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Published: Jun 20, 2023 4 min read
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Taxes are one of few certainties in life, and they often provoke the ire of those that pay them.

The average state sales tax clocks in at about 5%, but there are plenty of outliers. California has the highest sales tax in the country at 7.25%, and four other states tack on 7% in taxes on most purchases. Meanwhile, five states charge no sales tax at all.

Since 2021, two states have made changes to their sales tax rates: New Mexico and South Dakota both lowered their sales tax rates. Additionally, several other states like Indiana continue to mull over legislation to re-evaluate sales tax rates or to exempt sales tax on certain types of purchases, like groceries ad clothing. Some legislators are also supporting a bill called the Fair Tax Act, which would simultaneously institute a national sales tax and abolish the IRS. Simply put, more change could be on the horizon.

The map below gives an idea of each state's current sales tax rate. However, it's worth noting that this might not exactly be the sales tax percentage you pay. Individual localities sometimes have their own sales taxes rates independent of state sales taxes. Many cities, like Oakland, California, and Chicago, Illinois, have done exactly this, and the result is that shoppers there pay higher sales tax on purchases. These additional local tax rates are not included here.

States with no sales tax

Five states do not require sales tax on transactions:

  • Alaska
  • Delaware
  • Montana
  • New Hampshire
  • Oregon

States with the highest sales tax

On the other side of the coin, many states require higher sales tax percentages than the 5.09% national average. Here are the 10 states with the highest sales tax rates:

  1. California: 7.25%
  2. Indiana: 7%
  3. Mississippi: 7%
  4. Rhode Island: 7%
  5. Tennessee: 7%
  6. Minnesota: 6.875%
  7. Nevada: 6.85%
  8. New Jersey: 6.625%
  9. Arkansas: 6.5%
  10. Kansas: 6.5%

When do states have sales tax holidays?

One convenient type of event for Americans living in high sales tax states is the sales tax holiday. During this time, a state government allows residents to make certain types of purchases free of sales tax.

The most common type of sales tax holiday is that of the "back to school" promotion, when sales tax on items like school supplies, clothing and computers are suspended, usually during a weekend in the summer. Other popular tax holidays are "Second Amendment" holidays on gun and hunting supplies before hunting season, and tax-free events to help people buy weather-proofing materials in states affected by hurricanes or other inclement weather.

States are free to enact sales tax holidays whenever they wish. The Sales Tax Institute keeps a calendar of scheduled sales tax holidays for each participating state. There are restrictions on exactly what you can buy, with states imposing price limits on tax-free items. For example, most states with "back to school" tax holidays only allow tax-free purchases on clothing items or footwear worth up to $100.

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