States with low or no income tax still need to repair roads, fund schools and pay salaries for fire fighters and police. Some states close the gap by imposing above-average property taxes (see “Ahead,” July). In other cases, states rely heavily on sales taxes to pay the bills—something you may not realize until you go shopping and review your receipts.
In addition, cities and counties often levy their own sales taxes on top of the statewide tax. For that reason, a state could have a relatively low state sales tax rate but an average combined state and local rate of 10% or more.
Many states exempt groceries, prescription drugs and other essentials from sales taxes, meaning the sales tax you end up paying will depend not only on where you live but also on what you buy. And when you buy could also make a difference, because many states sponsor sales tax holidays throughout the year for back-to-school purchases, emergency supplies and other popular items (see the box on page 48 for sales tax holidays this summer).
These states have the highest sales taxes, based on the average combined state and local tax rate, according to data from the Tax Foundation. They’re ranked by the combined average state and local sales tax rate, with the highest taxes ranked first.
1. LOUISIANA
Statewide sales tax: 4.45%
Average local sales tax: 5.10%
Average combined sales tax: 9.55%
This story is from the August 2023 edition of Kiplinger's Personal Finance.
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This story is from the August 2023 edition of Kiplinger's Personal Finance.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
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