State Sales Tax Rates

As you travel from state to state, the money owed on purchases can be confusing due to differences in state sales tax rates. Adding to that confusion is the World Wide Web, which makes purchasing merchandise from a company doing business in another state an everyday affair.

In this publication, we're going to briefly cover the topic of state sales tax.  As part of that discussion, we'll explain why it's collected, and how the money is used.  Then we're going to finish up with a complete listing of the sales tax rates that are in effect for each of the 50 states.

Collecting Sales Tax

According to information gathered by the U.S. Census Bureau, sales tax accounts for approximately 25% of all the money needed to run our state and local governments.  Money collected via sales tax is used to provide essential services of state and local governments such as education, police, and fire protection.

Unlike an income tax, sales tax is usually charged on purchases of goods and services, and the amount charged will vary from state to state.  Since sales taxes are collected from consumers, it's considered a consumption tax.  In retail stores, prices appearing on merchandise are typically quoted before applying a sales tax.

If goods or services are purchased from an out of state seller, sales tax is usually not due.  However, a use tax may be owed on the property purchased.  While enforcement of sales tax is very high, it occurs at the time of sale.  This makes it very difficult to enforce the provisions of a use tax.

At one time, the Internet provided consumers a convenient way of avoiding sales tax, and in many ways it still does.  Most online stores will only charge a state sales tax if they also have a physical presence (such as a warehouse or corporate office) in the consumer's state.

Exceptions to State Sales Tax

Generally, there are three major categories of exceptions when it comes to state sales tax:  food, prescription medications, and over-the-counter medications.  We're going to give you a run down by state, mentioning if these exemptions apply.

Sales Tax Rates Throughout the United States

Listed below are the state sales tax rates that were in effect as of August 2011.  Don't worry too much about this list being outdated.  Sales tax rates, like their counterpart state income tax rates, don't change very often.  This list will probably be good for the year 2012 too.

Alabama

The state of Alabama has a 4.0% sales tax, with an exemption for prescription medications.

Alaska

The state of Alaska has no sales tax.

Arizona

The state of Arizona has a 6.6% transaction privilege tax, with an exemption for prescription medications, and food.

Arkansas

The state of Arkansas has a 6.0% sales tax, with an exemption for prescription medications, and a 2.0% tax on food items.

California

The state of California has a 7.25% sales tax, with an exemption for food and prescription medications.  This includes a statewide local tax of 1.0% in California.  California's tax rate may be adjusted annually according to a formula based on balances in a general fund and the school fund.

Colorado

The state of Colorado has a 2.9% sales tax, with exemptions for food and prescription medications.

Connecticut

The state of Connecticut has a 6.0% sales tax with exemptions for food, prescription medications, and over-the-counter medications.

Delaware

The state of Delaware has no state sales tax, but has a Gross Receipts Tax of 2.07% for some business activities.

District of Columbia

The District of Columbia has a 6.0% sales tax with an exemption for food, prescription medications and over-the-counter medications.

Florida

The state of Florida has a 6.0% sales tax with exemptions for food, prescription medications and over-the-counter medications.

Georgia

The state of Georgia has a 4.0% sales tax with exemptions for food and prescription medications.  However food sales may be subject to local sales taxes.

Hawaii

The state of Hawaii has a 4.0% sales tax with an exemption for prescription medications.  An income credit to compensate poor households may apply.

Idaho

The state of Idaho has a 6.0% sales tax with an exemption for prescription medications.  An income credit to compensate poor households may apply.

Illinois

The sate of Illinois has a 6.25% sales tax with a local tax of 1% on food, prescription medications and over-the-counter medications.

Indiana

The state of Indiana has a 7.0% sales tax with exemptions for food, prescription medications and over-the-counter medications.

Iowa

The state of Iowa has a 6.0% sales tax with exemptions for food and prescription medications.

Kansas

The state of Kansas has a 6.3% sales tax with an exemption for prescription medications.  An income credit to compensate poor households may apply.

