According to the annual year-end tax rate study issued by Vertex Inc., a tax technology provider, there were 721 total US sales tax rate changes in 2017, a substantial increase of 29.21 percent from the 558 changes that occurred in 2016. Most notable last year was a considerable increase in new district taxes.
“From the 2017 numbers you can see there was a surge in new district taxes that caused the total number of tax changes to increase to 236 from 142 last year, of which 94 are due to newly created districts,” said Vertex Chief Tax Officer Peggi Rockefeller. “California alone added close to 50 new districts effective as of April 1, 2017. Overall it was an extremely active year for districts as jurisdictions continue to look for additional ways to generate revenue,” she added.
The Vertex 2017 End of Year Tax Rate Report lists two significant state sales tax changes during the year:
- Effective January 1, 2017, California decreased their rate from 6.25 percent to 6.00 percent. However, this does not change the combined tax rates as the .25 reduction from the state was added to all counties.
- Effective January 1, 2017, New Jersey decreased their rate from 7.00 percent to 6.875 percent.
Although there was a significant increase in sales tax rate changes from last year, the states and cities with the highest sales tax rates remained the same as in 2016:
- Puerto Rico currently has the highest state sales tax rate at 10.50 percent.
- Indiana, Mississippi, Rhode Island and Tennessee have the second highest state sales tax rates at 7.00 percent.
- Kodiak and Wrangell, in Alaska, and Winter Park, CO respectively have the highest city sales tax rates at 7.00 percent. Hoonah and Selawik, both in AK have the second highest rate at 6.50 percent.
- Tuba City (including the surrounding areas that are in the To’Nanees’Dizi Local Government), in Coconino County, AZ has the highest combined sales tax rate of 12.90 percent.
- As stated above, there was a spike in new district taxes from 142 in 2016 to 236 in 2017, a 66.20 percent increase. As stated above, California led with the addition of almost 50 new districts effective April 2017.
The report highlights an ongoing sales tax trend of ever-changing and varying sales tax rates across jurisdictions. In the last 10 years in the U.S. there have been:
- 2,203 new sales and use taxes, an average of 220 per year;
- 3,889 sales and use tax changes, an average of 388 per year; and
- 6,092 new and changed sales and use tax rates, an average of 609 per year.