Once again the Tax Foundation has published their annual list of sales taxes in each state. Sales taxes are a form of taxation that truly affects every person…it’s the classic consumption tax. The Tax Foundation says these type of taxes are generally considered more pro-growth than income taxes because they introduce fewer economic distortions. Keep in mind, too, that some states like Tennessee have high sales taxes but no individual income tax. However, Oregon has no sales tax but levies high income taxes.
State and local governments should be cautious about raising rates too high relative to their neighbors because doing so will yield less revenue than expected or, in extreme cases, revenue losses despite the higher tax rate.
The five states with the highest average combined state and local sales tax rates are Louisiana (10.11%), Tennessee (9.61%), Washington (9.51%), Arkansas (9.46%), and Alabama (9.46%). Be sure to look at their entire list to see how previous years’ data compares to 2025 as well as the interactive chart below.
Click here to read the full report at the Tax Foundation.
