In addition to state-level sales taxes, consumers also face local sales taxes in 38 states. While graduated income tax rates and brackets are complex and confusing to many taxpayers, sales taxes are easier to understand consumers can see their tax burden printed directly on their receipts. Retail sales taxes are one of the more transparent ways to collect tax revenue. Sales tax rate differentials can induce consumers to shop across borders or buy products online.Sales tax rates differ by state, but sales tax bases also impact how much revenue is collected from a tax and how the tax affects the economy.New Mexico reduced its sales tax rate from 5.125 percent to 5 percent.The five states with the highest average combined state and local sales tax rates are Louisiana (9.55 percent), Tennessee (9.547 percent), Arkansas (9.48 percent), Washington (9.29 percent), and Alabama (9.22 percent).In some cases, they can rival or even exceed state rates. Local sales taxes are collected in 38 states.Forty-five states and the District of Columbia collect statewide sales taxes.Sales Tax Bases: The Other Half of the Equation.The Role of Competition in Setting Sales Tax Rates.Map: Combined State and Local Sales Tax Rates.
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