Nevada ranks among states with highest sales tax rates

CARSON CITY - When it comes to sales taxes, Nevada ranks among the highest taxed states in the country, according to a survey released Tuesday by the Washington, D.C.-based Tax Foundation.

Nevada's 6.85 percent statewide sales tax rate puts it eighth-highest, only a fraction behind California's leading 7.25 percent rate.

Counting local sales taxes, Nevadans on the average pay a 7.93 percent rate, 13th highest. Clark County's state and local combined sales tax rate is 8.1 percent.

Tennessee residents pay an overall sales tax rate of 9.43 percent, the highest in the nation.

But in the report, the Tax Foundation noted that the sales tax rates might not be the best indication of what constitutes high- or low-taxed states.

The nonprofit research organization noted that some states levy sales taxes on food, while others, including Nevada, do not. Others charge no taxes on clothes purchases, while Nevada does.

More than one-half of services in Nevada are not subject to sales taxes, according to estimates.

Still, the Tax Foundation said its survey is important because it is readily understandable by residents. And unlike other surveys, it includes locally imposed sales taxes.

"Retail sales taxes are one of the more transparent ways to collect tax revenue, as statewide sales tax rates are generally well-understood by taxpayers," said Tax Foundation economist Scott Drunkard in a statement.

"The local sales taxes collected in thousands of jurisdictions in 37 states, however, are not. These rates can be substantial, so a state with a moderate statewide sales tax rate can end up with a very high combined state and local rate," he said.

The highest total sales tax rate is 13.725 percent in Tuba City, Ariz.

Chicago charges a 9.25 percent sales tax, much higher than the state of Illinois' 6.25 percent. The high Chicago tax causes many residents to shop in suburban communities, according to the foundation.

Five states do not charge sales taxes. But of them, Alaska and Montana allow local governments to levy sales taxes. Only Oregon, Delaware and New Hampshire have no sales taxes.

According to the Tax Foundation, the state with the broadest-based sales tax - one that taxes most services and purchases - is Hawaii. Hawaii has a 4 percent sales tax, but residents and visitors pay the sales taxes on 99.21 percent of their purchases.

What percentage of goods and products are taxed in Nevada was not readily available. The Review-Journal requested that information from the Tax Foundation.

In Nevada, many services, such as haircuts, beauty shop visits, dry cleaning and medical office visits are not subject to taxation.

While Clark County's tax rate is 8.1 percent, it could rise to as much as 9 percent within a three-mile radius of a proposed arena near the Strip if voters approve a ballot question in November.

Whether that question goes on the ballot, however, is subject to a pending state Supreme Court decision. Legislators and the governor oppose the added tax and have put an alternative, anti-tax question on the ballot.

Contact Capital Bureau Chief Ed Vogel at evogel@reviewjournal.com or 775-687-3901.