Old Dominion outperforms all surrounding states.
Virginia’s Sales Tax Rate in the Top 10 Nationwide
The
Tax Foundation recently released their annual report analyzing and comparing
each state’s sales tax rate, and Virginia ranked well.
Virginia’s
combined state and average local sales tax rate of 5.63 percent earned the spot
of ninth lowest sales taxes in the nation. For state sales tax alone—at a rate
of 5.30 percent—Virginia ranked in the top 20, with the 19th lowest sales tax.
The
Tax Foundation addressed the importance of competition in setting sales tax
rates: “Avoidance of sales tax is most likely to occur in areas where there is
a significant difference between two jurisdictions’ sales tax rates. Research
indicates that consumers can and do leave high-tax areas to make major
purchases in low-tax areas…”
In
this regard, compared to surrounding states, Virginia fares well. Kentucky,
Maryland, North Carolina, and West Virginia all have higher combined state and
local sales tax rates, at 6 percent, 6 percent, 6.90 percent, and 6.20 percent,
respectively. And Tennessee has the highest combined state and local rate in the
nation, at 9.46 percent. The Tax Foundation does not take into account sales
tax bases.
However,
in another Tax Foundation report—on state-by-state Tax
Freedom Days in 2016—Virginia ranked in the bottom 20, with the 32nd latest date in the
nation, April 22. However, this is two days earlier than the national date. Tax
Freedom Day represents the day when the U.S. as a whole has earned enough money
to pay its total tax bill for the year, meaning it takes more than a quarter of
the year for taxpayers to be free of their tax burden and keep their remaining
income.
