The Tax Foundation last week shared its latest update on sales tax rates across major cities, defined as the 124 cities with populations of 200,000 or more, among the 11,253 sales tax jurisdictions in the United States. “It's important to note that sales taxes should be considered in context,” wrote Jared Walczak and Jeremiah Nguyen. “But while many factors influence business location and investment decisions, sales taxes are something within lawmakers’ control that can have immediate impacts — especially as a growing number of major cities (now 23) have combined rates north of 9%.” Among their findings:
Tacoma, Washington, after a 0.1% voter-approved increased went into effect July 1, now imposes the highest combined state and local sales tax rate, at 10.3 percent. “Five other cities — Fremont, Los Angeles, and Oakland, California; Chicago, Illinois; and Seattle, Washington — are tied for the second highest rate of 10.25%,” the Tax Foundation reports. “Birmingham, Alabama, at 10%, rounds out the list of major cities with a combined rate of 10% or higher.”
At the other end of the scale, Portland, Oregon, and Anchorage, Alaska, have neither a state nor a local sales tax. “Honolulu, Hawaii has the third lowest sales tax among major cities with a rate of 4.5%,” the Foundation reports. “However, Hawaii’s overly broad sales tax makes this not strictly comparable with other states.” Madison and Milwaukee, Wisconsin, both have 5.5% combined state and local sales tax rates.
“Richmond, Virginia, had a 5.3% rate until October 1, 2020, when the Central Virginia region became the state’s third region subject to the 0.7% regional state tax,” the report states, causing a cluster of Virginia cities to become part of the dozen in the country with a still relatively low 6% rate, whose number also includes Washington, D.C.; Lexington and Louisville, Kentucky; Detroit and Grand Rapids, Michigan; and Boise, Idaho. “Fourteen cities with populations of 200,000 or more do not impose local sales taxes, though some have state sales taxes as high as 7% (Fort Wayne and Indianapolis, Indiana),” said the Tax Foundation. “The median combined rate for major cities is 8.04%.”
While 15 major cities saw a combined rate increase of 0.25% or more over the past two years, Tampa, Florida decreased its sales tax rate by 1% to 7.5% earlier this year, when county commissioners voted to remove a transportation tax that was approved in 2018. — Adam Bruns