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Local sales taxes are collected in 38 states. The five states with the highest average combined state and local sales tax rates are Louisiana (9.98 percent), Tennessee (9.46 percent), Arkansas (9.30 percent), Alabama (9.01 percent), and Washington (8.92 percent).
States with the highest state/local taxes have below average income from other sources. Conversely, many states with low levels of taxation derive a very large percentage of revenue from sources other than sales, income and property taxes. People must also understand that the level of taxation varies within a state.