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Before exploring the country’s lowest sales taxes, I always assumed New York was the primary sales tax monster, hitting us up for 8.875% sales tax* every time we New Yawkas made a purchase. But lo and behold, another state turns out to be an even bigger tax biter: the gentle state of Tennessee charges its southern citizens a whopping 9.41% combined state and local sales tax, the highest in the country.

Of the 20 lowest sales taxes in the U.S., the residents of five states are fortunate enough to be charged zero state sales tax. But of those five states, two charge local sales tax which leaves only three, Montana, New Hampshire and Oregon, with a combined state and local sales tax of absolutely zero. If you live in any of these three states and decide to purchase some new furniture for $3,000 bucks you will not have to tack on a penny for sales tax. But if you buy that same furniture in pricey Tennessee, you’ll have to cough up a whopping $282.30 to cover the sales tax bill. Quite a difference, especially if you’re on a super-tight budget, retired or thinking of furnishing an entire new home.

One reason why Alaska has a zero state sales tax rate (though it charges a local 2.15% sales tax) is Oil. Companies happily enrich the state coffers for the privilege of drilling for the stuff.

Combined State and Local Sales Tax Rates from Tax Foundation (September, 2009)

  1. 0%       Montana
  2. 0%       New Hampshire
  3. 0%       Oregon
  4. 1.13%  Alaska
  5. 1.92%  Delaware
  6. 4.38%  Hawaii
  7. 5.00%  Maine
  8. 5.00%  Virginia
  9. 5.38%  Wyoming
  10. 5.42%  Wisconsin
  11. 5.52%  South Dakota
  12. 6.00%  Connecticut
  13. 6.00%  Idaho
  14. 6.00%  Kentucky
  15. 6.00%  Maryland
  16. 6.00%  Michigan
  17. 6.00%  North Dakota
  18. 6.00%  Vermont
  19. 6.00%  West Virginia
  20. 6.15%  Alabama

Check out Tax Foundation for the ranking of every state’s combined state and local sales tax rates.

* Includes 3/8% for the benefit of the Metropolitan Commuter Transportation District.

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