A sales tax is the tax imposed by the government on the consumers for selling goods and services. There are no sales and use taxes obligation for federal. Also, many states (all except Arizona) exempt their state governments by state statute. Not all states governments require an exemption certificate. Usually the sales tax is applied at sale point and it is gathered by the retailer. This collected funds are passed on to the government. If a business has a nexus in a given jurisdiction under certain law, then that is to pay the sales taxes.
Here it is quick review of different states with their sales tax rates, ranks and average local sales tax rate.
| 2021 State & Local Sales Tax Rates | ||||||
| State | State Sales Tax Rate | Rank | Avg. Local Sales Tax Rate (a) | Combined Sales Tax Rate | Rank | Max Local Sales Tax Rate |
| Alabama | 4.00% | 40 | 5.22% | 9.22% | 5 | 7.50% |
| Alaska | 0.00% | 46 | 1.76% | 1.76% | 46 | 7.50% |
| Arizona | 5.60% | 28 | 2.80% | 8.40% | 11 | 5.60% |
| Arkansas | 6.50% | 9 | 3.01% | 9.51% | 3 | 5.125% |
| California (b) | 7.25% | 1 | 1.43% | 8.68% | 9 | 2.50% |
| Colorado | 2.90% | 45 | 4.82% | 7.72% | 16 | 8.30% |
| Connecticut | 6.35% | 12 | 0.00% | 6.35% | 33 | 0.00% |
| Delaware | 0.00% | 46 | 0.00% | 0.00% | 47 | 0.00% |
| D.C. | 6.00% | (17) | 0.00% | 6.00% | (38) | 0.00% |
| Florida | 6.00% | 17 | 1.08% | 7.08% | 22 | 2.50% |
| Georgia | 4.00% | 40 | 3.32% | 7.32% | 19 | 4.90% |
| Hawaii (c) | 4.00% | 40 | 0.44% | 4.44% | 45 | 0.50% |
| Idaho | 6.00% | 17 | 0.03% | 6.03% | 37 | 3.00% |
| Illinois | 6.25% | 13 | 2.57% | 8.82% | 7 | 9.75% |
| Indiana | 7.00% | 2 | 0.00% | 7.00% | 24 | 0.00% |
| Iowa | 6.00% | 17 | 0.94% | 6.94% | 28 | 1.00% |
| Kansas | 6.50% | 9 | 2.19% | 8.69% | 8 | 4.00% |
| Kentucky | 6.00% | 17 | 0.00% | 6.00% | 38 | 0.00% |
| Louisiana | 4.45% | 38 | 5.07% | 9.52% | 2 | 7.00% |
| Maine | 5.50% | 29 | 0.00% | 5.50% | 42 | 0.00% |
| Maryland | 6.00% | 17 | 0.00% | 6.00% | 38 | 0.00% |
| Massachusetts | 6.25% | 13 | 0.00% | 6.25% | 35 | 0.00% |
| Michigan | 6.00% | 17 | 0.00% | 6.00% | 38 | 0.00% |
| Minnesota | 6.875% | 6 | 0.59% | 7.46% | 17 | 2.00% |
| Mississippi | 7.00% | 2 | 0.07% | 7.07% | 23 | 1.00% |
| Missouri | 4.225% | 39 | 4.03% | 8.25% | 12 | 5.763% |
| Montana (d) | 0.00% | 46 | 0.00% | 0.00% | 47 | 0.00% |
| Nebraska | 5.50% | 29 | 1.44% | 6.94% | 29 | 2.50% |
| Nevada | 6.85% | 7 | 1.38% | 8.23% | 13 | 1.53% |
| New Hampshire | 0.00% | 46 | 0.00% | 0.00% | 47 | 0.00% |
| New Jersey (e) | 6.625% | 8 | -0.03% | 6.60% | 30 | 3.313% |
| New Mexico (c) | 5.125% | 32 | 2.71% | 7.83% | 15 | 4.313% |
| New York | 4.00% | 40 | 4.52% | 8.52% | 10 | 4.875% |
| North Carolina | 4.75% | 35 | 2.23% | 6.98% | 26 | 2.75% |
| North Dakota | 5.00% | 33 | 1.96% | 6.96% | 27 | 3.50% |
| Ohio | 5.75% | 27 | 1.48% | 7.23% | 20 | 2.25% |
| Oklahoma | 4.50% | 36 | 4.45% | 8.95% | 6 | 7.00% |
| Oregon | 0.00% | 46 | 0.00% | 0.00% | 47 | 0.00% |
| Pennsylvania | 6.00% | 17 | 0.34% | 6.34% | 34 | 2.00% |
| Rhode Island | 7.00% | 2 | 0.00% | 7.00% | 24 | 0.00% |
| South Carolina | 6.00% | 17 | 1.46% | 7.46% | 18 | 3.00% |
| South Dakota (c) | 4.50% | 36 | 1.90% | 6.40% | 32 | 4.50% |
| Tennessee | 7.00% | 2 | 2.55% | 9.55% | 1 | 2.75% |
| Texas | 6.25% | 13 | 1.94% | 8.19% | 14 | 2.00% |
| Utah (b) | 6.10% | 16 | 1.09% | 7.19% | 21 | 2.95% |
| Vermont | 6.00% | 17 | 0.24% | 6.24% | 36 | 1.00% |
| Virginia (b) | 5.30% | 31 | 0.43% | 5.73% | 41 | 0.70% |
| Washington | 6.50% | 9 | 2.73% | 9.23% | 4 | 4.00% |
| West Virginia | 6.00% | 17 | 0.50% | 6.50% | 31 | 1.00% |
| Wisconsin | 5.00% | 33 | 0.43% | 5.43% | 43 | 1.75% |
| Wyoming | 4.00% | 40 | 1.33% | 5.33% | 44 | 2.00% |
Use Tax
Use tax is applicable for the goods or services that will be used, stored or consumed in the state where the taxpayer is living and on which no sales tax was collected. It is like sales tax; However, the use tax targets the purchases that are made outside of the given tax jurisdiction. The use taxes are imposed on the items or services that are bought in one state and transported, used or sold in another state. The application of use tax is on the purchased items which are exempted from tax but later used in taxable way.
Use taxes have two types, Consumer and Vendor use tax. The consumer tax is the tax paid to the state directly by the person who purchase the items or services while the retailer or vendor does not pay the appropriate the sales tax at the time of sale. If the vendor or retailer is registered in a state where he delivers, then the vendor use tax must be applied on the sale he made in that state.