Reliance on sales taxes in Texas is well above national average, study finds

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As a share of total state and local tax revenues, sales tax collections in Texas came in at 34.5 percent, representing the 11th highest percentage among the 50 states, according to a new Tax Foundation analysis.

That percentage was well above the average level of state reliance on sales taxes (23.3 percent). The Tax Foundation study is based on the most recent data available, which reflects tax collections during fiscal year 2018.

Consumption levies such as sales taxes are considered more stable than other taxes, including state income taxes, during economic downturns, according to the Tax Foundation. During the coronavirus era, sales tax collections initially dropped, but they recovered as more businesses reopened and consumers turned to online venues for products, the study says.

Four states – Delaware, Montana, New Hampshire and Oregon – have no state or local sales taxes, while Alaska allows for local sales taxes but has no statewide sales tax, according to the Tax Foundation. The remaining 45 states have statewide sales taxes in place, the study states, and 38 allow local governments to collect separate sales taxes.

Which States Are Most Dependent on Sales Taxes?

Rank State % of Total State and Local Revenues Coming From Sales Taxes
1 Louisiana 42.3%
2 Nevada 41.3%
3 Tennessee 40.7%
4 Arizona 40.5%
5 South Dakota 39.3%
6 Florida 38.3%
7 Arkansas 37.8%
8 New Mexico 37.3%
9 Hawaii 36.7%
10 Washington 36.4%
11 Texas 34.5%
12 Oklahoma 32.7%
13 Mississippi 31.7%
14 Alabama 30.5%
15 Kansas 29.6%
16 Indiana 28.5%
17 Missouri 27.4%
18 Ohio 26.8%
19 Colorado 26.7%
20 Idaho 26.6%
21 Wyoming 26.5%
22 North Carolina 26.2%
23 Georgia 23.9%
24 Utah 23.9%
25 Nebraska 22.5%
26 Michigan 22.3%
27 Iowa 22.2%
28 South Carolina 21.1%
29 Maine 20.6%
30 Kentucky 20.3%
31 Wisconsin 20.2%
32 North Dakota 20.1%
33 California 19.7%
34 Illinois 18.4%
35 West Virginia 18.1%
36 Rhode Island 17.1%
37 Pennsylvania 17.0%
38 Minnesota 16.9%
39 New York 16.6%
40 New Jersey 15.9%
41 Connecticut 14.9%
42 Massachusetts 13.5%
43 Virginia 13.0%
44 Maryland 12.0%
45 Vermont 10.4%
46 Alaska 6.9%
47 (tie) Delaware 0.0%
47 (tie) Montana 0.0%
47 (tie) New Hampshire 0.0%
47 (tie) Oregon 0.0%

Source: Tax Foundation





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