Ultimate magazine theme for WordPress.

5 States With No Sales Tax – Forbes Advisor

0

[ad_1]

Editorial Note: We earn a commission from partner links on Forbes Advisor. Commissions do not affect our editors’ opinions or evaluations.

For the 2021 fiscal year, sales taxes accounted for about 30% of states’ revenue, according to the Tax Foundation. Sales tax revenue is only second to individual state income taxes, which account for 40% of revenue.

While most states require you to pay sales tax on goods and services, there are five states that don’t: Delaware, Alaska, Montana, New Hampshire and Oregon.

However, just because a state doesn’t impose a state sales tax, doesn’t mean its cities, parishes, municipalities or localities won’t either. We’ll explain these nuisances for each of the five states that don’t charge state sales tax below.

What Are Sales Taxes?

Typically, a state may levy a sales tax on the sale of goods and services. However, there are some instances where sales taxes are exempt. For example, in Louisiana, state sales taxes are typically assessed at 4.65% on goods and services; however, some items such as food, prescriptions, and utilities aren’t taxable.

There are several states that offer sales tax holidays throughout the year. Typically, these states allow consumers to forego taxes on items such as disaster preparedness goods, clothing, school supplies and other purchases made during this time.

5 States With No Sales Tax

Below are states without sales taxes and information about other taxes each state charges.

Alaska

Alaska doesn’t assess statewide sales taxes nor an individual income state tax. However, many of its municipalities do impose a sales tax—up to 7% for 2022. Other local taxes are levied on items such as fish, hotels, liquor and tobacco.

Alaska also imposes a personal property tax on the local level and a corporate tax up to 9.40%.

Delaware

While Delaware doesn’t impose a state or local sales tax, it does impose a moderate state individual income tax of up to 6.6% for 2022. There is also a jurisdiction that collects local income individual taxes within the state. The state is also free from personal property and inventory taxes.

However, Delaware imposes an 8.7% tax rate on its corporate taxpayers.

Related:  Everything You Need To Know About Delaware Taxes

Montana

Neither the state nor the local governments of Montana levy a sales tax. For 2022, it imposes a moderate individual income tax of up to 6.75%. The state also imposes a real estate tax and a personal property tax on any property owned by January 1 for the taxable year.

Montana has a 6.75% corporate income tax rate.

New Hampshire

Neither the state nor the local governments impose sales taxes in New Hampshire. There is an individual income tax in the state, but it is one of the few states that charges a flat tax. The individual income tax rate is 5%; it only taxes dividends and interest income.

New Hampshire has a 7.60% corporate income tax rate.

Oregon

In Oregon, there is no sales tax imposed at the state or local level, but an income tax is imposed on individuals. For 2022, the individual income tax rate is up to 9.90%. In addition, local income taxes are collected by some jurisdictions within Oregon.

Oregon imposes a corporate tax rate of 6.60% to 7.60%.

Related:  Everything You Need To Know About Oregon Taxes

Compare the best tax software of 2022

Frequently Asked Questions (FAQs)

What is the sales tax rate in my state?

Your state’s sales tax rate can be found by visiting its Department of Revenue website. In addition, the Tax Foundation lists each state’s current sales tax rate.

Which state has the highest combined state and local sales tax rate?

As of June 2022, Louisiana has the highest combined sales tax rate of 9.55%, according to the Tax Foundation. It’s followed by Tennessee with a combined sales tax rate of 9.547%. Alaska has the lowest combined sales tax rate of 1.76%.

Which states don’t impose sales taxes on both local and state levels?

Among the five states without a state sales tax, Alaska is the only one that allows municipalities to assess taxes locally. Delaware, Montana, New Hampshire and Oregon don’t impose taxes on local or state levels.


[ad_2]

Source link

Leave A Reply

Your email address will not be published.