Kentucky

The state of Kentucky has a 6.0% sales tax with exemptions for food and prescription medications.

Louisiana

The state of Louisiana has a 4.0% sales tax with exemptions for food and prescription medications.  Food sales may be subject to local sales taxes.

Maine

The state of Maine has a 5.0% sales tax with exemptions for food and prescription medications.

Maryland

The state of Maryland has a 6.0% sales tax with exemptions for food, prescription medications and over-the-counter medications.

Massachusetts

The state of Massachusetts has a 6.25% sales tax with exemptions for food and prescription medications.

Michigan

The state of Michigan has a 6.0% sales tax with exemptions for food and prescription medications.

Minnesota

The state of Minnesota has a 6.875% sales tax with exemptions for food, prescription medications and over-the-counter medications.

Mississippi

The state of Mississippi has a 7.0% sales tax with an exemption for prescription medications.

Missouri

The state of Missouri has a 4.225% sales tax with an exemption for prescription medications.  Food is taxed at 1.225%.

Montana

The state of Montana has no state sales tax.

Nebraska

The state of Nebraska has a 5.5% sales tax with exemptions for food and prescription medications.

Nevada

The state of Nevada has a 6.50% sales tax with exemptions for food and prescription medications.

New Hampshire

The state of New Hampshire has no state sales tax.

New Jersey

The state of New Jersey has a 7.0% sales tax with exemptions for food, prescription medications and over-the-counter medications.

New Mexico

The state of New Mexico has a 5.0% sales tax with exemptions for food, prescription medications and over-the-counter medications.

New York

The state of New York has a 4.0% sales tax with exemptions for food, prescription medications and over-the-counter medications.

North Carolina

The state of North Carolina has a 5.75% sales tax with exemptions for food and prescription medications.  Food may also be subject to local sales taxes.

North Dakota

The state of North Dakota has a 5.0% sales tax with exemptions for food and prescription medications.

Ohio

The state of Ohio has a 5.5% sales tax with exemptions for food and prescription medications - however, this varies by geography.

Oklahoma

The state of Oklahoma has a 4.5% sales tax with an exemption for prescription medications.

Oregon

The state of Oregon has no state sales tax.

Pennsylvania

The state of Pennsylvania has a 6.0% sales tax with exemptions for food, prescription medications and over-the-counter medications.

Rhode Island

The state of Rhode Island has a 7.0% sales tax with exemptions for food, prescription medications and over-the-counter medications.

South Carolina

The state of South Carolina has a 6.0% sales tax with an exemption for prescription medications.

South Dakota

The state of South Dakota has a 4.0% sales tax with an exemption for prescription medications.  An income credit to compensate poor households may apply.

Tennessee

The state of Tennessee has a 7.0% sales tax with and exemption for prescription medications.  Food is taxed at 5.50%.

Texas

The state of Texas has a 6.25% sales tax with exemptions for food, prescription medications and over-the-counter medications.

Utah

The state of Utah has a 5.95% sales tax with an exemption for prescription medications.  Food is taxed at 1.75%.

Vermont

The state of Vermont has a 6.0% sales tax with an exemption for food, prescription medications and over-the-counter medications.

Virginia

The state of Virginia has a 5.0% sales tax with an exemption for prescription medications and over-the-counter medications.  Food is taxed at 2.5% and includes a statewide local tax of 1.0%.

Washington

The state of Washington has a 6.5% sales tax with an exemption for food and prescription medications.

West Virginia

The state of West Virginia has a 6.0% sale tax with an exemption for prescription medications.  Food is taxed at 3.0%.

Wisconsin

The state of Wisconsin has a 5.0% sales tax with exemptions for food and prescription medications.

Wyoming

The state of Wyoming has a 4.0% sales tax with an exemption for prescription medications.  Wyoming's tax rate may be adjusted annually according to a formula based on balances in a general fund and a school fund.  An income credit to compensate poor households may apply.

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