In a recently published analysis, about the sales taxes in the States, a discussion on the role of sales tax in the American economy sparkled. There are five states with zero sales tax rates in the US and, in this article, let’s see which is the top state with zero sales tax.
Most of the income of the United States Federal Government comes from income taxes, both on individuals and corporations. According to data Treasury Administration tax, the United States government, has collected a total revenue of $2.96 trillion in fiscal year 2024 so far this year.
That’s the revenue combined with the personal income tax and legal accounts for approximately 62% of total revenue so far, sales tax plays a very important role in states where income tax and corporate income tax are low, most States that have no or low income taxes. They have sales taxes higher than the state average sales tax rate of 5.10%.
For example, the states of Tennessee, Florida, Washington, and Nevada are some of the states with the lowest income taxes and highest state sales tax rates. Tennessee, Washington, and Nevada each have a state sales tax rate of 7%, while Florida has a state sales tax of 6%, which are higher than the average state sales tax rate.
South Dakota was the last state to make a sales tax cut in 2023, a cut that is expected to expire after 2026. New Mexico lowered its state sales tax from 5.12% to 5%. In the month of July 2022, New Mexico’s state sales tax is currently nearly 4.88%, according to data from the Tax Foundation, the seven-county Twin Cities metropolitan area in Minnesota spent an increase of 1% point in the sales tax in the month of October 2023.
Looking at Tax Burdens in the US
In Milwaukee, Wisconsin, the state implemented a new 2% sales tax on January 1, 2024, while Milwaukee County increased its sales tax from 0.5% to 0. .9%.
The first sales tax in the United States was applied in Mississippi in the 1930s and permanent as a last resort in the process of the Great Depression. There are five states that have no sales tax and Colorado has a minimum sales tax rate of 2.90%.
California has the highest state sales tax rate of 7.25%, starting in 2024, the state government imposes local sales taxes on different retail products and services.
Ranking of States and Its Tax Burden
| State | Total Tax Burden |
|---|---|
| Alaska | 4.9% |
| New Hampshire | 5.6% |
| Wyoming | 5.7% |
| Tennessee | 6.1% |
| Florida | 6.1% |
| South Dakota | 6.4% |
| Delaware | 6.4% |
| North Dakota | 6.8% |
| Oklahoma | 7.0% |
| Nevada | 7.4% |
| Alabama | 7.5% |
| Montana | 7.5% |
| South Carolina | 7.5% |
| Texas | 7.6% |
| Georgia | 7.7% |
| Arizona | 7.8% |
| Missouri | 7.8% |
| North Carolina | 7.9% |
| Idaho | 7.9% |
| Washington | 8.0% |
