States and Cities With the Highest Sales Tax
A state's sales tax is just the starting point. Explore how local additions create some of the highest combined tax rates in specific U.S. locations.
Sales tax is a consumption tax on goods and services that serves as a revenue source for state and local governments, funding public services like education and infrastructure. The rate a consumer pays is a combined rate, blending the state’s base tax with various local taxes. This causes the final amount to differ from one location to another, even within the same state.
States with the Highest State-Level Sales Tax
A consumer’s sales tax burden begins with the statewide rate, which is constant across all cities and counties within a state. This base rate is the starting point before any local taxes are factored into the final purchase price. Forty-five states and the District of Columbia levy a statewide sales tax.
California imposes the highest state-level sales tax in the nation at 7.25%. Following closely are Indiana, Mississippi, Rhode Island, and Tennessee, which share the second-highest rate of 7.0%. Just below the 7.0% tier, Minnesota has a statewide rate of 6.875%, and Nevada’s is set at 6.85%. New Jersey follows with a rate of 6.625%, while Arkansas and Kansas both have a state-level sales tax of 6.5%.
Understanding Local Sales Taxes
The sales tax rate displayed on a receipt is often higher than the state’s base rate due to local taxes. These are additional sales taxes levied by cities, counties, and other special-purpose districts, such as those for transportation. State governments grant these local jurisdictions the authority to impose their own taxes, which are then “stacked” on top of the state rate. This system is why a purchase made in one city can be taxed at a different rate than the exact same item bought in a neighboring city within the same state.
The structure and application of these local taxes vary significantly. For example, a consumer might pay a 6% state tax, a 1% county tax, and a 0.5% city tax, resulting in a total sales tax of 7.5%. This layering effect means that even in a state with a moderate statewide tax, certain municipalities can have some of the highest sales tax rates in the country.
These local taxes are a primary funding mechanism for municipal and county governments, supporting services like local law enforcement, parks, and community centers. The rates are often determined by local initiatives to fund specific public projects or to meet budget requirements. Consequently, the combined sales tax rate is a dynamic figure, subject to change based on the fiscal needs of local governing bodies.
Locations with the Highest Combined Sales Tax
The true measure of a consumer’s tax burden is the combined rate, which includes both state and average local taxes. When these figures are aggregated, a different set of states emerges at the top of the list. This combined rate provides a more accurate picture of what residents across a state typically pay on taxable goods and services.
Based on the population-weighted average of local taxes, these states have the highest average combined sales tax rates:
- Louisiana: 10.12%
- Tennessee: 9.56%
- Arkansas: 9.46%
- Washington and Alabama: 9.43%
These high average rates are driven by the widespread adoption of significant local taxes on top of their state-level rates.
Examining specific cities reveals even higher localized tax rates. Some municipalities in Arkansas can reach a combined rate of 11.5%. Other cities with high combined rates include:
- Chicago, Illinois: 10.25%
- Long Beach, California: 10.25%
- Tacoma, Washington: 10.2%
- Seattle, Washington: 10.1%
These examples highlight how local tax policies in major urban areas can create some of the highest sales tax burdens in the country.
Commonly Exempt Goods and Services
Not every purchase is subject to sales tax, as states provide exemptions for certain goods and services. These exemptions can affect a consumer’s overall tax liability and are often applied to items considered necessities. The rules for what is exempt vary widely from one state to another, reflecting different policy priorities.
One of the most common exemptions is for unprepared food, often referred to as groceries. Most states do not tax food items intended for home preparation and consumption, although some states do, occasionally at a lower rate than the general sales tax. This policy is intended to reduce the tax burden on essential living expenses. As of 2025, Kansas has eliminated the state sales tax on unprepared food.
Prescription medications are another widely exempt category. Sales of medicines prescribed by a licensed physician and dispensed by a pharmacist are not taxed. Some states also offer exemptions for certain types of clothing, often up to a specific value per item. States may also exempt items like textbooks, certain medical devices, and services such as installation or repair labor if they are itemized separately from the cost of parts.