States with the lowest sales tax

There are three lowest sales taxes, and they are three different states

By state rate, the lowest is Colorado at 2.9% — and its counties and cities take it to 11.2%, which is among the highest totals in the country. The state charges least and the address charges most.

By combined rate, the lowest is Hawaii at 4.5% — and it taxes groceries at the full rate, so $100 of food costs $6.00 there against nothing at all in 30 other states.

By what a weekly shop actually costs, the cheapest are the 30 states where $100 of groceries carries no tax whatsoever, and several of them have headline rates near the top of the table.

Three questions, three different winners, and no state appears in more than one. Which is why "which state has the lowest sales tax" has no answer until you say what you are buying.

Lowest by state rate — the ranking everyone publishes

Of the 45 states that charge a sales tax and whose own documents this site has read, these have the lowest state rate:

1. Colorado — 2.9%, but up to 11.2% once local tax is added.

2. New York — 4%, but up to 8.875% once local tax is added.

3. Georgia — 4%, but up to 9% once local tax is added.

4. Alabama — 4%, but up to 11% once local tax is added.

5. Hawaii — 4%, but up to 4.5% once local tax is added.

6. Wyoming — 4%, but up to 8% once local tax is added.

7. South Dakota — 4.2%, but up to 6.2% once local tax is added.

8. Missouri — 4.225%, but up to 10.225% once local tax is added.

9. Virginia — 4.3%, but up to 7% once local tax is added.

10. Oklahoma — 4.5%, but up to 11.5% once local tax is added.

11. North Carolina — 4.75%, but up to 7.5% once local tax is added.

12. Utah — 4.85%, but up to 8.85% once local tax is added.

13. New Mexico — 4.875%, but up to 8.375% once local tax is added.

14. Wisconsin — 5%, but up to 5.9% once local tax is added.

15. Louisiana — 5%, but up to 12% once local tax is added.

16. North Dakota — 5%, but up to 8% once local tax is added.

17. Maine — 5.5%, local ceiling not read here.

18. Nebraska — 5.5%, but up to 7.5% once local tax is added.

Read the second half of each line. That is the whole problem with this ranking, and it is the one almost every site publishes without the second half.

The state rate is a floor, and in places it is less than half the price

Almost every published ranking of sales tax by state ranks the state rate, and in 34 states that is not the rate anyone pays. Counties, cities and special districts add their own on top, and the ceiling varies more than the state rate does.

The widest gap is Colorado: a state rate of 2.9% and up to 8.3% more locally, so the same purchase can carry 2.9% or 11.2% depending on which side of a line it happens on.

That is why a state-rate ranking inverts. 4 of the ten states with the lowest state rates fall outside the cheapest twenty once local tax is counted, Oklahoma furthest of all — near the top by state rate and 32nd of 34 by combined.

The rate on your receipt is set by your address, not by your state. The sales tax calculator takes both layers.

Lowest by combined rate — closer to what you actually pay

State plus the highest local rate the state permits, for the 34 where that ceiling has been read:

1. Hawaii — up to 4.5% (4% state plus up to 0.5% local).

2. Wisconsin — up to 5.9% (5% state plus up to 0.9% local).

3. South Dakota — up to 6.2% (4.2% state plus up to 2% local).

4. Virginia — up to 7% (4.3% state plus up to 2.7% local).

5. Iowa — up to 7% (6% state plus up to 1% local).

6. Vermont — up to 7% (6% state plus up to 1% local).

7. West Virginia — up to 7% (6% state plus up to 1% local).

8. Florida — up to 7.5% (6% state plus up to 1.5% local).

9. North Carolina — up to 7.5% (4.75% state plus up to 2.75% local).

10. Nebraska — up to 7.5% (5.5% state plus up to 2% local).

11. Pennsylvania — up to 8% (6% state plus up to 2% local).

12. Ohio — up to 8% (5.75% state plus up to 2.25% local).

13. North Dakota — up to 8% (5% state plus up to 3% local).

14. Wyoming — up to 8% (4% state plus up to 4% local).

15. Texas — up to 8.25% (6.25% state plus up to 2% local).

16. Nevada — up to 8.375% (6.85% state plus up to 1.525% local).

17. New Mexico — up to 8.375% (4.875% state plus up to 3.5% local).

18. Utah — up to 8.85% (4.85% state plus up to 4% local).

This is a ceiling rather than a typical bill: most addresses pay less than the maximum, and a few pay it. But it is the honest bound, and it reorders the table completely against the state-rate version above.

