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State-Level U.S. Sales Tax Rates Unchanged in Q3 2016

The U.S. average combined sales tax rate increased marginally in Q3 due to stable sales tax rates and slight increases to city and county-level tax rates, according to the latest ONESOURCE Indirect Tax Report from Thomson Reuters. The report summarizes quarterly changes in sales, use and value-added tax.

The average state-level sales tax rate held steady at 5.56 percent in Q3 2016. Puerto Rico maintained its position as the U.S. territory with the highest rate, at 10.5 percent. Once again, Indiana, Mississippi, New Jersey, Rhode Island and Tennessee tied for the highest state sales tax rate at 7.0 percent, followed by Minnesota (6.875 percent) and Nevada (6.85 percent).  

“While U.S. state-level rates remained unchanged from Q2, there were a total of 130 regular sales tax rate changes in the U.S. alone this quarter, including 57 new rates introduced in Q3,” said Carla Yrjanson, vice president of tax research and content at Thomson Reuters. “Businesses must be informed of these changes as they happen to ensure that all of their tax obligations are properly met.”  

More than any other jurisdiction, cities accounted for the highest number of tax rate changes. In Q3, 51 changes occurred in cities and 21 new city rates were introduced. The cities with the highest average combined sales tax rates were Tuba City, Alaska (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, remains the highest-taxing jurisdiction for the last several quarters at 7.0 percent, followed by Petersburg and Sitka, Alaska (6.0 percent); and 11 counties in Alaska, Alabama, Colorado and Louisiana at 5.0 percent. The average county sales tax rates increased slightly to 1.267 percent in Q3 from 1.264 in Q2.   

Around the globe, Egypt adopted a VAT regime with a standard rate of 13 percent and a reduced rate of 5.0 percent, both effective as of September 9, 2016. Sri Lanka reduced the country’s standard rate from 15 percent to 11 percent, effective July 12, 2016, and Thailand introduced three special rates: the Commercial Banking, Financial and Credit Fancier Business, Sale of Immovable Property rate of 3.3 percent; the Life Insurance Pawnbroking rate of 2.75 percent; and the Sales of Securities rate of 0.11 percent, effective September 1, 2016.