Where do sales tax rates make the biggest difference?
Whether you’re buying holiday gifts for family members, reviving your wardrobe or simply shopping at the grocery store, sales tax can make spending feel like it goes from reasonable to over budget with the ding of the cash register. Because sales tax varies by state, county and even municipality, where you shop can mean the difference between a couple cents and few dollars extra. Sales tax rates aren’t a part of the calculation for the U.S. News Best Places to Live rankings, but they can play a part in how to budget and plan for a move. We’ve compiled the 20 metro areas out of the 125 most populous in the U.S. that make up the Best Places to Live with the highest and lowest combined sales tax rates for regular, store-bought goods.
Markets with the highest sales tax
These metro areas often not only have a sizable state sales tax, but in each case they also have county and city taxes that increase the total of a retail purchase. We determined the places with the highest sales tax based on local taxes levied by the biggest city by population in each market, as that’s where the most residents are likely to spend their money. In outer suburbs, the local sales tax may be slightly higher or lower as a result of different municipal policies. All tax rates come from tax information company Avalara and its subsidiary TaxRates.com. The following places with high sales tax are listed from lowest to highest rate.
Highest: San Jose, California
Best Places 2018 Rank: 17
Metro Population: 1,943,107
Combined Local Sales Tax Rate: 9.25 percent
California collects just 6 percent sales tax for the state. But a 0.25 percent sales tax for both Santa Clara County and the city of San Jose plus a 2.75 percent special tax — which is often voted for by local residents to fund specific projects — add up to 9.25 percent.
Highest: Knoxville, Tennessee
Best Places 2018 Rank: 64
Metro Population: 857,111
Combined Local Sales Tax Rate: 9.25 percent
Knoxville doesn’t charge residents additional sales tax in the city, but Knox County levies a 2.25 percent sales tax in addition to Tennessee’s statewide 7 percent sales tax rate.
Highest: Chattanooga, Tennessee
Best Places 2018 Rank: 72
Metro Population: 544,522
Combined Local Sales Tax Rate: 9.25 percent
Similar to Knoxville, Chattanooga’s high sales tax rate comes from the state tax of 7 percent and Hamilton County’s 2.25 percent tax rate.
Highest: Salinas, California
Best Places 2018 Rank: 114
Metro Population: 430,201
Combined Local Sales Tax Rate: 9.25 percent
Salinas adds a combined 3.25 percent sales tax rate from Monterey County (0.25 percent), the city of Salinas (1.5 percent) and a special tax (1.5 percent) to California’s state tax of 6 percent.
Highest: Memphis, Tennessee
Best Places 2018 Rank: 117
Metro Population: 1,341,339
Combined Local Sales Tax Rate: 9.25 percent
Sales tax rates for Memphis are based on the state’s 7 percent tax combined with the 2.25 percent sales tax for Shelby County.
Highest: New Orleans
Best Places 2018 Rank: 111
Metro Population: 1,250,247
Combined Local Sales Tax Rate: 9.45 percent
While Louisiana has a low state sales tax of just 4.45 percent, Jefferson Parish, where New Orleans is located, charges an additional 5 percent sales tax on purchases.
Highest: Baton Rouge, Louisiana
Best Places 2018 Rank: 100
Metro Population: 824,667
Combined Local Sales Tax Rate: 9.45 percent
For Baton Rouge, on the other hand, the 5 percent sales tax to accompany the state’s 4.45 percent sales tax comes from the city.
Highest: St. Louis
Best Places 2018 Rank: 89
Metro Population: 2,803,449
Combined Local Sales Tax Rate: 9.679 percent
St. Louis charges a very specific sales tax rate — to the third decimal. The state of Missouri levies a 4.225 percent sales tax, and the city of St. Louis charges an additional 5.454 percent sales tax, which includes a 0.5 percent tax for public safety funding.
Highest: Fayetteville, Arkansas
Best Places 2018 Rank: 5
Metro Population: 503,642
Combined Local Sales Tax Rate: 9.75 percent
The state of Arkansas, Washington County and city of Fayetteville all levy a sales tax. Arkansas’s statewide tax tops out at 6.5 percent, while the county charges 1.25 percent and Fayetteville charges 2 percent in sales tax.
