Texas’ reliance on sales taxes is well above national average, study finds

As a share of total state and local tax revenues, sales tax collections in Texas account for 34.5 percent– the 11th highest percentage of all 50 states, according to a new Tax Foundation analysis. The study is based on the most recent data available from FY 2018 tax collections.

Texas’ percentage is well above the average level of state reliance on sales taxes  of 23.3 percent.

Consumption levies like sales taxes are considered more stable than others like state income taxes, during economic downturns, according to the report. During the coronavirus era, sales tax collections initially dropped, but recovered as more businesses reopened and consumers turned to online venues to purchase products.

Four states – Delaware, Montana, New Hampshire and Oregon – have no state or local sales taxes. Alaska allows for local sales taxes but has no statewide sales tax. The remaining 45 states have statewide sales taxes in place, and 38 states allow local governments to collect separate sales taxes.

States Most Dependent on Sales Taxes

Rank State % of Total State and Local Revenues Coming From Sales Taxes
1 Louisiana 42.3%
2 Nevada 41.3%
3 Tennessee 40.7%
4 Arizona 40.5%
5 South Dakota 39.3%
6 Florida 38.3%
7 Arkansas 37.8%
8 New Mexico 37.3%
9 Hawaii 36.7%
10 Washington 36.4%
11 Texas 34.5%
12 Oklahoma 32.7%
13 Mississippi 31.7%
14 Alabama 30.5%
15 Kansas 29.6%
16 Indiana 28.5%
17 Missouri 27.4%
18 Ohio 26.8%
19 Colorado 26.7%
20 Idaho 26.6%
21 Wyoming 26.5%
22 North Carolina 26.2%
23 Georgia 23.9%
24 Utah 23.9%
25 Nebraska 22.5%
26 Michigan 22.3%
27 Iowa 22.2%
28 South Carolina 21.1%
29 Maine 20.6%
30 Kentucky 20.3%
31 Wisconsin 20.2%
32 North Dakota 20.1%
33 California 19.7%
34 Illinois 18.4%
35 West Virginia 18.1%
36 Rhode Island 17.1%
37 Pennsylvania 17.0%
38 Minnesota 16.9%
39 New York 16.6%
40 New Jersey 15.9%
41 Connecticut 14.9%
42 Massachusetts 13.5%
43 Virginia 13.0%
44 Maryland 12.0%
45 Vermont 10.4%
46 Alaska 6.9%
47 (tie) Delaware 0.0%
47 (tie) Montana 0.0%
47 (tie) New Hampshire 0.0%
47 (tie) Oregon 0.0%

Source: Tax Foundation

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