And lowest by what a weekly shop costs, which reorders it again

A rate applies to what is taxable, and the states disagree about what that is. On $100 of groceries:

30 states charge nothing at all — California, Texas, Florida, New York, Pennsylvania, Washington, New Jersey, Massachusetts, Michigan, Ohio, Arizona, Indiana, Minnesota, Wisconsin, Maryland, Kentucky, Iowa, Connecticut, Maine, Nebraska, Nevada, Rhode Island, Vermont, West Virginia, District of Columbia, New Mexico, North Dakota, Wyoming, Alaska, Montana. Several of them are nowhere near the top of either ranking above.

Illinois — $1.00 on $100 of food.

Virginia — $1.00 on $100 of food.

Georgia — $2.00 on $100 of food.

North Carolina — $2.00 on $100 of food.

South Carolina — $2.00 on $100 of food.

Colorado — $2.00 on $100 of food.

Louisiana — $2.00 on $100 of food.

Kansas — $2.00 on $100 of food.

The reversal is the point: South Dakota charges $6.20 on that basket — the most of any state here — while sitting 7th cheapest on state rate.

If most of what you buy is food, the grocery treatment decides your bill and the headline rate barely matters. If you are furnishing a house, the reverse. A single "lowest sales tax" ranking is answering for a shopper it has not met.

Who a low sales tax actually helps

Sales tax is the one major tax that follows spending rather than income or property, which decides who it falls on.

It falls hardest on households that spend most of what they earn, because a household spending its whole income pays sales tax on all of it while one saving a third pays on two thirds. That is why grocery exemptions exist: they are the cheapest available way to blunt that, since food is the largest unavoidable line in a low-income budget.

And it falls lightly on high earners, who spend a smaller share and buy more of the things states tend not to tax — services, which most states exempt almost entirely, and housing, which no state charges sales tax on.

So moving for a low sales tax is worth most to a household with a modest income and no room to save, and least to a high earner — the exact opposite of moving for a low income tax, which is worth most at the top. The nine states with no income tax is the other half of that trade.

On $1,000 of ordinary taxable purchases, the spread between the cheapest and dearest combined rate here is $45.00 against $125.00 — real money on a single large purchase, and the reason a car or a kitchen is sometimes bought across a state line.

Clothing splits the country a third way

Groceries are the exemption everyone knows about. Clothing is the one that moves a household budget almost as much and appears in nearly no comparison, because it divides the states into three groups that do not line up with either rate ranking.

4 states exempt clothing outright, with no price limit: Pennsylvania, New Jersey, Minnesota, Vermont. In those, a coat and a pair of school shoes carry no sales tax at any price.

3 set a threshold instead — New York, Massachusetts, Rhode Island — and the three do not agree on what a threshold means. In some the exemption applies to every garment under the limit; in others a single item above it makes the whole purchase taxable. The wording matters more than the number, and it is on each state's own page here.

The remaining 38 tax clothing at the full rate.

Put the two exemptions together and the effect is large: a state that exempts food and clothing charges sales tax mainly on things you buy occasionally, while one that taxes both charges it on nearly everything a household spends. Two states with the same rate can be a long way apart on a year's receipts.

What it costs on a single $1,000 purchase

Percentages are easy to shrug at. A sofa, a laptop or a set of tyres is where a sales tax stops being an abstraction, and at the bottom of the combined ranking $1,000 of taxable goods carries:

1. Hawaii — $45.00 of tax, at up to 4.5%.

2. Wisconsin — $59.00 of tax, at up to 5.9%.

3. South Dakota — $62.00 of tax, at up to 6.2%.

4. Virginia — $70.00 of tax, at up to 7%.

5. Iowa — $70.00 of tax, at up to 7%.

6. Vermont — $70.00 of tax, at up to 7%.

7. West Virginia — $70.00 of tax, at up to 7%.

8. Florida — $75.00 of tax, at up to 7.5%.

9. North Carolina — $75.00 of tax, at up to 7.5%.

10. Nebraska — $75.00 of tax, at up to 7.5%.

11. Pennsylvania — $80.00 of tax, at up to 8%.

12. Ohio — $80.00 of tax, at up to 8%.

Against $125.00 in Arkansas at the other end of the table — a difference of $80.00 on one purchase, and that is the whole reason people drive across a state line for a car or an appliance.

