Which State Has the Lowest Sales Tax?

Limbo, Limbo, How Low Can You Go?

Nobody likes sales tax, but we are all inseparable from it. One way or another, we’re going to encounter sales taxes during our business operation. It’s just a matter of how we handle it!

Luckily, the entire United States isn’t grippled under sales tax and there are actually states which have extremely low sales tax.

But which one has the absolute lowest? Let’s find out!

We’ll do a sweep of states with low sales taxes, until we get to the one which has the lowest of them all.

Our list starts with Maine. The Pine Tree State has an average combined state and local tax rate of 5.5%. The state does not collect sales tax, and much like other states, groceries and drugs (prescriptions) are tax exempt. However, anything that’s rental, as well as a bunch of services are taxed in this state.

Next on the list is the state of Wisconsin, which has an average combined tax rate of 5.46 percent. The Badger state has been in the news lately for distributing over 1.4 billion dollars of its shared revenue to aid the local governments, schools, universities, and other areas which have been affected by COVID-19. Good on them!

Moving on, we come up to another state which also starts with the letter W, and that is Wyoming! Not only does Wyoming not have state income tax, it also has a 5.34% sales tax, which is one of the lowest ones in the U.S., even though you might see it spike up an extra 2% in some counties. All in all, it’s considered to be a pretty tax-friendly state.

Pack your favorite Aloha shirt, because we’re going straight to the Pacific Ocean to visit Hawaii, the relaxing state with an equally relaxing 4.44 percent combined state and local tax rates. It might jump to 4.5% depending on which area you are, but it’s still pretty low! That being said, the state is well-known for its complex and sometimes confusing local tax laws.

Hello, How Low?

And the winner is:

ALASKA!

That’s right. Out of all the states in America, Alaska has the lowest sales tax rate. Actually, at this point, the Last Frontier state currently has no, you heard that right, no sales and use tax. What this means is that you probably won’t need a sales tax exemption certificate form (which you definitely need in other states!). That being said, some local jurisdictions might still impose sales taxes on a local level.

That concludes our list of states that have the lowest sales taxes in America. Which one you choose to form your business in is completely your decision. Just remember that we at Prestige Auditors are here, willing and able to set up your business foundation strong, in any state you choose! If you’re going to Canada, make sure to check out this Tax calculator in Canada.

Which State Has the Lowest Sales Tax?

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