Alabama is no. 4 in the nation for its sales taxes, according to the Tax Foundation’s 2017 study.
Although the state sales tax rate is 4 percent, one of the top 10 lowest rates in the country, the average local sales tax rate of 5.01 percent is the highest in the U.S. This combined average of 9.01 percent was enough to earn Alabama the fourth highest sales tax rate spot.
Of Alabama’s neighboring states, only Tennessee ranked higher—at no. 2, with a 9.46 percent combined average. Georgia came in 23rd with 7 percent, Florida came in 28th with 6.80 percent, and Mississippi came in 20th with 7.07 percent.
“State and local governments should be cautious about raising rates too high relative to their neighbors because doing so will yield less revenue than expected or, in extreme cases, revenue losses despite the higher tax rate,” the study authors, Jared Walczak and Scott Drenkard, note.
The study’s release is apt, given that the Joint Legislative Task Force on Budget Reform is working on a plan to address the state’s continual budget shortfalls. A report is coming from the task force in the early days of the 2017 legislative session, which began on Feb. 7.
