States With the Highest Sales Tax in the US (2026 Guide)

If you sell products or taxable services in the United States, sales tax is one of the most confusing -- and consequential -- obligations you will face. Unlike many countries that use a single national rate, the US leaves sales tax entirely to individual states and localities. The result is a patchwork of more than 13,000 taxing jurisdictions, each with its own rate, rules, and exemptions. For freelancers and small business owners, getting this wrong can mean penalties, back taxes, and lost clients. This guide breaks down which states have the highest combined sales tax rates in 2026, which states have no sales tax at all, and exactly what you need to do to stay compliant -- whether you sell physical goods, digital services, or both.

How US Sales Tax Works

Sales tax in the United States operates on two levels: the state rate and the local rate. Every state that imposes a sales tax sets a base statewide rate. On top of that, counties, cities, and special taxing districts can layer additional rates. When you hear about a "combined" rate, that is the state rate plus the average of all local rates within that state.

For example, Tennessee has a state rate of 7%, but when you factor in the county and city additions common across the state, the average combined rate climbs to about 9.55%. That makes it one of the highest-tax states in the country on a combined basis, even though several states have higher base state rates.

The concept of "nexus" is central to understanding your obligations. Nexus simply means a connection between your business and a state significant enough to require you to collect and remit that state's sales tax. Historically, nexus was physical -- you needed a store, warehouse, or employee in the state. But since the landmark 2018 Supreme Court decision in South Dakota v. Wayfair, economic nexus has become the law of the land. Under economic nexus rules, crossing a revenue or transaction threshold in a state (commonly $100,000 in sales or 200 separate transactions in a year) triggers a collection obligation -- even if you have never set foot there.

For online sellers, this is a major shift. A freelance graphic designer who sells digital templates, a small shop selling handmade goods through an online marketplace, or a consultant who invoices clients in multiple states may have nexus in dozens of states without realizing it. Understanding the combined rates in each state is therefore essential, not just for curiosity, but for calculating the right amount to charge on every invoice.

Sales tax is also destination-based in most states, meaning the rate applied is the rate at the buyer's location, not your location. This adds another layer of complexity for remote sellers who must know the exact local rate for each customer address.

The 10 States With the Highest Sales Tax in 2026

The table below shows the 10 states with the highest average combined sales tax rates in 2026, ranked from highest to lowest. The "combined rate" reflects the state base rate plus the weighted average of all local rates.

| State | State Rate | Avg Local Rate | Combined Rate | Key Notes |

|---|---|---|---|

| Tennessee | 7.00% | 2.55% | 9.55% | Among highest due to broad local additions; groceries taxed at reduced rate |

| Louisiana | 4.45% | 5.10% | 9.55% | Very high local rates; parishes (counties) add heavily on top of low state base |

| Arkansas | 6.50% | 2.96% | 9.46% | High local additions; food taxed at lower rate |

| Washington | 6.50% | 2.88% | 9.38% | No income tax; state relies heavily on sales tax; local rates vary widely |

| Alabama | 4.00% | 5.25% | 9.25% | High local rates; some cities exceed 10% combined |

| Oklahoma | 4.50% | 4.49% | 8.99% | Local jurisdictions add substantially; tribal tax considerations exist |

| Illinois | 6.25% | 2.61% | 8.86% | Chicago metro pushes averages up; complex local structure |

| Kansas | 6.50% | 2.18% | 8.68% | Recently eliminated grocery sales tax at state level |

| California | 7.25% | 1.43% | 8.68% | Highest state base rate in the country; local additions relatively modest |

| New York | 4.00% | 4.52% | 8.52% | New York City adds 4.5%; combined rate varies dramatically by county |

A few important observations from this data. First, a high state rate does not always mean the highest combined rate. Louisiana has a relatively modest state rate of 4.45% but lands at the top because parishes routinely add 4% to 5% on their own. Conversely, California has the single highest state rate in the country at 7.25%, but limited local additions keep it out of the very top tier on a combined basis.

Second, within-state variation can be enormous. In Alabama, some cities see combined rates above 10%, while rural unincorporated areas might be closer to 4%. In New York, rates range from 7% in some upstate counties to 8.875% in New York City. This means the state average is only a starting point -- destination-based sellers need to look up the specific rate at the buyer's address.

