Most US states have sales tax, usually between 5-7%. Some cities also impose additional sales taxes to fund services. Some states exempt certain items. Visitors may receive tax exemption, but not for luxury items. Some states don’t have sales tax, but revenue can fund important programs. A federal sales tax to replace income tax has been proposed but is unlikely.
Most US states charge sales tax on many goods and services, but some have laws that exempt certain items. For example, California doesn’t tax most food items, but snack foods are taxed. The average sales tax in US states is usually between five and seven percent.
In addition to a state-assessed sales tax, many cities also assess sales taxes. Some cities impose a one to two percent tax on top of state taxes. City tax revenues can be used to fund a variety of services including education, public work projects, or city financial obligations. Council fees, however, are usually directed towards one or two defined programs.
Visitors to a state can sometimes receive a sales tax exempt status of that particular state. This exemption, however, typically does not apply to luxury items such as hotel or restaurant services. Some goods or services purchased in one state without being taxed may be taxed later by the originating state. Cars, for example, purchased in a state with no sales tax may be taxed by the buyer’s home state.
Some states do not have a sales tax, including Alaska, Delaware, Montana, New Hampshire and Oregon. Tax laws, however, can change quickly and dramatically.
While it may seem ideal to live in a state with no sales taxes, the revenue generated by them can be beneficial to residents by funding important programs. However, opponents of this tax often argue that states without it appear to function as well as states that have it.
Some people who want to change the tax law have proposed a federal sales tax, which would replace the federal income tax. Individuals who paid more than their fair share during the year may be eligible for rebates at the end of each year. This is an unlikely scenario, especially with so many states already imposing state sales taxes. Raising this tax to perhaps double its current average would likely meet with great resistance.
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