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2022 Sales Tax Rates and Rules Report: Cities and Counties Rate Changes Continue

Vertex’s ongoing Sales Tax Rates and Rules Report research figures are among our most read (and most listened to) posts each year, so I want to provide an early peak of our 2022 Year-End Report, which will be published next week. 

Here’s what I find most compelling about our sales tax research based on data collected by our own Vertex research team through Nov. 30: 

  • Total number of rate changes decline, but that’s deceiving: While the overall number of sales tax rates and rules changes appears likely to reach the lowest level in eight years (528 changes at the state, county, city and district levels), that total is skewed by a major decline in one category: new district taxes. After a torrid five-year stretch in which an average of 180 new district-level taxes came online each year, that number declined to 115 this year (again, as of data collected through the end of November). However, tax rate changes at other levels of government remained near recent highs.
  • County and district rate changes increase; city rate changes remain elevated: At the county level, sales tax rate changes will post a three-year high. Through Nov. 30, the number of district tax rate changes that have been enacted so far this year (52) reached their highest level in six years; what’s more, district tax rate increases (39) were three times higher than rate decreases (13). Additionally, the number of city rate changes (233 through Nov. 30) match the average number of city rate changes enacted annually over the past five years. 
  • New Mexico enchants businesses with a rate reduction: Until last July, no state had changed its sales tax rate in more than two years. New Mexico may or may not have started a new trend by reducing its state sales tax rate from 5.125% to 5% (technically, the state uses a gross receipts tax). The Land of Enchantment’s taxation and revenue department reported that the change is designed to “make New Mexico businesses more competitive,” while noting that another reduction (to 4.875%) is schedule to take effect July 1, 2023.
  • The combined average sales tax rate surpasses a 10-year high: After a year of holding steady at 10.1237%, the combined average U.S. sales tax rate resumed its upward climb. At 10.1803%, the current combined average rate is more than 5% higher than it was a decade ago.

I appreciate your interest in our sales tax rates and rules research. I’ll keep you posted on the final numbers, along with related economic and business trends, once we conclude our data-collection activities.

Disclaimer

Please remember that the Vertex blog provides information for educational purposes, not specific tax or legal advice. Always consult a qualified tax or legal advisor before taking any action based on this information. The views and opinions expressed in the Vertex blog are those of the authors and do not necessarily reflect the official policy, position, or opinion of Vertex Inc.

Blog Author

Michael J. Bernard, Chief Tax Officer – Transaction Tax at Vertex Inc. Vertex's Chief Tax Office (CTO) provides insight regarding the impact of tax regulations, policy, enforcement, and emerging technology trends on global tax department operations.

Michael J. Bernard

Vice President of Tax Content and Chief Tax Officer

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Michael Bernard is the Chief Tax Officer of Transaction Tax. In his role, he provides insight and thought leadership around tax department operations, U.S. indirect tax, tax risk management, and tax policy, as well as emerging tax trends. He is an executive-level tax attorney with a diverse portfolio of experience in corporate tax, administration, and finance, including a substantive knowledge of U.S. and international tax laws.

Prior to joining Vertex, Michael was in various tax leadership roles at Microsoft Corporation for 28 years, the most recent being Senior Director – Tax Counsel. Michael led teams in the following functional areas: direct and indirect tax controversy, sales and use, business license, property, tax IT, SOX, and telecommunications. He also co-led a corporate taxpayer advocacy group with the Washington Department of Revenue and was a Director on the Board of the Washington Research Council. Michael has also testified before administrative and lawmakers at both the federal and state level.

Michael earned both a J.D. and a Bachelor of Science in Business Administration from Creighton University. He is a part-time lecturer of Law in the LLM program at the University of Washington School of Law. Michael also served on the board of directors, executive committee, and chaired committees for The Tax Executives Institute (TEI) for nearly 25 years.

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