The last time you picked up groceries or bought new clothes, you probably had to pay a sales tax. General sales taxes, which apply to most goods and services, are one of the biggest sources of tax revenue for state and local governments. These sales taxes made up 32.2% of state and local government tax revenue in 2020.
To understand how these and other taxes impact Americans, USAFacts examined tax burdens across the country, looking at the proportion of a person’s income that is paid in taxes. Tax burdens can be measured in two ways: as a percentage of personal income, which is calculated by dividing the per capita tax revenue by the per capita annual income for each state, and as the per-person tax revenue.
(There are also selective sales taxes, which target specific items like alcohol, tobacco, and gasoline. Learn more about how much Americans spend on alcohol and tobacco taxes here.)
Which states have the highest general sales tax burden?
When represented as a percentage of personal income, the general sales tax burden is highest in Hawaii. In 2020, the state collected 4.8% of personal income in general sales tax revenue. That same year, the average New Mexico resident paid 4.6% of their personal income in general sales taxes, making New Mexico the state with the second-highest sales tax burden. Washington follows, with its general sales tax revenue amounting to 4.2% of personal income.
However, states’ per capita tax revenue paints a slightly different picture. Using this metric, Washington (not Hawaii) leads the country with the highest general sales tax burden, collecting about $2,900 per person in sales tax revenue in 2020. That’s closely followed by Hawaii, where the average resident paid approximately $2,800 in sales taxes that year. Trailing Hawaii is New Mexico, whose sales tax revenue in 2020 amounted to about $2,200 per person.
Which states have the lowest general sales tax burden?
Among the 46 states (and Washington, DC) that have sales taxes, Alaska has the lowest general sales tax burden, with its revenue from sales taxes in 2020 amounting to 0.5% of personal income, or $340 per person. That’s followed by Vermont, which collected $720 per person in sales taxes, or 1.2% of personal income, that same year.
Like Vermont, Maryland also collected 1.2% of personal income in sales tax revenue. But in terms of each state’s sales tax revenue per capita, West Virginia has the third-lowest sales tax burden, collecting $810 per person in sales tax revenue in 2020.
Delaware, Montana, New Hampshire, and Oregon do not have general sales taxes.
Check out USAFacts’ full report on Americans’ tax burdens, and get the data directly in your inbox by signing up for our email newsletter.
Certainly! Sales tax is a significant source of revenue for state and local governments in the United States. In 2020, it made up about 32.2% of their tax revenue. The impact of these taxes on individuals varies across states and can be measured in different ways, such as as a percentage of personal income or per-person tax revenue.
When it comes to the states with the highest general sales tax burden as a percentage of personal income, Hawaii takes the lead, collecting 4.8% of personal income in general sales tax revenue. New Mexico follows closely at 4.6%, and Washington comes next at 4.2%.
However, shifting focus to per capita tax revenue, Washington leads in terms of the highest general sales tax burden, collecting around $2,900 per person in sales tax revenue in 2020. Hawaii follows closely, with an average resident paying approximately $2,800 in sales taxes that year. New Mexico ranks third, with sales tax revenue amounting to about $2,200 per person.
On the flip side, among the states with sales taxes, Alaska has the lowest general sales tax burden, with its revenue from sales taxes in 2020 amounting to 0.5% of personal income or $340 per person. Following Alaska, Vermont and Maryland both collected 1.2% of personal income in sales tax revenue, with Vermont collecting $720 per person and Maryland's revenue being in a similar range. In terms of sales tax revenue per capita, West Virginia ranks third lowest, collecting $810 per person in sales tax revenue in 2020.
It's also noteworthy that Delaware, Montana, New Hampshire, and Oregon do not have general sales taxes, offering a different taxation landscape compared to states that do impose such taxes.
For a comprehensive understanding of Americans' tax burdens and detailed data, the USAFacts' full report would be an excellent resource to explore.
