States with the Lowest or No Sales Tax: This article will examine the sixteen states where the sales tax is either minimal or nonexistent. You can bypass our comprehensive analysis and proceed directly to the five states with the least or no sales tax.
US Tax on Sales
Regarding the tax structure, the United States is unique among OECD nations. Social Security contributions and individual income taxes account for the largest portions of US tax revenue, each contributing 23.8% and 42.1%, respectively. In comparison to other developed nations, the United States tax system is significantly predicated on income and property taxes. Nevertheless, it circumvents consumption taxation including VAT. Conversely, its foundation is expanded upon state and local sales taxes, which have comparatively modest rates. Retail sales taxes constitute an essential component of state tax revenue. It contributes 16.6% to the overall tax revenue, which is in contrast to the OECD average of 32.2%. State-level sales taxes are implemented in 45 US states and the District of Columbia; additionally, local sales taxes are imposed in 38 states.
As of January 2024, the state of California imposes the highest statewide sales tax rate at 7.25%. Four other states subsequently implement tax rates of 7%. Alaska, with the exception of five states, does not levie a sales tax at the federal level. However, it does levy a local tax rate of 1.82%. At 2.9%, Colorado imposes the least onerous statewide sales tax. The top five states maintain their current local sales tax rates, with Alabama imposing the highest rate at 5.29%. Rankings for states including Minnesota and Wisconsin have decreased since July 2023 due to the implementation of local tax increases in major metropolitan areas.
States experienced an increase in local tax rates, with the seven-county Twin Cities metropolitan area in Minnesota experiencing a 1% increase and Milwaukee, Wisconsin, seeing a 2% increase. States including California, Maine, New Mexico, Ohio, and Illinois, among others, implemented higher local sales tax rates in response to the competitive tax rate increases observed in neighboring states.
US tax cut fails to boost investment, jobs: Survey
Firms Offering Tax Services in the U.S.
Tax service providers are of paramount importance in facilitating the complexities of the United States tax systems through the provision of cutting-edge products and services. In the United States, Intuit Inc. (NASDAQ: INTU), CBIZ, Inc. (NYSE: CBZ), and H&R Block, Inc. (NYSE: HRB) are among the foremost providers of tax services.
A prominent technology company, Intuit Inc. (NASDAQ: INTU) is a specialist in financial solutions. The company possesses TurboTax, the industry-leading software application utilized for tax preparation. The company announced the integration of TurboTax with Credit Karma and Quickbooks products on January 8. Customers will be granted access to streamlined tax submission services as a result. Credit Karma members can now submit their taxes directly through the app, with options including self-filing, assisted filing, and expert assistance. Additionally, creditors can expedite the refund process by utilizing Credit Karma Money. Customers of QuickBooks who utilize the online platform can also submit their business taxes. The goal of this update from Intuit Inc. (NASDAQ: INTU) is to make the tax filing process simpler and possibly increase users’ refunds.
CBIZ, Inc. (NYSE: CBZ) is a United States-based accounting firm specializing in advisory, tax, and consultation services. The company announced on February 7th that it had completed the acquisition of Erickson, Brown & Kloster (EBK), the preeminent tax and accounting firm in Colorado. This action will increase the scope of CBIZ, Inc.’s (NYSE: CBZ) Denver operations. EBK reported an approximate revenue of $8.9 million in 2023 and maintained a staff of 50 individuals. The amalgamation of these elements will fortify the capacities and products of CBIZ, Inc. (NYSE: CBZ).
H&R Block, Inc. (NYSE: HRB) is a significant provider of tax preparation services with operations in Australia and North America. On December 14, 2023, the company unveiled the generative AI assistant, H&R Block AI Tax Assist. Its primary function is to assist individuals, small businesses, and self-employed individuals with the tax preparation process. Utilizing over seven decades of experience, the company created an AI to provide dependable and instantaneous aid in the tax submission process. H&R Block, Inc. (NYSE: HRB) fully guarantees it. With data from The Tax Institute, the organization’s top institute, the AI assistant has over 60,000 tax experts to help filers with federal and state tax regulations.
In light of the foregoing, we shall examine the sixteen states that levy minimal or no sales tax.
We compiled our list of the sixteen states with the lowest or no sales tax by consulting the Tax Foundation’s January 2024 report, which details the most recent rates of state sales tax, local sales tax, and the combined sales tax of all U.S. states. The most recent combined sales tax rates for the states of the United States in 2024 have been utilized to determine the states. State and local sales tax rates for each state have also been provided. The US Census Bureau used state-by-state population estimates for 2023 to break the deadlock among states with the same combined sales tax rates.
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Sixteen states have minimal or no sales tax.
Massachusetts 16.
State Sales Tax Rate: 6.25 percent in 2024
0% is the average local sales tax rate in 2024.
