California has the highest statewide sales tax at 7.25 percent
California's base sales tax rate is 7.25 percent, the highest in the country. However, the total tax you pay at checkout is usually higher because counties and cities add their own local sales taxes on top of the state rate. In some California cities, the combined rate reaches 8.625 percent or higher.
Tennessee and Louisiana tie for the second-highest statewide rate at 7 percent each. Like California, both states allow local jurisdictions to add additional taxes, so the final rate varies by location within each state.
Key Takeaways
- California's statewide sales tax of 7.25 percent is the highest in the nation, but local taxes can push the total higher depending on your city or county.
- Tennessee and Louisiana both have statewide rates of 7 percent, with local additions that vary by location.
- The total sales tax you pay depends on both the state rate and the local rate where you make the purchase, not just the state number alone.
- Five states—Alaska, Delaware, Montana, New Hampshire, and Oregon—have no statewide sales tax, though some allow local taxes.
How statewide and local sales taxes combine
The rate you see on a receipt is the sum of the state tax and the local tax for that specific location. A purchase in Los Angeles, California, for example, is subject to California's 7.25 percent state rate plus Los Angeles County's local rate, which together total 9.5 percent. The same purchase in a different California city might have a different total because that city's local rate differs.
This means two people buying the same item in the same state can pay different sales tax amounts depending on where they live. A resident of rural California might pay 7.25 percent (state only, if no local tax applies), while someone in San Francisco pays 8.625 percent (state plus local).
States with the highest combined rates in practice
When you add state and local taxes together, some locations reach rates above 9 percent. Certain cities in California, Tennessee, Louisiana, and Arkansas have combined rates of 9.5 percent or higher. The exact highest combined rate shifts as cities and counties adjust their local rates, so the "highest" location changes over time.
For example, some areas in California and Tennessee regularly see combined rates of 9.5 to 9.75 percent. To find the exact rate for a specific address, you can check your state's Department of Revenue website or enter the zip code into a sales tax calculator, since rates are tied to precise locations.
States with no statewide sales tax
Five states have no statewide sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon. This does not mean purchases are tax-free in those states. Alaska allows local jurisdictions to impose sales taxes, so some cities and boroughs have local rates while others do not. Delaware, Montana, New Hampshire, and Oregon have no statewide or local sales tax on most purchases.
New Hampshire taxes meals and lodging but not retail goods. Oregon taxes services but not most retail purchases. These exceptions mean the tax picture in no-sales-tax states is more complex than the label suggests.
How sales tax rates are set and change
State legislatures set statewide sales tax rates, and local governments (counties, cities, and special districts) set their own rates within state law. A state can raise or lower its rate, and so can a city or county independently. This means the rate you pay can change if your local government votes to adjust the local portion.
Rates also vary by what is being sold. Most states exempt groceries, prescription medications, and medical equipment from sales tax. Some states tax clothing, while others do not. Services are taxed differently depending on the state—haircuts, repairs, and consulting may or may not be subject to sales tax depending on where you live.
Why sales tax rates matter for budgeting
The difference between a 7 percent rate and a 9.5 percent rate adds up over time. On a $100 purchase, you pay $7 in one location and $9.50 in another—a $2.50 difference on a single transaction. Over a year of regular purchases, these differences compound, especially for large purchases like appliances or vehicles.
If you live near a state border, you might notice that people cross the line to shop in lower-tax areas. Online purchases complicate this picture because sales tax rules for internet orders have changed in recent years, and many online retailers now collect sales tax based on the buyer's location rather than the seller's location.
Frequently Asked Questions
Do I pay sales tax on groceries?
Most states exempt groceries from sales tax, but the definition of "groceries" varies. Prepared foods, candy, and soft drinks are often taxed even in states that exempt raw groceries. Check your state's Department of Revenue website for the specific list of what counts as a grocery item in your state.
Is sales tax the same everywhere in my state?
No. The total rate depends on your exact location—your city and county both add their own local taxes on top of the state rate. Two addresses in the same state can have different total rates. Enter your zip code into your state's sales tax lookup tool to find your specific rate.
Do I pay sales tax on online purchases?
Most online retailers now collect sales tax based on where you live, not where they are located. The rate applied is the combined state and local rate for your address. Some small sellers are exempt from collecting sales tax, but this is becoming less common.
Can a city or county lower its sales tax rate?
Yes. Local governments can raise or lower their local sales tax rate through a vote or legislative action, though state law sets limits on how high local rates can go. If your city votes to reduce its local rate, your total sales tax goes down.