Tennessee has the highest combined state and local sales tax rate of any state, the Tax Foundation reported today.
The 7 percent state sales tax rate in Tennessee, combined with an average 2.45 percent local sales tax rate across the state, boosts the Volunteer State's sales tax rate to the highest among the 50 states with an average tax levy on purchases of 9.45 percent.
The other states with the highest combined state and local sales tax rates, in order, are Arizona (9.12 percent), Louisiana (8.85 percent), Washington (8.80 percent), and Oklahoma (8.66 percent).
According to the Tax Foundation, five states do not have a statewide sales tax: Alaska, Delaware, Montana, New Hampshire and Oregon.
"Retail sales taxes are a transparent way to collect tax revenue," said Scott Drenkard, an economist for the Tax Foundation. "While graduated income tax rates and brackets are complex and confusing to many taxpayers, the sales tax is easier to understand. People can reach into their pocket and see the rate printed on a receipt."
But Drenkard said sales tax rates vary widely and even differ by locality within a state.
Tennessee does not tax personal earned income and derives more than 57 percent of its state revenues from its sales tax.