The average rate for sales taxes across the U.S. increased a bit in the second quarter of the year, according to a new report.
The latest ONESOURCE Indirect Tax Report from Thomson Reuters found there were only minimal sales tax changes last quarter in most cities and states. On average, state-level sales taxes rose marginally from 5.535 percent to 5.56 percent in Q2 2016. The highest sales tax rate was in the economically distressed territory of Puerto Rico, where the sales and use tax rate is 10.5 percent.
Louisiana and South Dakota heightened their state-level tax rate in Q2 from 4 to 5 percent. The increase, on top of the current average local tax rate of 4.99 percent, makes Louisiana the state with the highest combined state and local tax rate in the country. South Dakota’s sales tax rate rose 0.5 percent to 4.5 percent, for a combined state and local sales tax rate of 6.34 percent.
“Though Q2 was relatively quiet, a few changes can result in rippling effects that professionals need to account for,” said Thomson Reuters vice president of tax research and content Carla Yrjanson in a statement. “Our report illustrates the seemingly unpredictable nature of tax rates from quarter to quarter. While changes in sales, use and value-added tax are not easy to predict, businesses must remain abreast of changes in real-time and react accordingly to keep their operations flowing flawlessly.”
At 7.0 percent, Indiana, Mississippi, New Jersey, Rhode Island and Tennessee tied for the states with the highest sales tax rate. That five-way tie was followed by Minnesota with 6.875 percent and Nevada at 6.85 percent.
Cities experienced fewer changes in their sales tax rates last quarter, with increases in 61 cities in Q2, compared to 542 in Q1. The cities with the highest average combined sales tax rates were Tuba City, Ariz. (12.9 percent), Arab, Ala. (12.5 percent), Piedmont, Ala. (12.5 percent), and Sunset, Ark. (12.25 percent).
At the county level, Wrangell, Alaska, is still the highest-taxing jurisdiction, as it was for the last several quarters, at 7.0 percent. It is followed by Petersburg and Sitka, Alaska (with a 6.0 percent tax rate), and 11 counties in Alaska, Alabama, Colorado and Louisiana, at 5 percent. The average county sales tax rates increased to 1.264 percent in Q2, from 1.259 percent in Q1.
On the international front, Argentina upped its special rate of excise tax from 60 percent to 75 percent, while China unveiled a special rate tax of 5 percent. In addition, the special rates of 3 percent, 5 percent and 20 percent in the authority of China Business Tax were end-dated effective April 30, 2016 to transition from the China Business Tax to the value-added tax. Ecuador, Greece, India, Sri Lanka, and Aegean Islands all saw increases in their standard tax rates.
For a copy of the full report, click here.
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