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 As you travel from state to state, things can get a bit confusing when it comes to state sales tax rates. Add to that confusion this world wide web of ours, which makes purchasing merchandise from a company doing business in another state an everyday affair.
In this article we're going to briefly cover the topic of state sales tax including 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 in effect for each of the 50 states.
Collecting Sales Tax
According to information gathered by the US Census, 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.
Sales tax is usually charged on 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. And while enforcement of sales tax is very high - it occurs at the time of sale - it is 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 today 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 exception categories 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 affect starting in January 2007. You don't need to worry too much about this list being outdated because sales tax rates, like their counterpart state income tax rates, really don't change very often - so this list will probably be good for the year 2008 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 5.6% sales 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.
California
The state of California has a 7.25% sales tax, with an exemption for food and prescription medications. This includes 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.
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 6.2% sales tax with a local tax of 1% on food, prescription medications and over-the-counter medications.
Indiana
The state of Indiana has a 6.0% sales tax with exemptions for food, prescription medications and over-the-counter medications.
Iowa
The state of Iowa has a 5.0% sales tax with exemptions for food and prescription medications.
Kansas
The state of Kansas has a 5.3% 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. However, food sales may be subject to local sales taxes.
Maine
The state of Main has a 5.0% sales tax with exemptions for food and prescription medications.
Maryland
The state of Maryland has a 5.0% sales tax with exemptions for food, prescription medications and over-the-counter medications.
Massachusetts
The state of Massachusetts has a 5.0% 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 6.5% 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 6.5% 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 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 4.25% sales tax with exemptions for food and prescription medications. In addition, food may 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 5.0% 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 6.0%.
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 4.75% sales tax with an exemption for prescription medications and over-the-counter medications.
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 4.0% and includes a statewide local tax of 1.0%. In addition, the tax rate on food is scheduled to decrease to 3.5% on January 1, 2005.
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.
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.
About the Author - State Sales Tax Rates
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