When it comes to taxes, people never tend to be quite confident about doing or reviewing their taxes. With many taxes such as income tax rates and brackets being rather complex and can be perceived as confusing to ordinary taxpayers, sales taxes are pretty straight forward – you can see the deduction on every receipt. Maybe less know are the state sales tax rates being used in 37 states. They vary from state to state and can produce, despite being a modest tax by itself, a burdensome tax when added up with the overall sales tax. In case of well-known e-commerce platform Magento state sales tax that needs to be calculated can reach in the sky. Magento state sales tax is a good reference to use because Magento e-commerce platform is used throughout the nation from New York to California.
The general or statewide sales tax does not apply in only five states – Montana, Alaska, Oregon, Delware and New Hampshire. These states have different sales tax approaches which can be seen nicely from looking at taxes generated by companies implementing the Magento e-commerce platform. In Alaska in Montana the local sales taxes are in use for the locals. Nonetheless, Alaska being as big as it is has sometimes high local rates of population groups such a Kodiak and Juneau, which can rise upward of 5%, and as such can increase the local average rate. However, living in Alaska will not have a combined rate that would be higher than in any other state covered by statewide sales tax.
If you observe Magento State Sales Tax state to state you might come to the conclusion where the sales tax rates are the highest. The highest combined average rate is in Tennessee, where it rises to as high as 9.44%, followed by Arizona with 9.16%. Louisiana, Washington and Oklahoma hold high sales taxes as well. On the other hand of the line, the states with lowest tax rates are Alaska with 1.69%, Hawaii with 4.35% followed by Maine, Virginia and Wyoming. Alaska in this case is a more exotic state because the heavy leverage of their own state tax system and because they are, of course, not covered by general statewide sales tax rate system. Where you don’t have to live if you generate lots of sales is in Tuba City, Arizona, where the tax rate is the highest for any play on USA soil – astounding 13.725%. This figure is summed up by regular state tax yielding 6.6%, a tribal tax levied by the local government and an additional Coconino country tax. So having your Magento state sales tax levied in Tuba City is financially very stressful.
On the other hand, different kinds of taxes are levied in different kinds of states with varying weight. Basing your decision of building a company or moving to a certain are based on state sales tax alone can be a risky business – as in all thing in life, you are recommended to look at the big picture and base your judgment on that.