A total of 556 sales and use tax rate changes occurred in 2016, according to a new report.
The report, from sales tax software developer Vertex, identified two significant state sales tax increases last year: in Louisiana, which hiked its rate from 4 to 5 percent last April, and South Dakota, which upped its rate from 4 to 4.5 percent in June. On the other hand, California lowered its rate from 6.5 to 6.25 percent, though taxpayers experienced no change in their total combined rate thanks to tax rate changes across all of the Golden State’s counties.
The territory of Puerto Rico currently has the highest state sales tax rate at 10.5 percent. Last year Puerto Rico repealed the Value Added Tax legislation it tried to institute in 2015 as a replacement for its sales and use tax to help the island’s troubled economy. Instead it decided last May to go back to the sales and use tax.
On the state side, Indiana, Mississippi, New Jersey, Rhode Island and Tennessee continued to impose the second highest sales tax rate at 7 percent.
Among cities, Kodiak, Alaska; Wrangell, Alaska; and Winter Park, Colorado, had the highest city sales tax rate last year, tied at 7 percent. Also in Alaska, the cities of Hoonah and Selawik have the second highest rate of 6.5 percent.
Tuba City (including the surrounding areas that are in the To’Nanees’Dizi Local Government), in Coconino County, Arizona, trumpeted the highest combined sales tax rate of 12.9 percent.
The tax rate changes have come at a dizzying pace over this past decade. Vertex found there have been 2,172 new sales and use taxes since 2007, translating into an average of 217 per year. Since 2007, there have been 3,985 sales and use tax changes, an average of 399 per year. The combined number of new and changed sales and use tax rates since 2007 totals 6,157, an average of 616 a year.
“The significant number of tax changes made every year across thousands of jurisdictions pose a challenge to companies attempting to track these changes and manage the growing complexity of tax rules,” said John Minassian, vice president of tax content development at Vertex, in a statement.