Sales Tax: A State-By-State Comparison
While declining to pay your taxes altogether is one way to reduce your costs, the risks associated with tax evasion often outweigh the initial benefits. A more effective (and legal) approach would be to identify places you'll pay more taxes doing the things you enjoy, and avoid them when possible.
This may sound easier said than done, but MyBankTracker decided to do some of the work for you by using data compiled by the Tax Foundation to identify the states with the highest and lowest sales tax rates in the nation.
While Americans paid an average of $745 in sales tax on average, residents of Hawaii charged $1,906 per person on average in sales tax during that year—the highest rate in the nation for that year, according to the Tax Foundation's report.
The organization's report also showed that the state of Washington generates almost half of its revenue from collecting sales tax--also the highest percentage in the country. In comparison, the states of Montana, New Hampshire, Delaware and Oregon generate zero revenue from collecting sales tax from its residents because they don't charge sales tax.
Here's a chart showing the states that charge both the highest and lowest sales tax rates in the nation, as of Jan. 2011:
States With Highest Sales Tax Rates
| State Gasoline Rates (cents per gallon) | State Cigarette Excise Tax (dollars per 20-pack) | State Spirit Excise Tax (dollars per gallon) | State Table Wine Excise Tax (dollars per gallon) | State Beer Excise Tax (dollars per gallon) | State and Local Cell Phone Tax Rates | |
|---|---|---|---|---|---|---|
| 1 | California (47.7 cents) | New York ($4.35) | Washington ($26.03) | Alaska ($2.50) | Alaska ($1.07) | Nebraska (18.64%) |
| 2 | New York (47.3) | Rhode Island ($3.46) | Oregon ($22.38) | Florida ($2.25) | Alabama ($1.05) | Washington (17.95%) |
| 3 | Hawaii (45.8) | Washington ($3.025) | Virginia ($20.13) | Iowa ($1.75) | Georgia ($1.01) | New York (17.78%) |
| 4 | Connecticut (45.2) | Hawaii ($3.00) | Alabama ($18.94) | Alabama ($1.70) | Hawaii ($0.93) | Florida (16.57%) |
| 5 | Illinois (42.8) | Washington, D.C. ($2.50) | Alaska ($18.94) | Georgia, Virginia ($1.51) | S. Carolina ($0.77) | Illinois (15.85%) |
States With Lowest Sales Tax Rates
| State Gasoline Rates (cents per gallon) | State Cigarette Excise Tax (dollars per 20-pack) | State Spirit Excise Tax (dollars per gallon) | State Table Wine Excise Tax (dollars per gallon) | State Beer Excise Tax (dollars per gallon) | State and Local Cell Phone Tax Rates | State Gasoline Tax Rates (cents per gallon) | State Cigarette Tax Rates (dollars per 20-Pack) | State Spirit Excise Tax (dollars per gallon) | State Table Wine Excise Tax (dollars per gallon) | State Beer Excise Tax (dollars per gallon) | State and Local Cell Phone Tax Rates | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 1 | California (47.7 cents) | New York ($4.35) | Washington ($26.03) | Alaska ($2.50) | Alaska ($1.07) | Nebraska (18.64%) | 1 | Oklahoma (17.0) | Alabama ($0.425) | Missouri ($2.00) | Kansas ($0.30) | Massachusettes ($0.11) | W. Virginia (6.23%) |
| 2 | New York (47.3) | Rhode Island ($3.46) | Oregon ($22.38) | Florida ($2.25) | Alabama ($1.05) | Washington (17.95%) | 2 | S. Carolina (16.8) | Georgia ($0.37) | W. Virginia ($1.85) | Wisconsin ($0.25) | Maryland, Washington D.C. ($0.09) | Montana (6.03%) |
| 3 | Hawaii (45.8) | Washington ($3.025) | Virginia ($20.13) | Iowa ($1.75) | Georgia ($1.01) | New York (17.78%) | 3 | New Jersey (14.5) | Louisiana ($0.36) | Maryland ($1.50) | Texas ($0.20) | Colorado, Pennsylvania, Oregon, Kentucky ($0.08) | Idaho (2.20%) |
| 4 | Connecticut (45.2) | Hawaii ($3.00) | Alabama ($18.94) | Alabama ($1.70) | Hawaii ($0.93) | Florida (16.57%) | 4 | Wyoming (14.0) | Virginia ($0.30) | Vermont ($0.67) | California ($0.20) | Missouri, Wisconsin ($0.06) | Nevada (2.08%) |
| 5 | Illinois (42.8) | Washington, D.C. ($2.50) | Alaska ($18.94) | Georgia, Virginia ($1.51) | S. Carolina ($0.77) | Illinois (15.85%) | 5 | Alaska (8.0) | Missouri ($0.17) | New Hampshire, Wyoming ($0.00) | Louisiana ($0.11) | Wyoming ($0.02) | Oregon (1.81%) |
If you're a person that thoroughly enjoys drinking alcoholic beverages, then you may want to avoid living in Alaska. The cold state charges the highest rates for both table wine and beer in the United States. Alaska also comes in fifth for charging some of the highest rates on spirit sales. The state you'll be able to get more than your fair share of boozing done without hurting your wallet is Wyoming, which charges zero dollars on spirit sales tax and a mere 2 cents on beer sales.
If you're a smoker they you'll want to steer clear of New York, which tacks on $4.35 to packs of cigarettes, while Rhode Island closely follows with an average tax of $3.46 per pack. Smokers living in Missouri save the most per pack of cigarettes they purchase--paying an average of $0.17 in sales tax per pack of cigarettes.
Alaska more than makes up for its exorbitant liquor sales taxes by carrying the lowest gasoline sales tax rates in the nation, charging just 8 cents per gallon on average. Residents of California in comparison pay an extra 47.4 cents per gallon of gasoline they pump into the tanks of their cars, while New York residents closely follow by paying 47.3 cents per gallon of gasoline on average.
If you constantly have a cellular phone attached to your ear then you'll want to avoid living in Nebraska, which has the nation's highest local cell phone tax rates at 18.84%. More suitable state for cell phone addicts include Oregon (1.81%), Nevada (2.08%)--the states with the lowest average cell phone taxes in the nation.
For more information about how your state's taxes compare to other check out this year's edition of the Tax Foundation's Facts & Figures: How Does Your State Compare?
Read: New Internet Tax Law in Illinois Strikes Chord With Online Retailers
Check out: Top 5 States and Cities With the Highest Sales Tax Rates
