Sales tax changes accelerated this year
Hundreds of localities and one state made 335 changes in their standard sales tax rate in the first half of 2019, a 5 percent increase from the same period last year, according to a new report.
The report, from the tax technology provider Vertex, pointed out there have been 6,230 new and changed standard sales and use tax rates over the past 10 years. However, there was only change in a state sales tax rate this year. Starting April 1, Utah increased its rate from 4.700 percent to 4.850 percent.
Nevertheless, more states are re-examining their tax rates and tax laws in the wake of the 2017 tax overhaul and the Supreme Court’s decision in the Wayfair case last year. “The notable increase in standard sales tax rates was primarily due to the addition of new district taxes in California, as well as the creation of seven new taxing counties in various other states,” said Bernadette Pinamont, Vertex vice president of tax research, in a statement. “This surge in taxing jurisdictions is not surprising as more districts and counties continue to look for ways to increase tax revenue. The rise in rate changes, coupled with the states’ enactment of sales tax nexus thresholds for remote sellers and marketplace facilitators, continues to add to the complexity of the U.S. indirect tax landscape.”
The combined national sales tax rates average increased slightly to 10.0941 percent, from 10.0363 percent, for the same period in 2018, according to the report. Vertex also found that Puerto Rico maintains the highest state sales tax rate at 10.500 percent. Indiana, Mississippi, Rhode Island and Tennessee had the second highest state sales tax rates of 7.00 percent.
In terms of local taxes, Kodiak, Nome and Wrangell, all in Alaska, and Winter Park, Colorado, have the highest city sales tax rate at 7.000 percent. Hoonah, Klawock and Selawik, all in Alaska, have the second highest rate of 6.500 percent. All areas located within the Coconino County region of the Navajo Indian Reservation in Arizona have the highest combined sales tax rate of 12.900 percent. This includes Tuba City (including the surrounding areas that are in the To’Nanees’Dizi local government).
The report also pointed to the changing tax rates across jurisdictions over the past decade. There have been 2,363 new standard sales and use taxes, an average of 225 per year; 3,867 standard sales and use tax changes, an average of 368 per year; and 6,230 standard new and changed sales and use tax rates, an average of 593 per year.