Sales tax rate stays steady
After 18 years of steady increases, the average sales tax rate combining state, county and city levels across the United States has leveled off. According to Berwyn, Pa.-based Vertex, a provider of state and local tax software and research, the average combined sales tax remained below the 1998 all-time high of 8.25 percent for the second straight year. The rate increased slightly for 2000 — to 8.235 percent — but remains below the 1998 average.
In 2000, the number of sales tax rate changes across the United States dropped to a 10-year low of 530. Vertex attributes the leveling off to a strong economy and healthy state and local budgets.
Since 1990, the average number of annual sales tax rate changes at the state, county and city levels is 635. In 2000, sales tax rate changes at the city level dropped to a 10-year low of 368, while the rate change at the county level reached 133, the lowest number since 1996.
In 2000, 186 new sales taxes were imposed: 37 by counties, 128 by cities and 21 by special districts. That figure compares with 51 new county, 184 new city and six new special district sales taxes in 1999. There were 289 rate increases in 2000: 78 at the county level and 211 by cities. Eighteen counties, 29 cities and seven special districts lowered existing rates in 2000.
The study found that, in 2000, about 7,500 state, county and city jurisdictions charged a sales tax. The national average sales tax rate for that year was:
- 1.556 percent for cities;
- 1.551 percent for counties; and
- 5.128 percent for states.
Wrangell, Alaska, imposes the highest city sales tax at 7 percent. Arab, in Cullman County, Ala., continues to have the highest combined sales tax (11 percent) in the country. Six parishes in Louisiana and two counties in Alaska impose the highest county sales taxes in the nation (5 percent).
For more information, see www.vertexinc.com.