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State and Local Sales Taxes in Virginia

A study published today by the Tax Foundation (Fiscal Fact No. 553) discusses state and local sales tax rates at mid-year 2017.

The study, authored by Jared Walczak, introduces the topic this way:

"Retail sales taxes are one of the more transparent ways to collect tax revenue. While graduated income tax rates and brackets are complex and confusing to many taxpayers, sales taxes are easier to understand; consumers can see their tax burden printed directly on their receipts.

"In addition to state-level sales taxes, consumers also face local sales taxes in thirty-eight states. These rates can be substantial, so a state with a moderate statewide sales tax rate could actually have a very high combined state and local rate compared to other states. This report provides a population-weighted average of local sales taxes as of July 1, 2017, in an attempt to give a sense of the average local rate for each state. Table 1 provides a full state-by-state listing of state and local sales tax rates."

The key findings in the study were:

  • Forty-five states and the District of Columbia collect statewide sales taxes.
  • Local sales taxes are collected in thirty-eight states.
  • The five states with the highest average combined state and local sales tax rates are Louisiana (10.02 percent), Tennessee (9.45 percent), Arkansas (9.34 percent), Washington (9.20 percent), and Alabama (9.03 percent).
  • Sales tax rates differ by state, but sales tax bases also impact how much revenue is collected from a tax and how the tax affects the economy.
  • Sales tax rate differentials can induce consumers to shop across borders or buy products online.

Virginia's state sales tax rate is 5.3%, which ranks #31. The average local sales tax rate in Virginia is 0.33%. The maximum local sales tax rate is 0.70%. The local "rates are weighted by population to compute an average local tax rate." The combined state and local sales tax rate is 5.63% for a combined rank of #41. In addition, the Tax Foundations notes "(t)hree states levy mandatory, statewide, local add-on sales taxes at the state level: California (1%), Utah (1.25%), and Virginia (1%)," and are included in the state sales tax.

Wakczak provides an interesting discussion of the role of competition in the setting of sales tax rates, noting "evidence suggests that Chicago-area consumers make major purchases in surrounding suburbs or online to avoid Chicago’s 10.25 percent sales tax rate." Also, he writes, "Delaware actually uses its highway welcome sign to remind motorists that the state is the “Home of Tax-Free Shopping.”

The following map shows the combined state and average local sales tax rates on July 1, 2017:


Growls readers who are concerned about the level of state sales taxes in Virginia should take a few minutes to write to Governor McAuliffe. Click-on the following link:

Growls readers should also write to their state legislators. The following legislators represent Arlington County in the Virginia General Assembly: Senators (Adam Ebbin, Barbara Favola, or Janet Howell) and Delegates (Rip Sullivan, Patrick Hope, Alfonso Lopez, or Mark Levine). Contact information for members of the General Assembly can be found here  -- use one of the "quick links" to locate the senator and delegate who represent you.

And tell them ACTA sent you.

For information about the Tax Foundation, click here.


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