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The Tax Foundation is the nation’s
leading independent tax policy
research organization. Since 1937,
our research, analysis, and experts
have informed smarter tax policy
at the federal, state, and global
levels. We are a 501(c)(3) nonprofit
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Editor, Rachel Shuster
Designer, Dan Carvajal
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State Sales Tax Breadth and
Reliance, Fiscal Year 2021
• Sales taxes account for 29.52 percent of state tax revenue, but most sales
taxes are imposed on narrow—and still-narrowing—bases, with average sales
tax breadth of only 29.71 percent and a median of 35.72 percent.
• Sales tax bases range from 19.32 percent of personal income in
Massachusetts to 93.89 percent in Hawaii; the Massachusetts base is
extremely narrow, while the Hawaii base features significant tax pyramiding.
• Within states with a sales tax, the mean taxpayer cost of sales taxes is $1,131,
or about $199 per percentage point on the tax rate.
• An ideal sales tax is imposed on all final consumption, both goods and
services, but excludes intermediate transactions to avoid tax pyramiding.
• Sales tax breadth has declined from a mean of 49.98 percent in 2000 to the
current 29.52 percent, reflecting continued erosion that has largely been
offset by an increase in the mean state rate from 5.16 to 6.00 percent over
• The pandemic has yielded temporary fluctuations as the amount and
composition of consumer expenditures has changed, though long-term sales
tax trends remain highly visible in the data.
Vice President of State Projects
TAX FOUNDATION | 2
Sales taxes account for 29.5 percent of all state tax revenue, second only to individual income
taxes (40 percent) in their contribution to state receipts. Reliance on sales taxes, however, varies
dramatically, from 13.4 percent in the Dist