Third, these rates apply to tangible personal property by default. Whether digital services, software, or professional services are taxable depends entirely on each state's rules. Tennessee, for example, taxes some digital goods. Washington taxes most digital services at the full rate. These distinctions matter enormously for freelancers selling digital deliverables.

States With No Sales Tax

Five states impose no statewide sales tax at all: Oregon, Montana, New Hampshire, Delaware, and Alaska. However, it is important to understand what "no sales tax" really means for each one.

Oregon, Montana, New Hampshire, and Delaware have no sales tax at any level -- no state tax and no local tax. These are true zero-sales-tax jurisdictions. Businesses selling exclusively to customers in these states do not need to collect any sales tax on those transactions.

Alaska is a partial exception. The state itself levies no sales tax, but Alaskan municipalities are permitted to impose local sales taxes, and many do. The Alaska Remote Seller Sales Tax Commission has even created a simplified filing system for remote sellers dealing with Alaska local taxes. So a sale to a customer in Juneau or Anchorage may still carry a local sales tax obligation, even though there is no Alaska state tax.

For freelancers, these five states represent a simpler situation. If your client is in Portland, Oregon, or Wilmington, Delaware, you do not need to add sales tax to your invoice (with the caveat that you should always verify whether your specific service is taxable in that state if you have nexus there through other means).

That said, operating in a no-sales-tax state does not protect you from obligations elsewhere. If you are a freelancer in Oregon selling digital products to clients in Tennessee, Washington, and New York, you may have economic nexus in all three of those states and need to collect their combined rates -- even though Oregon itself has no tax. Your home state is irrelevant to the nexus rules of the state where your customer is located.

Businesses sometimes relocate to no-sales-tax states to simplify their own in-state compliance, but for remote sellers with a national client base, the obligation follows the buyer, not the seller.

How Sales Tax Affects Freelancers and Small Businesses

Many freelancers assume that sales tax is a retail problem -- something that applies only to stores selling physical merchandise. That assumption is increasingly incorrect, and acting on it can create serious liability.

Whether a freelancer must collect sales tax depends on three things: (1) whether the type of service or product they sell is taxable in the relevant state, (2) whether they have nexus in that state, and (3) whether any exemptions apply to the transaction.

For physical goods -- freelancers who sell handmade crafts, prints, merchandise, or any tangible product -- sales tax obligations are broad. Most states tax the sale of tangible personal property as a default, and many marketplace platforms (Etsy, Amazon, Shopify, etc.) now collect and remit marketplace facilitator taxes on behalf of sellers automatically. Even so, direct sales made outside those platforms remain the seller's responsibility.

For digital services and digital products, the rules are a patchwork. As of 2026, roughly half of US states tax at least some categories of digital goods or electronically delivered services. Washington state taxes digital products broadly. New York taxes certain digital services. Tennessee taxes digital audio works, digital audiovisual works, and digital books. Other states, like California, have generally not expanded their sales tax to cover most digital services, though this continues to evolve.

For traditional professional services -- consulting, design work, writing, legal advice -- most states do not impose sales tax. However, a growing number of states do tax certain services. Hawaii's general excise tax, for example, effectively functions as a broad-based consumption tax that covers services. Texas taxes data processing services. Ohio taxes most business services. Freelancers operating in these states or serving clients there need to verify their obligations.

Economic nexus thresholds are the key trigger. The most common threshold, used by the majority of states, is $100,000 in sales or 200 transactions in the previous or current calendar year. Once you cross that threshold in a state, you have nexus and must register, collect, and remit. A few states use lower thresholds, and some count only sales, not transactions. Keeping a running tally of revenue by state is no longer optional for any growing freelancer or small business.

How to Calculate and Collect Sales Tax on Invoices

Once you have determined that you have nexus in a state and that your product or service is taxable there, the mechanics of calculating and collecting sales tax are straightforward -- but they must be done correctly on every invoice.

Step 1: Determine the applicable rate. For destination-based states (the majority), look up the combined rate for the buyer's specific address, not just the state average. Many states provide free rate lookup tools on their department of revenue websites. The state average rates in the table above are useful for planning, but for billing you need the precise rate for the delivery address.

