The states with the highest combined sales tax rates

Tennessee, Louisiana, and Arkansas have the highest statewide sales tax rates in the country, each at 9.55 percent when you add the state rate to the average local rate. Tennessee's state rate alone is 9.55 percent with no local add-on. Louisiana sits at 4.45 percent state plus an average of 5.1 percent local. Arkansas is 6.5 percent state plus an average of 3.05 percent local.

The rates that matter to you depend on where you live and shop. A state's headline rate is only part of the picture — local jurisdictions (cities and counties) layer on their own sales taxes, and those vary block by block in some places. A purchase in one neighborhood might be taxed at 8 percent while the same purchase two miles away costs 9 percent.

Five states have no statewide sales tax at all: Alaska, Delaware, Montana, New Hampshire, and Oregon. But that does not mean shopping there is always cheaper. Alaska allows local jurisdictions to charge sales tax, so some cities and boroughs do. The others genuinely have no sales tax, state or local.

Key Takeaways

  • Tennessee, Louisiana, and Arkansas have the highest combined sales tax rates at or above 9.5 percent when state and average local rates are added together.
  • Your actual tax rate depends on both your state rate and your local rate, which can differ significantly even within the same state.
  • Five states have no statewide sales tax, though Alaska still allows local sales taxes in some areas.
  • Sales tax rates change when you cross county or city lines, so the rate where you work may differ from the rate where you live.

How state and local sales taxes stack together

The combined rate you pay is the state rate plus the local rate for your specific location. In Louisiana, the state charges 4.45 percent, but your parish (county) and city may add 3 to 7 percent more. Someone in New Orleans pays a different total than someone in Baton Rouge, even though both live in Louisiana.

This matters because a state with a moderate state rate can end up with a high combined rate if local taxes are steep. Conversely, a state with a high state rate might have lower local rates. California's state rate is 7.25 percent, but local rates push the combined rate to 8.625 percent in some areas and over 10 percent in others.

The IRS does not track these rates for you — you need to know your own location's rate when you budget. Most state revenue departments publish a lookup tool where you enter your zip code and see your exact combined rate. Some retailers show the tax at checkout; others do not until the final step.

States with the highest state-level rates

California, Tennessee, and Indiana all have state rates of 7.25 percent or higher. California is 7.25 percent (the federal minimum for states that tax sales). Tennessee is 9.55 percent with no local add-on, making it the highest state rate in the country. Indiana is 7 percent.

High state rates do not always mean high combined rates. Indiana's 7 percent state rate combines with local rates averaging 0.5 to 2 percent, so most Indiana shoppers pay between 7.5 and 9 percent total. Tennessee's 9.55 percent is the final number — there is no local layer on top.

States with lower state rates sometimes have higher combined rates because local governments add more. Mississippi's state rate is 7 percent, but local rates average 0.79 percent, bringing the combined average to 7.79 percent. Wyoming's state rate is 4 percent, but local rates push the combined average to 5.39 percent.

States with no sales tax and what that means

Alaska, Delaware, Montana, New Hampshire, and Oregon do not charge a statewide sales tax. This does not mean everything is cheaper there. These states fund government through other taxes — income tax, property tax, fuel tax, or business taxes — that residents and visitors pay in other ways.

Alaska is a partial exception. The state has no statewide sales tax, but cities and boroughs can impose local sales taxes. Anchorage charges 3.7 percent, Juneau charges 5 percent, and some areas charge nothing. If you shop in Fairbanks, you pay no sales tax. If you shop in Ketchikan, you pay 6 percent.

Delaware, Montana, New Hampshire, and Oregon have no sales tax anywhere in the state. However, New Hampshire and Montana have other consumption taxes. New Hampshire taxes restaurant meals and prepared foods. Montana taxes lodging. These are not called sales tax, but they function similarly for certain purchases.

How sales tax rates change by location within a state

Even within a single state, your rate depends on your exact address. In Colorado, the state rate is 2.9 percent, but Denver adds 3.62 percent, bringing the combined rate to 6.52 percent. In rural areas outside Denver, the combined rate might be 4 percent. A $100 purchase costs $104 in one place and $106.52 in another.

This happens because local governments — cities, counties, school districts, and special districts — each set their own rates and keep their own revenue. A city might add 2 percent for schools, the county might add 1 percent for roads, and a transit district might add 0.5 percent. These stack on top of the state rate.

The variation is most extreme in states with many local jurisdictions and no cap on local rates. Louisiana, Oklahoma, and Arkansas have some of the widest ranges. In Louisiana, combined rates range from 5.45 percent to over 11 percent depending on where you are. In Oklahoma, they range from 4.45 percent to 11.5 percent.

Why states set different sales tax rates

States set sales tax rates based on their revenue needs and tax philosophy. States without income tax (like Tennessee and Texas) often rely heavily on sales tax to fund schools, roads, and services. States with income tax (like California and New York) use sales tax as a secondary revenue source.

Local governments add sales tax to fund specific services. A city might add 1 percent specifically for public transportation or schools. A county might add 0.5 percent for a new jail or courthouse. Voters in that area approve the increase, and the revenue stays local.

Sales tax rates also reflect what is taxed and what is not. Most states exempt groceries, prescription medications, and medical equipment. Some exempt clothing. A few exempt certain services. These exemptions reduce the effective rate people pay on everyday purchases, even if the headline rate is high.

How to find your exact sales tax rate

Your state's Department of Revenue publishes a sales tax lookup tool. Enter your zip code or address, and it shows your combined state and local rate. This is the most accurate method because it accounts for all local layers — city, county, school district, and special districts.

The Tax Foundation and the Federation of Tax Administrators also maintain searchable databases of state and local rates. These are updated regularly but may lag by a few months if a jurisdiction recently changed its rate. Your state's official tool is always the most current.

If you are shopping online, the retailer's tax calculation should reflect your location's rate. If you are shopping in person, ask the cashier or check the receipt. If the rate seems wrong, verify it against your state's lookup tool — errors happen, and you can dispute them.

Frequently Asked Questions

Do I pay sales tax on groceries?

Most states exempt groceries from sales tax, but the definition varies. Some states exempt only uncooked food. Others tax prepared foods, hot foods, and foods eaten in the store. A few states tax all food. Check your state's Department of Revenue website to see what counts as groceries in your location.

Can sales tax rates change during the year?

Yes. Local jurisdictions vote to increase or decrease their rates, and these changes take effect on specific dates. A city might raise its rate on July 1 or January 1. Check your state's Department of Revenue for a calendar of rate changes in your area.

Why is my receipt's tax different from what I calculated?

The retailer's system may be rounding, or you may have entered the wrong zip code. Some items are taxed differently — clothing might be exempt while shoes are taxed, or vice versa. Check your state's rules for what is and is not taxable, then verify your location's rate against your state's official lookup tool.

Do I pay sales tax when I buy something online?

It depends on the retailer and your state. Large online retailers now collect sales tax in most states. Smaller retailers may not. Your state's Department of Revenue can tell you which retailers are required to collect tax in your state and what to do if they do not.

If I live in a no-sales-tax state, do I owe tax on online purchases?

Your state's rules determine this. Some states with no sales tax have use tax, which applies to items you buy elsewhere and bring into the state. Others do not. Check your state's Department of Revenue to see whether you owe use tax on online purchases.