It is also why the purchase, not the year, is the right unit for this decision. Sales tax on a year of ordinary spending is a slow leak; sales tax on a car is a single number large enough to change where you buy it. The states at this end of the table are the ones where that calculation most often comes out in favour of the drive.

Which states are not in the combined ranking, and why

The combined figures on this page cover the 34 states whose own documents publish a local range this site has read. The other 11 — New Jersey, Massachusetts, Michigan, Indiana, Maryland, Kentucky, Mississippi, Connecticut, Maine, Rhode Island, District of Columbia — appear in the state-rate table and not in the combined one, because their local ceiling has not been read in a state document.

That is a deliberate omission rather than an oversight. A combined rate assembled from a secondary compilation would slot those states into the ranking at a position nobody could check, and the ranking is the entire point of the page.

4 states are absent altogether for the same reason at state level: Idaho, New Hampshire, Delaware, Oregon. Idaho’s state sites refuse connections from this environment — the Tax Commission and the Legislature alike, as they did when the vehicle data was gathered. Neither the rate nor the treatment of groceries has been read in an Idaho document, and Idaho is one of the few states that taxes food and rebates it through an income tax credit, so guessing would be doubly wrong.

And the 5 states with no general sales tax at all — Alaska, Delaware, Montana, New Hampshire, Oregon — are not in either ranking because they are not in the race. They have their own page, including the two that still let their towns charge one.

Where these figures came from

Every state rate, local range and exemption here is read off that state's own revenue department, one state at a time, with the date recorded. The full record for each is on its own page under the sales tax calculator.

Local ranges are the state's own published ceiling, not an average of what districts charge. Where a state does not publish one, it is absent from the combined ranking rather than estimated into it.

And the basket figures use the state's own treatment of food, which is the part compiled rankings almost always drop. A state that exempts groceries from the state rate but lets counties tax them is not the same as one that exempts them outright, and both are called "exempt" in most summaries.

Questions

Which state has the lowest sales tax?

It depends what you are buying. Colorado has the lowest state rate at 2.9%, but local tax takes it to 11.2% — among the highest totals in the country. Hawaii has the lowest combined rate at 4.5%. And for groceries, 30 states charge nothing at all. No state is lowest on more than one of those three.

Which states have no sales tax on groceries?

30 charge nothing on a $100 food basket, counting both state and local tax: California, Texas, Florida, New York, Pennsylvania, Washington, New Jersey, Massachusetts, Michigan, Ohio, Arizona, Indiana, Minnesota, Wisconsin, Maryland, Kentucky, Iowa, Connecticut, Maine, Nebraska, Nevada, Rhode Island, Vermont, West Virginia, District of Columbia, New Mexico, North Dakota, Wyoming, Alaska, Montana. That list includes states with some of the highest headline rates in the country, which is why a rate ranking tells you little about a weekly shop.

Is Colorado really the lowest sales tax state?

By state rate, yes — 2.9%, the lowest in the United States. By what you actually pay, no: Colorado permits up to 8.3% of local sales tax on top, so a purchase there can carry 11.2%. It is the clearest example of why the state rate is the wrong number to rank on.

What is the difference between state and combined sales tax?

The state rate is set by the legislature and applies everywhere in the state. The combined rate adds whatever counties, cities and special districts charge on top, and in 34 states they do. Your receipt shows the combined rate, so it is set by your address rather than by your state.

Does a low sales tax mean low taxes overall?

No, and often the reverse. A state that charges little sales tax raises the money from income or property instead — the three big taxes have to add up to a budget. The useful comparison is all three together against your own income, spending and housing, which is what the state comparison runs.