Why Alabama Has Some of the Nation's Highest Average Sales and Local Tax Rates

Date: February 06, 2019

Tax Foundation: The state's combined rates are among the nation's highest.

No small business owner likes taxes, and Alabama has some of the nation’s highest when it comes to its average combined state and local tax rates, according to a new report.

The Tax Foundation found that Alabama has the nation’s fifth highest average combined state and local sales tax rates at 9.14 percent. That ranks behind Tennessee (9.47 percent), Louisiana (9.45 percent), Arkansas (9.43 percent), and Washington (9.17 percent.)

“Retail sales taxes are one of the more transparent ways to collect tax revenue,” according to the report. “Sales taxes are easier to understand; consumers can see their tax burden printed directly on their receipts.”

But according to the Tax Foundation, high tax rates can push consumers toward neighboring tax environments. “Sales tax rate differentials can induce consumers to shop across borders or buy products online,” writes Janelle Cammenga, the report’s author.

Some good news for Alabama small business owners: The state has the lowest tax collections per capita at $3,206.

For more information, visit https://taxfoundation.org/sales-tax-rates-2019

Related Content: News | State | Alabama | Economy | Taxes

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