Sales tax is a familiar part of our everyday transactions, whether we’re purchasing groceries or updating our wardrobes. It plays a significant role in generating tax revenue for state and local governments, comprising 32.2% of their total tax income in 2020.
To gain insights into the impact of these taxes on individuals, USAFacts conducted a thorough examination of tax burdens across the country. They assessed the proportion of a person’s income that goes towards taxes using two metrics: the percentage of personal income, which is obtained by dividing per-capita tax revenue by per-capita annual income for each state, and the per-person tax revenue.
It’s important to note that besides general sales taxes, there are also selective sales taxes that specifically target items like alcohol, tobacco, and gasoline.
Among these states, New Mexico has the highest general sales tax burden per capita, with residents paying approximately $2,170 in sales taxes. Nevada follows closely behind with around $2,040 per person, while Arizona residents face a burden of $1,720. Texas and Colorado have sales tax burdens of $1,640 and $1,520 per capita, respectively.
California and Oklahoma also have significant burdens, with residents paying approximately $1,500 and $1,390 in sales taxes. Finally, Utah has a relatively lower burden of $1,380 per person. These figures provide insights into the variations in sales tax burdens across the American Southwest states, highlighting the financial impact on individuals within these regions.