Average Combined Sales and Use Tax Rate Hits Record High in 2010

Vertex study shows the combined average sales tax rate continued to rise as governments face budget shortfalls

BERWYN, Pa. – February 14, 2011 – The average combined U.S. sales and use tax rate for 2010 hit a new record average of 9.64 percent, compared to the previous record of 8.63 percent in 2009, according to the annual Sales Tax Rate Report for 2010 issued today by Vertex Inc., the leading provider of corporate enterprise tax solutions.

The combined sales and use tax rate of 9.64 percent, which includes U.S. state, county, local and special purpose tax districts, is the highest level since Vertex began tracking the data in 1982.

As of December 31, 2010:

  • The average state level sales tax rate increased to 5.52 percent, compared to 5.48 percent in 2009.
  • The average county tax rate increased to 1.55 percent, compared to 1.54 percent in 2009.
  • The average city tax rate increased to 1.66 percent, compared to 1.65 percent in 2009.

“The combined average sales tax rate hit a record level at the end of 2010 due to the budget deficits being experienced at every level of government,” said John Minassian, Vice President Tax Content Development for Vertex. “Budget-weary governments turned to new and increased taxes in 2010 to help offset these deficits and in some instances, stave off painful cuts.”

The number of sales and use tax rate changes in the U.S. in 2010 decreased to 555 compared to 707 in 2009. Of the 555 changes, 273 were tax increases, 249 were new taxes and 53 were decreases.

“While the average rate reached a record level, the total number of sales and use tax rate changes in the U.S. did decrease in 2010,” said Minassian. “The overwhelming majority (94 percent) of these changes continue to be new or increased taxes signaling that we continue to experience fallout from the recession. However, the decrease in the total number of changes may be indicative of some level of economic improvement for governments and taxpayers alike.”

Video: Vertex's John Minassian offers commentary on trends in sales and use tax rates in 2010.

 

As of December 31, 2010, California remained the state with the highest sales tax rate at 7.25 percent. Five states – Indiana, Mississippi, New Jersey, Rhode Island and Tennessee – have the second highest rate, 7.00 percent.

Three states had rate changes during the year:

  • Arizona increased its sales, use and rental rate to 6.6 percent from 5.6 percent
  • Kansas increased its sales tax rate to 6.3 percent from 5.3 percent
  • New Mexico increased its rate to 5.125 percent from 5.0 percent

Additional highlights from Vertex’s 2010 Sales Tax Rate Report:

  • The highest city sales tax rate is found in Wrangell, Alaska (7.0 percent).
  • The highest combined sales tax rate of 13.73 percent is found in Tuba City, Coconino County, Arizona. 
  • The combined number of new and changed sales and use tax rates since 2003 is 5,407, an average of 676 per year.
  • Since 2003 there have been 1,934 new sales and use taxes, an average of 242 per year, and 3,473 sales and use tax changes, an average of 434 per year.

WATCH: Minassian offers additional insight via a video interview.

For a PDF copy of the full report, contact Paul Johnson of Vertex at paul.johnson@vertexinc.com or view the report.

About Vertex

With more than 30 years of experience, Vertex Inc. is the leading provider of corporate enterprise tax solutions and process management services worldwide.

Vertex solutions help companies streamline and integrate tax provision and compliance processes, and leverage information to discover new strategic tax savings across every major line of business tax, including income, sales, consumer use, value added, communications, and payroll. To serve its customers, Vertex works in partnership with the world’s leading providers of ERP software and related services.

Founded in 1978, Vertex is a privately held company that employs over 600 professionals at its headquarters in the U.S. (Berwyn, Pa.) with offices in Europe (London), Brazil (São Paulo), Dallas, Fort Collins, Naperville, Phoenix and Sarasota. For more information about Vertex, visit the website at www.vertexinc.com.

Press Contact:

Garfield Group Public Relations
Amber Lutz
Office: 215.867.8600
alutz@garfieldgroup.com

Company Contact:

Vertex Inc.
Paul Johnson
Office: 484.595.6142
Mobile: 610.716.5408
Paul.Johnson@vertexinc.com

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