Ten states with the lowest sales tax rates in the US

Sales tax is collected at the state level in forty-five states and in the District of Columbia. New Hampshire, Oregon, Montana, Alaska, and Delaware, otherwise known as the NOMAD states, are the only states that do not have a state-level sales tax, although some local levels in Alaska do impose a sales tax.

Sales tax rates vary significantly from state to state. Below is a list of the ten states with the lowest average combined state and local sales tax rates across the US.

Right off the bat, we have a 4-way tie for spot #10, which puts the first four states in a tie for #7:

10 – District of Columbia

(6.00%) – The District of Columbia is one of four jurisdictions imposing the lowest combined rate in the US with a single state rate of 6%. In October 2018 the Capitol’s rate increased from 5.75%. Notably, in DC, special higher rates are charged on the sale of alcohol and the rental of vehicles and utility trailers.

9– Kentucky

(6.00%) – Kentucky is the second of four jurisdictions tied for the lowest average rate in the country with its single state level rate of 6%. Notably, effective July 1, 2018, Kentucky expanded its sales tax base to include many services that had been previously exempt.

8 – Maryland

(6.00%) – Maryland does not impose any sales tax at the city or county level, so again, only the 6% state level rate applies. The rate was last changed in 2008, when it went up by one percentage point. Maryland typically has one weekend in August where the sales tax rate does not apply to many clothing footwear, and back-to-school items.

7 – Michigan

(6.00%) – Michigan’s sales tax regime mirrors Maryland’s, with a single 6% rate at the state level and no rates at the county and city level. The rate has been 6% since 1994, a ballot initiative to raise the rate to 7% was rejected by Michigan voters in 2015.

6 – Virginia

(5.65%) – The base state rate in Virginia is 4.3%, with city, county, and special rates contributing to the rest of the combined rate. In the Northern Virginia and Hampton Roads regions an additional .7% is added to the state rate. The highest rate in the state can be found in Jamestown, which has a total rate of 7%.

5 – Maine

(5.50%) – Maine only imposes a sales tax at the state level, and its 5.5% rate makes it the fifth lowest in the country. The rate increased from 5% in 2013. “Grocery staples” are exempt from the tax, however there is a 1.5 cent per pound tax on anyone who grows, purchases, sells, or processes blueberries!

4 – Wisconsin

(5.44%) – The state rate in Wisconsin is 5%, local tax rates range from 0 to .6%. The highest combined rates in the state are in Milwaukee, Ozaukee, and Washington counties (5.6%). There is a .1% baseball stadium sales tax in five counties, which has helped pay for Miller Park (home of the Brewers) since 1996.

3 – Wyoming

(5.36%) – Wyoming has a state rate of 4%, and counties can levy an additional tax ranging from 0 to 2%. The highest rate in the state is 6%, found across multiple counties and in the largest city in the state, Cheyenne. The sale of farm implements are exempt from tax.

2 – Hawaii

(4.41%) – The state rate in Hawaii is 4% with county rates ranging from 0 to .5%. Hawaii compensates for a low rate by taxing a wide variety of services that are exempt in most other states. The sales tax rate in Honolulu is tied for the highest rate inside the state, at 4.5%.

1 – Alaska

(1.43%) – Alaska does not have a state-level sales tax, which makes its combined rate easily the lowest in the country. Sales tax in Alaska is only found at the city and county level. Some of these local jurisdictions only administer the sales tax for part of the year, while others have higher rates during popular tourist seasons. For example, in Nome, Alaska a 7% seasonal sales tax is levied on all sales and rental of goods and services made in the city during the months of May, June, July and August and a 5% sales tax is levied at all other months of the year.

Does your location rank?

After looking at these ten states, you can see that sales tax rates vary widely across the US. If you want to know if your location’s rate ranks at the bottom or top of the list, you can turn to Quickbooks Sales Tax free calculator. The new online sales tax calculator tool calculates rates for the nearly 11,000 US state and local taxing jurisdictions.