“The pace of rate changes and new impositions, which had been at a record level the past three years, has slowed to some degree in 2010,” says John Minassian, Vice President Tax Content Development for Vertex. “However, the continued increase in the average state sales tax rate suggests states, counties, cities and districts by and large are increasing rate levels when they change them.”
Minassian notes that as states, cities and municipalities battle budget deficits and shortfalls, they are increasingly turning to sales tax rate increases to help make up the difference.
“Based on the rate level for the first nine months of 2010, and our internal forecasts for the last quarter of the year, it appears that the average sales tax rate will be at a new record high by December 31, 2010,” comments Minassian.
In the nine month period from January to September 2010, three states increased their sales tax rates:
- Arizona, increased its rate to 6.6 percent from 5.6 percent
- Kansas increased its rate to 6.3 percent from 5.3 percent
- New Mexico increased its rate to 5.125 percent from 5.0 percent
California remains the state with the highest state sales tax rate at 7.25 percent. Indiana, Mississippi, New Jersey, Rhode Island and Tennessee have the second highest rate at 7.0 percent.
Additional highlights from the Vertex’s nine month Sales Tax Rate Report:
- The average county tax rate for the first nine-months of 2010 is down slightly at 1.5450 percent, compared to 1.5480 percent in the same period of 2009.
- The average city rate increased modestly to 1.6580 percent, compared to 1.6490 percent in the first nine months of 2009.
- The highest city sales tax rate is found in Wrangell, Alaska (7 percent).
- The highest combined sales tax rate of 13.725 percent is found in Tuba City (including the surrounding areas in the To’Nanees’ Dizi Local Government), Coconino County, Arizona. The average combined sales tax rate (including special purpose tax districts) is 9.642 percent.
