipment that he and other farmers in the area are using will allow them to take the precision aspect of farming even further.

“The idea is to treat a big field like a bunch of small ones. I can make as many soil samples as I wish, record the GPS coordinates of each sample and send it off for analysis,” he explains.

The data he gets back from the laboratory feeds directly into software on his laptop computer. More importantly, it loads into the computer on his tractor.

The tractor communicates with a controller on the fertilizer spreader as it pulls through the field, instructing the machine how much lime, phosphorus or potassium to distribute.

Another primary nutrient, nitrogen, is applied after the crop has sprouted. It has always been applied in a set rate across the field. Here is where the next innovation in “ag-tech” will come in.

Rogers says the next step is to integrate yield data from each year into the formula to determine the right amount of fertilizer.

“Our combine and cotton picker have on-board computers that record how much the machine is gathering at any one time. That includes the GPS coordinates. So we can see exactly where in each field the crop performed the best,” says Rogers.

The operator’s cabin of his John Deere combine looks like a computer room, with digital displays and controls. To the right of the driver’s seat is a touch-screen about the size of an Apple I-pad.

On this screen, the operator can monitor exactly how much corn or soybeans the machine is gathering.

This yield data will later be loaded into Rogers’ laptop. Combining that information with the soil sample data and the amount of fertilizer used to produce that crop, he will be able to further tune in on the perfect concentration of nutrients each area of a field needs.

He will also begin applying nitrogen in varying amounts, based on the yield results.

“Unlike the soil samples, the yield data is something that will take several years to collect to get a meaningful picture,” he says.

Over time, the variations caused by the volume of rainfall and other weather conditions will average out. He also predicts that future versions of the software will begin to accumulate data for those variables.

The primary goal is to produce more crops but Rogers expects to reduce spending on fertilizer and lime. By having precise control, very little unnecessary fertilizer will be used and that will be a benefit to the environment.

“This technology is advancing quickly. There is no telling where this may take us in the future,” says Rogers.


South Carolina Will Get Boost From Expanded Panama Canal

When the Panama Canal opens up a new lane for bigger ships this month, much of the cargo they carry will be headed for this quiet corner of the Southeast, some 200 miles inland.

In the past few years, the rolling hills and farmland surrounding Greenville and Spartanburg have given way to massive warehouses and industrial parks. Restaurants in Greenville, S.C.’s formerly neglected downtown cater to corporate managers and engineers from Germany and Japan. Trucks clog the two main interstates, carrying engine parts and finished goods to and from the region’s growing number of manufacturing plants.

More development is on the way: over six million square feet of warehouse space is under construction in the Greenville-Spartanburg region, a scale typically seen in major cities like Philadelphia and St. Louis, according to CBRE Inc., a real-estate brokerage.

Lake Authority to receive grant for walking trail improvements

Major improvements are coming to the Lake Paul Wallace walking trail, thanks to a $75,000 grant administered through the South Carolina Department of Parks, Recreation and Tourism.

The Lake Wallace Authority applied for the Recreational Trails Grant in February and recently learned it has been recommended for full funding. The next steps are project reviews by the Federal Highway Administration, State Historic Preservation Office and US Fish and Wildlife Service. Pending successful completion, the grant will be awarded later this year.

The grant will be used for a first-phase improvement plan for the 3.2-mile walking trail that crosses the diversion dam and encircles Lake Paul Wallace. It requires a 20 percent local match, which will be met through in-kind labor and additional funding by the Lake Wallace Authority.

Sully Blair, vice-chairman of the authority, said the project will involve regrading the diversion dam, which runs across the middle of the lake from Country Club Drive to Beauty Spot Road, and resurfacing it with a sand/clay/gravel mix for walking and running.

It will also involve clearing the eastern bank of the trail (around the perimeter of the lake), removing dead trees and brush to increase visibility and make this portion of the trail safer, and adding permanent trash receptacles and new seating areas along the entire trail.

Blair estimated the total cost to be around $100,000.   The grant, which will cover the bulk of the funding, will be delivered in either August or October, depending upon whether it is included in the 2016 or 2017 grant cycle.

Regardless, he expects the work to begin this year. The diversion dam should be completed quickly, but the clearing will be more extensive and will likely take several months.

This is just the latest step in the Lake Wallace Authority’s quest to improve the lake. A safety plan, which replaced the fencing, removed the old canteen building, added protective barriers and resurfaced and expanded the parking areas, is almost complete.

Future plans include adding more communal spaces around the lake, including shelters, grills, picnic tables and trash receptacles.

Early harvest

Marlboro County farmer McNiel Hinson harvested 27 acres of commercially grown snap (string) beans on Wednesday off Hebron-Dunbar Road. He grew the beans for Hanover Foods of Hanover, PA., who arranged for a harvesting company to gather the beans. Hinson then transported the picked beans to Pennsylvania for processing. Hinson also has 45 acres of snap beans planted in Dillon County. Doug Newton and Cade Baughman are other Marlboro County farmers who commercially grow the beans. Snap beans grow rapidly, producing large yields in a little over six weeks, allowing a second crop, such as soybeans, to be planted after them in the same season.

Photos by Dan McNiel

Airport fixed-base operator considering expansion in Florence

BY JOE PERRY Morning News

FLORENCE, S.C. – Fixed base operator Precision Air is pondering an expansion at Florence Regional Airport.

Precision Air is in charge of ground handling, maintenance and fueling operations under a 15-year contract with the Pee Dee Regional Airport Authority that began in March. Company representatives told board members Wednesday evening of their plans.

A 2,000-square-foot building that is undergoing renovations to become the new FBO hub and main point of entry for general aviation customers has an Aug. 20 target date for completion, said Todd Gibson, FBO manager. He also said a new 40,000-gallon fuel farm should be operational by July 15. Maintenance hangar doors that are 55 feet 8 inches wide for the 12,000-square-foot hangar need repairs and need to be widened to accommodate larger aircraft, he said. He raised the possibility of the authority covering costs of the repairs and Precision Air paying for the widening, which he said could save both entities money. One quote was $25,000, he said, and another was $31,500. He also said Precision Air has added staffers, has a new website up and running, has new uniforms in use, has had new utility poles installed to power equipment needed to service heavier aircraft and has ordered new signs.

Tim Summerow, vice president of operations for Precision Air parent company TKC Aerospace, said he wanted to advocate for the hangar door issue as well as a possible ramp expansion and additional taxiway space to allow for a “proper turnout” for aircraft dropping off and picking up passengers at the new FBO building. Corporate jets could offload and more easily and efficiently turn back onto the tarmac, he said. He also said that four government aircraft on site will require weekly servicing and maintenance and the expected revenue will be mutually beneficial.

“We’re very optimistic” that current capacity will soon be exceeded, he said, in floating the idea of a new T hangar.

Paving the new taxiway and ramp would cost somewhere “in the neighborhood” of $120,000, he said, but those projects are usually funded by the Federal Aviation Administration.

Authority Chairman Glen Greene asked Norwood Bonnoitt, who heads the FBO committee, if those issues would be taken up by his committee, and Bonnoitt agreed.

Joe Powell reported on the authority’s finances, telling fellow board members that May’s net income was $4,850 before depreciation and year-to-date is $97,000. That’s operating money, he said, and if grants and other revenues are included, the number is $260,000.