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John Minassian
John Minassian

Report shows continued decrease in sales tax rate changes in 2012

Keeping pace with constant changes continues to be a concern for companies of all sizes.

February 28, 2013
by John Minassian/Vertex Inc.

The number of sales tax rate changes across the U.S. declined for the fourth consecutive year in 2012, while the combined average sales tax rate increased slightly, according to the 2012 Sales Tax Rate Report from Vertex Inc.

While there continued to be a number of changes in sales tax rates across the U.S., there is a sustained decline in the rate of these changes. The rate of change has declined steadily from record levels seen in 2008 and may signal improved strength in the larger economy.

The number of rate changes at the state, county, city, and district level declined to 459 in 2012, compared with 483 in 2011, 573 in 2010, 723 in 2009, and a record 831 in 2008. Of the 459 changes, 211 were tax increases, 167 were new taxes, and 81 were decreases.

The average combined sales tax rate, including state, county, local, and special purpose tax districts, is 9.6144%, up slightly from the 2011 year-end rate of 9.6056%.

Over the past five years there have been in excess of 3,000 sales and use tax rate changes in the U.S. Keeping pace with these constant changes continues to be a concern for companies of all sizes, particularly those in the retail sector. Sales and use taxes continue to receive scrutiny from auditors at the state and local levels, and companies continue to seek tax process and technology improvements in response.

Additional highlights from the report:

  • The average state level sales tax rate remains at 5.488%, the same as in 2011. Indiana, Mississippi, New Jersey, Rhode Island, and Tennessee have the highest sales tax rate at 7%, and Minnesota has the second-highest sales tax rate at 6.875%.
  • The average county tax rate is marginally higher than the year-end 2011 rate at 1.5368%, and the average city rate increased to 1.6754% from the year-end 2011 rate of 1.6708%.
  • The highest city sales tax rates are found in Kodiak, Alaska, and Wrangell, Alaska (both 7%). The highest combined sales tax rate of 13.725% is found in Tuba City (including the surrounding areas that are in the To’Nanees’Dizi Local Government), Coconino County, Ariz.

Click here to view and download a full copy of Vertex's 2012 Sales Tax Rate Report.

John Minassian, vice president, tax content development, joined Vertex in 1999 and leads tax researchers supporting Vertex’s income tax application and an assortment of transactional tax applications. He ensures that Vertex has the processes and resources in place to ensure the development of new tax features and to also support the monthly maintenance process. Minassian’s work experience includes positions with E. I. du Pont de Nemours, ICI Americas, and AMP, Inc. (now Tyco Electronics). He holds a B.A. from the University of Pennsylvania, an MBA from Drexel University, and a Master of Taxation from Villanova University.