Step 2: Apply the rate to the taxable portion of the invoice. Not everything on an invoice may be taxable. If you are billing for a mix of taxable products and non-taxable services, you need to separate them and apply the tax only to the taxable items. Document this clearly on the invoice itself.

Step 3: Show the tax as a separate line item. Most state tax authorities require that sales tax be shown as a distinct line on the invoice, separate from the price of the goods or services. Do not simply inflate your price by the tax amount and hide it -- this can be treated as tax evasion and also confuses clients who need to track sales tax for their own records.

Step 4: Remit the collected tax to the appropriate state. Sales tax you collect from customers is not your income. It is held in trust for the state. Commingling it with your operating funds and failing to remit it on time is a common and costly mistake.

For freelancers who need to create professional invoices with proper tax line items quickly, Eonebill's free invoice generator makes it easy to add itemized tax lines to any invoice, specify different rates for different line items, and produce a polished PDF that satisfies both clients and tax authorities. You can generate unlimited invoices for free, and the platform handles the formatting so you never forget to include a required tax field.

When quoting clients, always clarify whether your quoted price is inclusive or exclusive of sales tax. For B2B transactions, many buyers will provide you with a resale certificate or exemption certificate that eliminates your obligation to collect tax on that sale -- but you must keep a copy of that certificate in your records.

Staying Compliant Without the Headache

Sales tax compliance is not a one-time task. It is an ongoing operational process that requires attention to registration, filing, remittance, and record-keeping -- all across multiple states if you sell nationally.

Registration comes first. Before you can legally collect sales tax in a state, you must register with that state's department of revenue to obtain a sales tax permit. Collecting without a permit is itself a violation. Most states offer online registration, and many are free, though a few charge a small fee. Once registered, you will be assigned a filing frequency -- monthly, quarterly, or annually -- based on your expected sales volume in that state.

Record-keeping is the backbone of compliance. You need to maintain documentation of: every taxable sale and the rate applied, every exempt sale and the exemption certificate received, every filing submitted and every remittance made, and any changes to rates in jurisdictions where you sell. The IRS standard for record retention is at least three years, but many state tax authorities can audit further back, particularly if fraud is suspected. Keeping clean records from day one is far less painful than reconstructing them under audit.

Filing deadlines must be treated seriously. Late remittance typically triggers both a penalty (often 10% to 25% of the tax owed) and interest. Some states require zero-balance returns even in periods when you collected nothing, so do not assume that a quiet quarter means no filing obligation.

Technology makes multi-state compliance manageable. Dedicated sales tax software can calculate rates at checkout, file returns automatically, and flag you when you are approaching nexus thresholds in new states. For very small operations, a simpler approach -- tracking sales by state in a spreadsheet and filing manually -- can work, but it becomes unwieldy above a handful of states.

Eonebill helps at the invoice layer, which is where the paper trail starts. Every invoice you send through the platform can include properly formatted tax lines, clear separation between taxable and non-taxable items, and a complete audit history of every document you have issued. That documentation is exactly what a state auditor asks for first. If your invoices are clean and consistent, audits resolve faster and with less stress.

For freelancers who want professional invoicing with tax line support without paying enterprise software prices, Eonebill pricing starts at $0 for the Free plan, which covers unlimited invoices for smaller operations. The Pro plan at $19 per month adds automation, client portals, and advanced reporting. The Business plan at $69 per month is built for teams managing multi-client, multi-state billing at volume.

Sales tax compliance is one of those areas where investing a small amount of time and the right tools early on saves enormous headaches later. Knowing which states have the highest rates, understanding your nexus obligations, and issuing invoices that clearly document the tax you collect puts you in a strong position -- whether you are filing quarterly returns or responding to a state audit notice.

The combined rates vary widely across the US, from the 9.55% highs of Tennessee and Louisiana down to 0% in Oregon and New Hampshire. For a freelancer or small business owner with customers in multiple states, this is not trivia -- it is the difference between compliance and liability. Use this guide as your reference point in 2026, stay current on economic nexus thresholds, and make sure every invoice you send reflects the right rate for the right jurisdiction.