Combined Sales Tax Rate: 6.25 percent in 2024
Population: 7,001,399 in 2023
Massachusetts is positioned within the group of states that impose minimal or no sales tax. As of January 2024, the state has implemented a state-wide sales tax rate of 6.25%. Local sales tax is not imposed by the state. As of 2023, the territory includes 7,001,399 inhabitants.
South Dakota 15.
4.20% is the state sales tax rate in 2024.
The mean rate of local sales tax in 2024 is 1.91%.
Rate of Combined Sales Tax in 2024: 6.11%
Population: 919,318 in 2023
According to the Tax Foundation, South Dakota, which is ranked fifteenth on our list, has a state sales tax rate of 4.2% and an average sales tax rate of 1.91%. The state has a recorded population of 919,318 as of 2023.
Idaho 14, Idaho
Rate of State Sales Tax (2024): 6%
0.03% is the average local sales tax rate in 2024.
Rate of Combined Sales Tax in 2024: 6.03%
Population: 1,964,726 in 2023
Idaho has one of the lowest sales taxes among U.S. jurisdictions. As of January 2024, a 6% statewide sales tax is in effect. Conversely, the state’s local tax rate is close to 0%. As of 2023, its population is recorded at 1,964,726.
Thirteenth Kentucky
Rate of State Sales Tax (2024): 6%
0% is the average local sales tax rate in 2024.
6% is the Combined Sales Tax Rate in 2024.
Population: 4,526,154 in 2023
Kentucky is classified among the states that impose no or a minimal sales tax. As of January 2024, the statewide sales tax rate is set at 6%. Local sales tax is not imposed by the state. As of 2023, the total population of the province stands at 4,526,154.
The 12th of Maryland
Rate of State Sales Tax (2024): 6%
0% is the average local sales tax rate in 2024.
6% is the Combined Sales Tax Rate in 2024.
Population: 6,180,253 in 2023
Our list positions Maryland twelfth. A six percent statewide sales tax is imposed by the province. Nevertheless, no local sales tax is levied. The state has a cumulative population of 6,180,253 as of the year 2023.
11. The state of Michigan
Rate of State Sales Tax (2024): 6%
0% is the average local sales tax rate in 2024.
6% is the Combined Sales Tax Rate in 2024.
Population: 10,037,261 in 2023
Michigan has one of the lowest sales taxes among U.S. jurisdictions. As of January 2024, a 6% statewide sales tax is in effect. However, local tax rates are not implemented by the state. As of 2023, the US Census Bureau estimates its population to be 10,037,261.
10. The Commonwealth of Virginia
Rate of State Sales Tax (2024): 5.30%
The mean rate of local sales tax in 2024 is 0.47%.
Rate of Combined Sales Tax in 2024: 5.77%
Population: 8,715,698 in 2023
Virginia is positioned in the group of states that impose minimal or no sales tax. As of January 2024, the state imposes a statewide sales tax rate of 5.3% and a local tax rate of 0.47%. As of 2023, the total population of the state stands at 8,715,698.
Wisconsin 9.
Rate of State Sales Tax (2024): 5%
The mean rate of local sales tax in 2024 is 0.70%.
Rate of Combined Sales Tax (2024): 5.70%
Population: 5,910,955 in 2023
We rank Wisconsin ninth on our list. The state imposes a 5% statewide sales tax and a 0.7% local sales tax. As of the year 2023, the total population of the state is 5,910,955.
Eighth Maine
5.5% is the state sales tax rate in 2024.
0% is the average local sales tax rate in 2024.
Rate of Combined Sales Tax in 2024: 5.50%
Population: 1,395,722 in 2023
Maine has one of the lowest sales taxes among U.S. jurisdictions. As of January 2024, a statewide sales tax of 5.5% is in effect. However, the state does not implement local tax rates. The population as of 2023 stands at 1,395,722.
Wyoming 7.
Rate of State Sales Tax (2024): 4%
The mean rate of local sales tax in 2024 is 1.44%.
Rate of Combined Sales Tax in 2024: 5.44%
Population: 584,057 in 2023
We rank Wyoming seventh on our list. As of January 2024, the state imposes a 4% statewide sales tax and a 1.44% local sales tax. As of 2023, the total population of the province is 584,057.
6. The Hawaiian Islands
Rate of State Sales Tax (2024): 4%
Rate of Average Local Sales Tax in 2024: 0.50%
Rate of Combined Sales Tax in 2024: 4.50%
Demographics as of 2023: 1,435,138
Hawaii occupies a position among the states that impose no or minimal sales tax. As of January 2024, the statewide sales tax rate is 4%, while the local tax rate is 0.5%. The US Census Bureau data records the state’s population as 1,435,138 as of 2023.
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