Lowest Tax Highest Tax No Sales Tax All but five U.S. states have a statewide sales tax which is collected on most consumer purchases made within state borders. Although Alaska doesn’t have a statewide sales tax, the state does allow localities to impose a local sales tax on residents. Four states tie for the second-highest statewide rate, at 7 percent: Indiana, Mississippi, Rhode Island, and Tennessee. Property taxes are comparable to most other states, as are the combined state and local sales taxes, which range between 7 and 8%. The lowest non-zero state-level sales tax is in Colorado, which has a rate of 2.9 percent. For example, while Illinois does not tax retirement income, it has one of the highest sales and property taxes in the U.S. Other low-tax states may have fewer programs that you might find helpful, such as senior centers and public transportation. Of these, Alaska also has no income tax, thanks to the severance tax it levies on oil and natural gas production. The state sales tax rate is 6.5%, which is well above average. California has the highest state-level sales tax rate, at 7.25 percent. 37 states, including sales-tax-free Alaska and Montana, allow local municipalities to impose a sales tax, which can add up. These rates are weighted by population to compute an average local tax rate. While most states do charge a statewide sales tax, not all of these tax rates are particularly high. Overall, the average combined state and local sales tax is 7.12%. City, county and municipal rates vary. Taxes aren't everything. The sun shines a little brighter in the Sunshine State thanks to no income tax. Thirteen states impose taxes of 5% of the purchase price or less, including five states where the tax is just 4%. Among states that do have a sales tax, some are less significant than others. As of 2020, they include: 2021 State Sales Tax Rates. Plus, at 9.23%, the Tax Foundation's average combined state and local sales tax rate for Washington is … Like Florida, Michigan exempts out-of-state car buyers from sales tax when their home state has no sales tax on cars. Alaska only levies a paltry 1.76% sales tax rate. Some states with low or no income taxes have higher property or sales taxes. Comparing tax rates for other tobacco products is difficult as some states levy a per unit rate and others take a percentage of wholesale or manufacturer prices. These states charge sales taxes of 1.76, 4.35, 5.43, 5.47, and 5.5%, respectively. States With Low Sales Taxes . The five states that charge the lowest average sales tax are Alaska, Hawaii, Wisconsin, Wyoming, and Maine. Average state and local taxes stay in the low range as a result. Vermont has one of the highest rates for cigars at 92% the wholesale price or up to $4.00 a cigar depending on the cigar’s category. 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