Sales Tax by State 2026

How Sales Tax Works in the United States

Sales tax in the US is a consumption tax imposed at the point of sale on tangible personal property and, in many states, on selected services. Unlike income tax, it is administered almost entirely at the state and local level — there is no federal sales tax. The result is a patchwork of 45 state-level tax regimes (plus DC) layered on top of more than 13,000 distinct local taxing jurisdictions, each with its own rate, base, and exemptions. Understanding which rules apply to a transaction is the central challenge for both consumers and businesses.

Two technical concepts drive most rate complexity: nexus and sourcing. Nexus is the legal connection between a seller and a state that triggers a duty to collect tax. Before 2018, physical presence (a store, employee, warehouse) was required. After the Supreme Court ruling in South Dakota v. Wayfair, every state can require remote sellers to collect once they cross an economic threshold — typically $100,000 in annual sales or 200 separate transactions, although thresholds vary by state. Sourcing rules then determine which jurisdiction\'s rate applies. Most states are destination-based: the buyer\'s ship-to address governs. About 11 states use origin-based sourcing for intrastate sales (the seller\'s location). For interstate remote sales, destination sourcing is universal under the Streamlined Sales and Use Tax Agreement framework.

Layered on top are marketplace facilitator laws, now in effect in all 45 sales-tax states. These laws shift collection responsibility from individual third-party sellers to the marketplace itself — Amazon, eBay, Etsy, Walmart Marketplace, and similar platforms collect and remit on behalf of their sellers. This dramatically simplified compliance for small online sellers and is why most online purchases now have sales tax added at checkout automatically.

States With No Statewide Sales Tax

Five states have no general statewide sales tax — sometimes nicknamed the "NOMAD" states (New Hampshire, Oregon, Montana, Alaska, Delaware). Of these:

• Delaware, Montana, New Hampshire, Oregon: Truly zero sales tax at every level of government. Delaware funds itself partly with a gross receipts tax on businesses; Oregon uses the Corporate Activity Tax. New Hampshire imposes a 9% meals and rooms tax that functions like a narrow sales tax.
• Alaska: No state sales tax, but more than 100 municipalities — including Juneau, Sitka, and Kodiak — impose local sales taxes that can run as high as 7.5%. The statewide population-weighted average local rate is 1.82%.

For shoppers, this means crossing a state line for a major purchase (a car, an appliance) can save hundreds. But residents of no-tax states still owe use tax in their home state if they bring a taxable item back — see the section below.

Highest Combined Sales Tax Rates

Per the Tax Foundation 2026 Mid-Year Sales Tax Report, the states with the heaviest combined state + average local sales tax are:

1. Tennessee — 9.55% (state 7%, average local 2.55%). No state income tax; sales tax does much of the revenue lifting.
2. Louisiana — 9.55% (state 5%, average local 4.55%). State rate raised from 4.45% to 5% effective January 2025.
3. Arkansas — 9.45% (state 6.5%, average local 2.95%).
4. Washington — 9.43% (state 6.5%, average local 2.93%). Compensates for the absence of a state income tax.
5. Alabama — 9.25% (state 4%, average local 5.25%) — the highest local component in the country.
6. Oklahoma — 9.00%, Illinois — 8.86%, California — 8.85% round out the top 8.

Looking only at the statutory state rate, California is highest at 7.25%, followed by Indiana, Mississippi, Rhode Island, and Tennessee at 7.0%. The state rate matters for businesses calculating compliance burdens, but for everyday consumers the combined rate is what hits the receipt.

Grocery, Prescription, and Clothing Exemptions

States carve out exemptions for essentials, but the patchwork is uneven and sometimes politically contested.

Groceries: About 32 states fully exempt unprepared food at the state level. Some apply reduced rates: Illinois 1% (phasing out 2026), Tennessee 4%, Utah 1.75%, Virginia 1% (state portion), Missouri 1.225%, Alabama 3%. A few still tax groceries at the full rate: Mississippi (7%), Hawaii (4% GET), South Dakota (4.2%), and Idaho (6%, partly offset by an income-tax credit). Kansas finished its phase-out in January 2025; Oklahoma\'s state grocery tax was repealed in August 2024.

Prescription drugs: Nearly universal exemption. Only Illinois (1% reduced rate) deviates meaningfully — every other taxing state exempts prescription medication entirely. Over-the-counter medication is more often taxed.

Clothing: Six states exempt clothing entirely or with generous thresholds — Pennsylvania, New Jersey, Minnesota, Vermont, Massachusetts (under $175/item), New York (under $110/item, state portion), Rhode Island (under $250/item), and Connecticut (under $50/item). Several others run annual sales tax holidays in early August for back-to-school clothing purchases (Texas, Florida, Iowa, South Carolina, Tennessee, and a dozen more).

How to Compute Your Sales Tax Owed

The calculation itself is simple. Multiply the pre-tax price by the combined rate that applies to the ship-to or pickup address:

Example: a $1,200 laptop shipped to Memphis, Tennessee (combined 9.75%, slightly above the state average) costs $1,200 x 0.0975 = $117 in tax, for a total of $1,317. The same laptop shipped to Portland, Oregon costs $1,200 — zero tax. Across the year, a household spending $40,000 on taxable goods in a high-tax state pays roughly $3,800 in sales tax, while the same household in a no-tax state pays nothing on those purchases.

For businesses calculating tax on bulk transactions or with mixed taxable/exempt items, the calculation gets more complex — exempt items (groceries, prescription drugs) come out of the base, and bundled-transaction rules govern how to handle items sold together. Most accounting software and POS systems handle this automatically given a current rate table, but the rates themselves change frequently. Use our effective tax rate tools to see how sales tax stacks alongside income and FICA in your overall burden.

Use Tax — The Often-Ignored Other Side

Use tax is the complement of sales tax. It is owed whenever you acquire a taxable item without paying the sales tax that would have applied if you bought it from an in-state retailer. Common scenarios:

• Purchasing from an out-of-state seller too small to have collection nexus in your state.
• Driving to a no-tax state to buy a big-ticket item (appliance, jewelry, electronics) and bringing it home.
• Importing goods from overseas where US sales tax was not collected at customs.
• A business buying an item under a resale certificate but later using it internally.

The use-tax rate is identical to your home state\'s sales tax rate (state + local at your address). Most states have a use-tax line on the annual income tax return, and many offer a "safe harbor" lookup table tied to AGI for taxpayers who do not track individual purchases. Compliance among individuals is famously low, but states audit businesses aggressively, and 1099-K reporting on third-party platforms is increasingly used to flag individuals with unreported use-tax obligations.

Understanding sales and use tax is the missing piece in many household tax pictures. For the income side, see our state income tax burden ranking and the broader complete guide to US taxes. For the full library of state and federal calculators, visit all calculators.

Sources and Methodology

Combined and local average rates are population-weighted aggregates published by the Tax Foundation in its 2026 Mid-Year State and Local Sales Tax Rates report. Statutory state rates are confirmed against each state\'s Department of Revenue published rate schedule. Exemption status reflects state law in effect as of April 2026; locality-level deviations from state exemptions (especially for groceries) are noted in the state-detail rows above. Rates change frequently; always confirm a specific transaction\'s rate via the state DOR rate lookup before remitting.