Black Friday shoppers are looking forward to cheap deals on gifts this week, but sales taxes will still apply in the 47 states that levy them.
Shoppers in Tennessee, Arkansas, Louisiana, Washington and Oklahoma will have at least an 8 percent sales tax added to their subtotal, depending on their locality. Although these states have high sales tax rates, they offer relatively low income tax rates. Washington and Tennessee levy no income tax. The top income tax rate in Kentucky and Louisiana is 6 percent. Arkansas has a modestly high top rate of 7 percent.
Tennessee has the highest combined state and average local sales tax rate in the nation at 9.45 percent, according to the Tax Foundation. Although Tennessee residents pay out more on Black Friday, they make it up on April 15. Still, Nashville residents shopping on Black Friday might find it useful to cross the border into Kentucky, where the six percent sales tax is 14th lowest in the nation.
Twelve states do not allow any localities to administer a sales tax. Alaska and Montana do not collect a statewide sales tax, but they allow localities to apply them.
Three states do not collect any state or local sales taxes: Delaware, New Hampshire and Oregon. Border cities in these states should expect more Christmas shoppers than other cities, especially in Portland, Ore., where Washington State residents can save nearly 9 percent by skipping their state and local sales taxes.
Retail sales on Thanksgiving and Black Friday last year were $12.3 billion, according to ShopperTrak, a retail research firm. If the nationwide average sales tax were 7 percent, that would amount to $861 million of tax revenue for state and local governments.
Shoppers looking to beat the retail crowds by shopping online for Cyber Monday may find themselves saving on taxes. However, purchases made online are increasingly being taxed at the state level. As of Oct. 1, 69 percent of Americans are subject to state sales tax on purchases made online. Still, 31 percent of Americans in 21 states can bypass their sales tax bill by purchasing online. The Marketplace Fairness Act would change that tax-free status and allow state governments to collect taxes from retailers with no presence in their state, but Congress has no plans to vote on it in the near future.
