California has the highest state sales tax rate at 7.25 percent
California's base state sales tax is 7.25 percent, the highest in the country. However, the total tax you pay at checkout is usually higher because most California counties and cities add their own local sales tax on top of the state rate. In some cities, the combined rate reaches 8.625 percent or higher.
Sales tax rates change frequently as cities and counties adjust their local portions. The 7.25 percent figure is the state portion only — what you actually pay depends on where in California you make the purchase.
Key Takeaways
- California's state sales tax of 7.25 percent is the highest in the nation, but local taxes often push the total higher.
- Tennessee, Louisiana, and Arkansas also have combined rates above 9 percent when you include local taxes.
- Five states — Alaska, Delaware, Montana, New Hampshire, and Oregon — have no state sales tax at all.
- The total tax you pay depends on both state and local rates, which means the same item costs different amounts in different cities within the same state.
- Sales tax applies to most goods but not to groceries, prescription medications, or medical equipment in most states.
How state and local sales taxes combine
When you see a sales tax rate, it usually combines a state portion and a local portion. California's 7.25 percent is the state rate, but your city or county may add 0.5 percent to 2.25 percent more. A purchase in Los Angeles, for example, is taxed at 9.5 percent total — the 7.25 percent state rate plus 2.25 percent local.
This matters because two people buying the same item in California pay different amounts depending on their location. Someone in San Francisco pays 8.625 percent total, while someone in a different county pays less. When comparing sales tax across states, you need to look at the combined rate, not just the state portion.
Other states with high combined sales tax rates
Tennessee ranks second with a combined state and local rate that reaches 9.55 percent in some cities. Louisiana's combined rate goes as high as 9.52 percent, and Arkansas reaches 9.51 percent. These states have high local portions in addition to their state rates.
Washington state has a 6.5 percent state rate, but combined with local taxes, some areas reach 10.25 percent — among the highest in the nation. The variation within each state is significant, so the city or county where you shop matters as much as the state itself.
States with no sales tax
Five states have no state sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon. Alaska allows cities and boroughs to charge local sales tax, so some areas still have a tax despite no state rate. The other four states have no sales tax at any level.
New Hampshire taxes meals and lodging but not retail goods. Oregon taxes services but not most physical items. These exceptions mean that even in no-sales-tax states, you may pay tax on certain purchases.
What items are taxed and what are exempt
Most states exempt groceries, prescription medications, and medical devices from sales tax. Some states also exempt clothing, though the rules vary — New York taxes clothing under $110 per item but not above that threshold. Prepared food and restaurant meals are almost always taxed, even in states that don't tax groceries.
Digital goods like e-books, streaming services, and software are increasingly taxed, though the rules are still changing. If you're buying something and unsure whether it's taxed, your state's revenue department website lists the specific rules for your state.
How sales tax rates change
Sales tax rates are not fixed. Cities and counties adjust their local portions regularly, sometimes multiple times per year. A rate that is accurate today may change in a few months. If you need the exact rate for a specific location, check your city or county tax assessor's website or your state's revenue department.
When you buy something online from an out-of-state seller, the rules depend on whether that seller has a physical presence in your state. Most large retailers now collect sales tax for all states, but smaller sellers may not. You may owe use tax (a tax on purchases from out-of-state sellers) when you file your state income tax return, though most people do not report this.
Why sales tax rates vary so much within states
States allow cities and counties to set their own local sales tax rates to fund schools, roads, and local services. This creates huge variation — two towns 20 miles apart in the same state can have different total tax rates. California cities range from 7.25 percent to over 10 percent depending on local decisions.
This system means that comparing sales tax across states requires looking at specific cities, not just state rates. A purchase in a low-tax California city might be cheaper than the same purchase in a high-tax Tennessee city, even though Tennessee's state rate is lower.
Frequently Asked Questions
Do I pay sales tax on groceries?
Most states exempt groceries from sales tax, but the definition of "groceries" varies. Fresh produce, meat, and dairy are usually exempt. Prepared foods, candy, and drinks are often taxed. Check your state's revenue department website for the exact list, since rules differ by state.
What is the difference between sales tax and use tax?
Sales tax is collected by the seller at the point of purchase. Use tax is a tax you owe on items you buy from out-of-state sellers who did not collect sales tax. You report use tax on your state income tax return, though enforcement is minimal for individuals.
Can I get a refund of sales tax I already paid?
Generally no, unless you return the item. Some states offer refunds for sales tax on specific items like energy-efficient appliances, but this is rare. If you overpaid due to an error, contact the store or your state's revenue department.
Why does the same item cost different amounts in different cities?
Because local sales tax rates vary by city and county. A shirt that costs $20 before tax costs $21.45 in one city and $21.80 in another city 10 miles away, depending on their local tax rates. This is why the total price at checkout depends on where you shop.
Do online purchases have sales tax?
Most large online retailers now collect sales tax based on your shipping address. Smaller sellers may not. If you buy from a seller who did not collect sales tax, you may owe use tax when you file your state income tax return, though this is rarely enforced for individuals.