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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
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