As if inflation wasn’t bad enough, now your wallet must adjust to another sad reality: Sales tax rates have risen to an all-time high.
Vertex Inc., a provider of tax technology solutions, found that the average U.S. sales tax rate have reached a record high of 10.17%. That figure reflects the average state, county, city, and district rates.
At the city level, the number of sales tax increases (126) trounced that of decreases (20). In addition, the number of county-level increases was nearly twice that of county-level decreases.
In a press release, Michael Bernard, Vertex’s vice president of tax content and chief tax officer, notes that throughout the pandemic, state and local revenues have benefited from a flood of funding out of the federal government.
However, state and local government budget directors are preparing for the flow of money to dry up, given the expected outcome of this November’s midterm elections. It is widely assumed that Republicans will take back control of the U.S. House of Representatives, and possibly the Senate.
“To that end, sales tax revenues will play a key component in funding local governments, in addition to income and property taxes. Sales tax presents a unique opportunity because it can be implemented quickly and administered much more swiftly than income and property taxes.”
There was a little good news in Vertex’s report for beleaguered taxpayers: New district sales taxes appear to be leveling off. That comes after a record-setting pace of new district taxes during the first two years of the pandemic.
In the first half of 2022, districts implemented 54 new sales taxes. Over the same period of 2021, districts introduced 127 new sales taxes.