Sales tax rates in the US vary by state. Each state has the authority to set its own tax structure to reflect local values, economic conditions, and other factors. For example, states with strong tourism industries might levy higher sales taxes to capitalize on spending by visitors, while states rich in natural resources might rely more on severance taxes and reduce sales tax rates to lessen the burden on residents.

Divergent sales tax policies across states have given rise to economic competition, with states often adjusting tax rates to attract businesses and residents. This also lets states diversify their revenue streams to avoid an over-reliance on federal funding. Below, we’ll cover sales tax rates by state, including which states have the highest sales tax, which have the lowest, and which don’t have a statewide sales tax.

What’s in this article?

• US states with the highest sales tax
  
• US states with the lowest sales tax
  
• US states that don’t have state sales tax
  

US states with the highest sales tax

Here are the states with the highest average combined state and local sales taxes as of 2025:

• Louisiana (10.12%): With a complex network of state and local taxes, Louisiana has a high sales tax rate that compensates for lower property taxes and major tax exemptions for the oil and gas industries. These high rates also reflect attempts to stabilize state finances amid fluctuating oil prices and natural disaster recovery costs.

• Tennessee (9.56%): Tennessee does not levy a personal income tax, which shifts much of the tax burden onto consumption taxes. This strategy spreads the tax responsibility to all customers, including tourists and nonresidents, to boost revenue while maintaining low personal taxes.

• Arkansas (9.46%): Arkansas supports a range of state services, including investments in public education and healthcare, with a higher sales tax. The state’s reliance on sales tax helps keep property taxes lower.

• Washington (9.43%): Washington state has no personal or corporate income taxes and relies heavily on sales taxes and excise taxes (such as those on fuel and alcohol) to fund public services. This capitalizes on its high population density and extensive tourism industry.

• Alabama (9.43%): Alabama combines high sales tax with relatively low property and income taxes, a structure that puts a larger fiscal responsibility on customers. This system is often criticized for disproportionately affecting lower-income residents, but it’s bolstered by political and public support for low property taxes.

• Oklahoma (9%): Oklahoma’s high sales tax rate is a cornerstone of its tax policy, designed to fund education, infrastructure, and more. The state supports local options to increase the tax rate, a boost for local governments that rely on sales taxes because of limited revenue from other sources.

• Illinois (8.89%): Illinois faces fiscal challenges that include substantial public pension obligations and budget deficits. High sales taxes help mitigate these issues alongside high property and income taxes.

• California (8.8%): Despite a relatively high personal income tax, California maintains a high sales tax to support its extensive public services and infrastructure needs in education, healthcare, and welfare. The state’s large economy benefits from high consumption rates, which makes sales tax a major revenue source despite concerns about its impact on lower-income residents.

• Kansas (8.77%): In Kansas, high sales tax rates have been part of efforts to shift from income taxes to consumption taxes. This effort to simplify the tax system and attract businesses has also raised concerns about the tax burden on working families.

• New York (8.53%): High sales taxes in New York are partially due to the substantial revenue needs of its large population and major cities. These taxes fund extensive public services, including transportation and healthcare, in a state known for its high cost of living.

US states with the lowest sales tax

Of the 45 states that collect statewide sales tax, these have the lowest rates:

• Hawaii (4.5%): Hawaii has a unique tax system that imposes a General Excise Tax (GET). Though technically not a sales tax, it functions similarly by taxing all business activities. The GET’s broader base allows for a lower rate, covering more transactions than typical sales taxes.

• Wyoming (5.44%): Wyoming benefits from its mineral production and tourism, which help keep its sales tax rate low. The state has no personal income tax and relies on taxes from natural resources and excise taxes on tourism-related activities.

• Maine (5.5%): Maine’s low sales tax rate is supported by its broader tax base, which includes income and property taxes. The state has maintained moderate sales tax rates to avoid overburdening residents and tourists in its tourism-dependent economy.

• Wisconsin (5.7%): Wisconsin’s sales tax rate remains low because of a balanced taxation strategy that includes income and property taxes as major contributors to state revenue. This balance helps keep the sales tax rate more moderate.

• Virginia (5.77%): Virginia keeps its sales tax relatively low by maintaining a diversified tax structure that includes substantial contributions from income and corporate taxes. This balance lets the state fund its services without strongly relying on sales tax.

• Maryland (6%): Maryland relies more on income taxes and property taxes than on sales taxes for state revenue, and a lack of local sales tax helps keep rates low.

• Michigan (6%): Michigan has a balanced revenue system, relying on income taxes, property taxes, and other sources, which allows for a lower sales tax rate.

• Kentucky (6%): Kentucky’s lower sales tax rate helps the state stay competitive with neighboring states, encourage customer spending, and maintain affordability for residents.

• Idaho (6.03%): Idaho’s low sales tax rate is part of its strategy to attract businesses and retirees. The state relies on a mix of income, property, and sales taxes.

US states that don’t have state sales tax

Five states don’t have a statewide sales tax:

• Alaska: Though Alaska does not have a statewide sales tax, local jurisdictions can impose sales taxes, with an average rate of 1.82% in 2025. The absence of a statewide tax is largely because Alaska earns substantial revenue from its oil and natural gas industries. This helps fund state spending and allows for direct payments to residents through the Alaska Permanent Fund.

• Delaware: Known as a “tax haven” within the US, Delaware attracts businesses with its favorable tax policies that include no state sales tax. This stimulates local economic growth by attracting corporations and lets Delaware gain substantial revenue from other forms of taxes and fees (e.g., franchise taxes) from corporations registered in the state.

• Montana: Montana does not have a general sales tax, partly because of its sparse population and an economy historically reliant on agriculture and resource extraction. By not imposing a sales tax, Montana avoids placing a heavier burden on its residents and preserves its appeal as a shopping destination for visitors from neighboring states.

• New Hampshire: In keeping with its motto “Live Free or Die,” New Hampshire doesn’t charge sales tax to promote customer purchases and attract shoppers from neighboring states. This policy is part of a broader fiscal strategy that includes no personal income tax, with the state relying instead on higher property taxes and taxes on dividends and interest.

• Oregon: Oregon’s decision not to impose a sales tax is deeply rooted in its citizens’ values of economic freedom and customer benefit. The state instead relies more heavily on income and property taxes to fund its services.