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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).
Most states finance local and state government largely through some mixture of sales taxes, property taxes and income taxes. Texas is one of nine states that do not levy an individual income tax. The Tax Foundation, a conservative-leaning research group, ranks Texas ninth-best on its State Business Tax Climate Index, largely because of the stateâs lack of an income tax. On three of the foundationâs other major rankings â property taxes, sales taxes and corporate taxes â Texas ranks in the bottom 20 states.