Tax Tips What are State Sales Taxes? Read the Article Open Share Drawer Share this:Click to share on Facebook (Opens in new window)Click to share on Twitter (Opens in new window)Click to share on LinkedIn (Opens in new window)Click to share on Pinterest (Opens in new window)Click to print (Opens in new window) Written by Published Jan 26, 2011 - [Updated Sep 7, 2017] 2 min read In most conversations, when we talk about taxes, we’re pretty focused on the Federal Rates, most of us painfully aware of how much of that next dollar earned will be shared with Uncle Sam. The state income tax takes second fiddle even though it can run as high as 11% (Hawaii) for top earners. Today, however, I’d like to discuss sales tax. You know, the extra you wind up paying at the register on most purchases. Typically, the states will charge this on non-food or drug items, although prepared foods that you eat in a restaurant or get for takeout usually are taxed as well. There was recently a bit of controversy when New York decided that a whole bagel had no sales tax, but a sliced bagel was “prepared” and therefore taxed. Some states offer small exclusions for clothing, so long as you’re buying an item below a certain cutoff, $175 in my state, there may be no tax. The highest 5 state sales taxes are as follows: California – 8.25% Indiana – 7% Rhode Island – 7% Mississippi – 7% New Jersey – 7% Tennessee – 7% This is state only and ignores the local taxes some cities add, or additional tax on particular transactions such as hotel room rental. One important decision to make on your tax return, specifically, your ‘Schedule A – Itemized deductions’ is between deducting your state income tax or sales tax paid throughout the year. The lucky folk in Alaska and New Hampshire enjoy paying no state income tax and no sales tax, so that section of Schedule A comes up blank. But those in Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming all have no income tax, and therefore should take the sales tax deduction. The IRS allows you to keep all of your receipts throughout the year and claim the actual amount, or you may use the online calculator for the IRS approved amount based on your income. Even if your state has an income tax, you may find that in a year of high spending, furnishing a new home for instance, that your sales tax deduction is still worth more than the deduction for income tax. It may be time well spend to add up all those receipts. Previous Post Handling Your W-4 and Tax Brackets When You Get a… Next Post Can I Write Off My Dog? (And Other Strange Deductions) Written by More from 9 responses to “What are State Sales Taxes?” why is hard to find a sales tax deduction from each state that has no state income tax like Texas. there shoud be a chart based on income as to how much can we deduct Reply I did not keep all of my sales receipts but my credit card company supplies me with a yearly summary of expenses charged to my cards. Can I use these totals to calculate my estimated state sales tax paid? Reply John – if I recall, it was only when considering the local (e.g. city) tax that it went record. This article focused on state level. Reply There is a federal sales tax? I thought Sales Tax was comprised of state sales tax and local sales tax. For example, Los Angeles is 8.25% (state) + 1.5% (local) which adds up to 9.75%. As far as I know, there is no national sales tax? Reply @ Michelle Yes but that 10% is total sales tax (Fed, State, and Local). They are only referring to the amount of State sales tax. Reply Mobile and Baldwin County, AL, the sales tax is 10%. Reply Thanks a lot, this praaicultr post ended up being very interesting, I look forward to looking at more of this blog. Reply Hi Kuba, Thank you! We’re glad you enjoyed it. Check back for more interesting topics. Lisa Greene-Lewis You forgot NY, state of taxes Reply Leave a ReplyCancel reply Browse Related Articles Crypto Understanding Crypto and Capital Gains Work 7 Things You Need to Know About the New Business Report… Work Using Form 8829 to Write-Off Business Use of Your Home Tax Tips Roth 403(b) vs. Roth IRA: Which Should You Invest In? Life Interest Rates, Inflation, and Your Taxes Investments Essential Tax Tips for Maximizing Investment Gains Uncategorized TurboTax is Partnering with Saweetie to Elevate Hoop Dr… Business Small Business Owners: Optimize Your Taxes with a Mid-Y… Small Business The Benefits of Employing Your Children and the Tax Bre… Income and Investments Are Olympics Winnings Taxed?
why is hard to find a sales tax deduction from each state that has no state income tax like Texas. there shoud be a chart based on income as to how much can we deduct Reply
I did not keep all of my sales receipts but my credit card company supplies me with a yearly summary of expenses charged to my cards. Can I use these totals to calculate my estimated state sales tax paid? Reply
John – if I recall, it was only when considering the local (e.g. city) tax that it went record. This article focused on state level. Reply
There is a federal sales tax? I thought Sales Tax was comprised of state sales tax and local sales tax. For example, Los Angeles is 8.25% (state) + 1.5% (local) which adds up to 9.75%. As far as I know, there is no national sales tax? Reply
@ Michelle Yes but that 10% is total sales tax (Fed, State, and Local). They are only referring to the amount of State sales tax. Reply
Thanks a lot, this praaicultr post ended up being very interesting, I look forward to looking at more of this blog. Reply
Hi Kuba, Thank you! We’re glad you enjoyed it. Check back for more interesting topics. Lisa Greene-Lewis