Sales tax rates reached 10-year high in 2020

The combined average sales tax rate in the U.S. reached a 10-year high in 2020, enabling states to collect more tax revenue from online sales amid the pandemic. A report by tax technology company, Vertex, found 592 standard sales tax rate changes across the U.S. in 2020. The combined average sales tax rate across jurisdictions reached 10.12%. 

Many of the rate changes occurred in the first half of the year as states and cities rushed to plug projected revenue gaps before they discovered more tax revenue pouring in than they had anticipated. Even though the frenetic pace of rate-change activity earlier in 2020, in particular with cities, slowed in the second half of the year, indirect tax teams still need to keep their eyes on several possible tax trends this year as all jurisdictions will attempt to recover lost revenue and close COVID-related budget deficits.