Arkansas has the second highest combined state-local sales tax rate in the United States for 2014, according to a report released this morning from the nonpartisan Tax Foundation.
Arkansas’ combined state-local sales tax rate comes in at 9.19 percent, the second highest rate under Tennessee with the highest combined state-local sales tax rate of all 50 states at 9.45 percent.
Arkansas’ state tax rate is 6.50 percent, ranking No. 9 overall, but the state comes in at No. 2 when combined with an average local tax rate of 2.69 percent, bringing the combined rate to 9.19 percent.
Using a population-weighted average of local city, county and municipal sales taxes, the report details the combined state and local sales tax rates for each state and explains how sales taxes fit into a state’s overall tax structure.
“Sales taxes are some of the most easily understood taxes because every time a consumer makes a purchase, they can see the rate on the receipt” says Tax Foundation economist Scott Drenkard.
The study addresses the fact that 38 states allow local governments to levy sales taxes within their jurisdiction. These local rates, when combined with the statewide rates, can result in substantially larger tax bites.
“Of course, sales taxes are just one part of an overall tax structure and should be considered in context,” adds Drenkard. “For example, Washington State has high sales taxes but no income tax; Oregon has no sales tax but high income taxes. While many factors influence business location and investment decisions, sales taxes are something within policymakers’ control that can have immediate impacts.”