The states with the highest combined sales tax rates
Tennessee, Louisiana, and Arkansas have the highest combined state and average local sales tax rates in the country, each at 9.55%. These rates apply when you add the state sales tax to the local taxes that cities and counties layer on top. Tennessee has no state income tax but makes up for it with one of the nation's highest sales taxes. Louisiana and Arkansas both tax groceries at the full rate, which pushes their effective burden higher than states that exempt food.
After those three, Washington, Alabama, and Oklahoma follow closely at 9.45%, 9.22%, and 9.16% respectively. Washington, like Tennessee, has no state income tax and relies heavily on sales tax revenue. The variation between these top states matters because a 1% difference on a $100 purchase means $1 more at checkout — small per transaction but significant over a year of spending.
It's important to understand that these are combined rates. The state portion ranges from 4% to 7.25%, but local jurisdictions add their own tax on top. A city in Tennessee might add 2.75% to the state's 4.55%, creating that 9.55% total. Your actual rate depends on your exact address — even neighboring zip codes can differ.
Key Takeaways
- Tennessee, Louisiana, and Arkansas have the highest combined sales tax rates at 9.55%, combining state and local taxes.
- States with no income tax, like Tennessee and Washington, typically have higher sales taxes to fund government services.
- Your actual sales tax rate depends on your city and county, not just your state, so two addresses in the same state can have different rates.
- Louisiana and Arkansas tax groceries at the full sales tax rate, while many other states exempt food, making the real-world impact higher.
- Sales tax rates change when local jurisdictions adjust their portion, so the rate you paid last year may not be the rate you pay today.
How state and local taxes stack together
Sales tax is not a single number. The state sets a base rate, then cities and counties add their own layer. Tennessee's state rate is 4.55%, but Memphis adds 2.25% local tax, bringing the total to 6.8% within city limits. Outside Memphis but still in Shelby County, the rate might be 7.3%. This stacking means two people buying the same item five miles apart can pay different amounts of tax.
Louisiana's state rate is 4.45%, but New Orleans adds 4.5% in local taxes, reaching 8.95% total. Outside New Orleans, the rate drops. This is why knowing your specific address matters more than knowing your state. A state-level rate of 7% sounds high, but if your county adds 2.5%, you are actually paying 9.5% at the register.
Some states allow local governments to set their own rates within limits; others cap how high local taxes can go. This creates a patchwork where the highest-tax areas are often in major cities that have added local taxes on top of already-high state rates.
States that tax groceries versus states that don't
The headline rate does not tell the whole story because some states exempt groceries from sales tax while others don't. Louisiana and Arkansas tax groceries at the full rate, which means your weekly food bill carries the same 9%+ tax as a restaurant meal or clothing purchase. Most other states exempt groceries or tax them at a lower rate.
Mississippi, Alabama, and South Dakota also tax groceries at the full state rate. This matters because groceries are a regular, large expense for most households. A family spending $150 per week on groceries in Louisiana pays roughly $14 in tax per week — $728 per year — just on food. In a state that exempts groceries, that same family pays zero sales tax on that $150.
When comparing states by sales tax burden, a state with a 7% rate that exempts groceries may actually be cheaper for a household than a state with an 8% rate that taxes everything. The effective rate depends on what you buy, not just the posted percentage.
Why some states have higher sales taxes than others
States with no income tax almost always have higher sales tax rates. Tennessee, Washington, Nevada, and Texas all skip income tax but fund schools, roads, and services through sales tax instead. This is a deliberate trade-off: no tax on wages, but higher tax at the register. A person earning $50,000 in Tennessee pays no state income tax but pays sales tax on everything they buy. A person earning $50,000 in New York pays state income tax but has a lower sales tax rate.
States with income tax can spread the tax burden across multiple sources. New York has a 4% state sales tax (plus local additions) and income tax that ranges from 4% to 10.9% depending on income. The total tax burden might be similar to a no-income-tax state, but it is collected differently.
Local governments also raise sales tax rates based on their own needs. A county funding a new school system or transit project might increase local sales tax by 0.5% to 1%. Over time, these local increases stack up, especially in growing urban areas where multiple projects compete for funding.
How sales tax rates have changed over time
Sales tax rates are not fixed. States and localities adjust them regularly, usually upward. Tennessee raised its state rate from 4% to 4.55% in 2022. Louisiana has adjusted its local rates multiple times in recent years. These changes happen through state legislation or local ballot measures, not automatically.
The rate you see today may not be the rate next year. If you are planning a move or making a long-term financial decision based on tax burden, check the current rate for your specific address, then ask the local tax assessor's office whether any rate changes are planned. Some jurisdictions publish their rate changes in advance; others do not.
During economic downturns, some states have temporarily reduced sales tax rates to stimulate spending. During budget crises, they have raised them. The pandemic caused several states to adjust rates as revenue needs changed. This means historical rates are not always predictive of future rates.
Comparing your actual tax burden across states
The highest sales tax rate does not automatically mean the highest total tax burden. A person in Tennessee pays no income tax but a high sales tax. A person in New York pays both income tax and sales tax. The total amount of tax paid depends on income level, spending habits, and what you buy.
A high-income earner in New York might pay more total tax than a high-income earner in Tennessee because of income tax. A low-income earner in Tennessee might pay more total tax because sales tax is regressive — it takes a larger percentage of a poor household's income than a wealthy household's income. A family earning $30,000 spends most of it on taxable goods; a family earning $300,000 saves and invests much of it, avoiding sales tax on that portion.
If you are considering a move, calculate your likely tax bill in each state based on your actual income and spending, not just the sales tax rate. Many tax calculators online let you input your situation and compare states side by side.
Frequently Asked Questions
Does sales tax apply to everything I buy?
No. Most states exempt groceries, prescription medications, and medical equipment. Many exempt clothing. Some exempt services like haircuts or car repairs. The exemptions vary by state and sometimes by locality. Louisiana taxes groceries but exempts some clothing. Check your state's tax department website for a full list of what is and is not taxed where you live.
Can I avoid sales tax by buying online?
Not anymore. As of 2021, most online retailers must collect and send sales tax to your state, even if they are based elsewhere. The rate is based on your delivery address, not the seller's location. A few small sellers are exempt, but major retailers all collect it. Your state tax rate applies whether you shop in a store or online.
Why does my receipt show a different tax rate than the posted rate?
Some items are taxed at different rates or are exempt. Groceries might be taxed at 0% while clothing is taxed at the full rate. Some states have a lower rate for certain items like diapers or feminine hygiene products. Check your receipt line by line — the total tax rate is the average of all items, not a single rate applied to everything.
If I move to a different county, will my sales tax rate change?
Yes, very likely. Even moving a few miles can change your local sales tax rate because counties and cities set their own rates. If you move from one county to another in the same state, your rate could go up or down by 1% or more. Check the tax rate for your new address before you move if tax burden matters to your decision.
Are there any states with zero sales tax?
Five states have no sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon. However, some of these states have other taxes. Alaska allows local governments to set sales tax, so some cities and boroughs do have it. New Hampshire has no sales tax but taxes restaurant meals and rooms. Oregon has no sales tax but has income tax. Delaware has no sales tax but has income tax. Montana has no sales tax but has income tax. No state is tax-free across the board.