California is the undisputed champion of state sales tax rates, notes a report from the nonprofit Tax Foundation. Including the mandatory 1 percent Bradley-Burns sales tax rate added to all sales in the state, California has a state sales and use tax rate of 7.5 percent. This is a half percent higher than second-place finishers tied at 7 percent: Indiana, Mississippi, New Jersey, Rhode Island and Tennessee.
California had the top sales tax rate even before Proposition 30 added 0.25 percent to the state rate, effective January 1.
The Tax Foundation’s rankings placed California first for highest state rate and ninth for highest combined state and local sales tax rate. California’s average local sales tax rate is 0.88 percent, which makes the state’s average combined rate 8.38 percent.
The Tax Foundation report does not including local transactions and use tax add-ons, which vary widely. In Pico Rivera, for example, the combined state and local rate is 10 percent.
Five states do not have a statewide sales tax: Alaska, Delaware, Montana, New Hampshire and Oregon. Of the states that do impose sales tax, the lowest state rate is in Colorado, at 2.9 percent.
The Tax Foundation noted that many studies have shown that sales taxes can affect consumers’ behavior, influencing them to make major purchases in neighboring states or counties where the rates are lower.
February 15, 2013
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