Highest: Mobile, Alabama
Best Places 2018 Rank: 122
Metro Population: 414,291
Combined Local Sales Tax Rate: 10 percent
Mobile is one of three places out of the 125 most populous metro areas in the U.S. that charges 10 percent or more in sales tax. The state of Alabama charges just 4 percent in sales tax, while Mobile County collects an additional 1 percent and the city of Mobile takes 5 percent.
Highest: Seattle
Best Places 2018 Rank: 10
Metro Population: 3,671,095
Combined Local Sales Tax Rate: 10.1 percent
Washington’s state sales tax is 6.5 percent, while the city of Seattle places an additional 3.6 percent sales tax on top of that.
Highest: Chicago
Best Places 2018 Rank: 87
Metro Population: 9,528,396
Combined Local Sales Tax Rate: 10.25 percent
Illinois collects a sales tax rate of 6.25 percent, while Cook County adds 1.75 percent, the city of Chicago charges 1.25 percent and a special tax tacks on 1 percent to make sales tax in Chicago a whopping 10.25 percent.
Markets with the lowest sales tax
While some places fund their local projects and improvement efforts with sales tax, others get rid of it entirely. As with the places with the highest sales tax rates, these rates are based on the combination of state, county and local sales tax rates in each metro area’s largest city, so it’s possible the rate varies in smaller municipalities. The following eight metro areas are the only ones out of the 125 most populous in the U.S. that have combined sales tax rates of less than 6 percent, presented in descending order of sales tax rate.
Lowest: Milwaukee
Best Places 2018 Rank: 70
Metro Population: 1,571,730
Combined Local Sales Tax Rate: 5.6 percent
Milwaukee is just a couple hours north of Chicago, but the sales tax rate is nearly half that of the Windy City. Wisconsin’s sales tax rate is 5 percent, while Milwaukee County charges 0.5 percent and a special tax adds 0.1 percent.
Lowest: Madison, Wisconsin
Best Places 2018 Rank: 16
Metro Population: 634,269
Combined Local Sales Tax Rate: 5.5 percent
Without any special tax added to the sales tax rate, Madison has a slightly lower combined sales tax than Milwaukee, with just Wisconsin’s 5 percent sales tax and Dane County’s 0.5 percent sales tax.
Lowest: Portland, Maine
Best Places 2018 Rank: 27
Metro Population: 523,874
Combined Local Sales Tax Rate: 5.5 percent
As the largest city in Maine, Portland maintains a low sales tax rate by keeping the rate determined by the state — 5.5 percent — without adding any local taxes.
Lowest: Richmond, Virginia
Best Places 2018 Rank: 54
Metro Population: 1,258,158
Combined Local Sales Tax Rate: 5.3 percent
Virginia’s sales tax of just 4.3 percent and the city of Richmond‘s additional tax of 1 percent combine for a low sales tax rate of 5.3 percent for the state capital.
Lowest: Honolulu
Best Places 2018 Rank: 35
Metro Population: 986,999
Combined Local Sales Tax Rate: 4.5 percent
Hawaii keeps its state sales tax low at just 4 percent. With the addition of Honolulu County’s 0.5 percent sales tax rate, the city of Honolulu sees a total sales tax rate of 4.5 percent.
Lowest: Manchester, New Hampshire
Best Places 2018 Rank: 37
Metro Population: 404,948
Combined Local Sales Tax Rate: 0 percent
Manchester is one of three places out of the 125 most populous metro areas in the U.S. that has no sales tax at all. New Hampshire is one of five states — the others being Alaska, Delaware, Montana and Oregon — with no sales tax.
Lowest: Salem, Oregon
Best Places 2018 Rank: 93
Metro Population: 404,997
Combined Local Sales Tax Rate: 0 percent
There may be five states that levy no sales tax, but only two other places out of the 125 most populous metro areas keep the sales tax rate at zero for local taxes as well. Salem is one of two Oregon metro areas with no sales tax.
Lowest: Portland, Oregon
Best Places 2018 Rank: 6
Metro Population: 2,351,319
Combined Local Sales Tax Rate: 0 percent
Portland is similar to Manchester and Salem in that there’s no sales tax, but it’s also significantly larger in population. The Portland metro area is home to nearly 2.4 million people and still manages to keep its sales tax at zero.
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The Best Places in the U.S. With the Highest and Lowest Sales Tax originally appeared on usnews.com
