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Local governments and municipalities have been raising sales tax rates or introducing new taxes throughout 2024, due to the inflationary environment in place prior to the Federal Reserve's interest rate cuts. Amid lawsuits and proposals for regulations on voluntary sales tax disclosures, much is due to change.
In the Tax Foundation's 2025 State Tax Competitiveness Index, the organization judged each state based on five areas: individual income taxes; sales, use, and excise taxes; corporate taxes; property and wealth taxes and unemployment insurance taxes. Sales and excise taxes was the second highest-weighted category at 22.8%.
The most competitive states are ranked from one to 10 according to their scores, one being the most competitive within the group and 10 being the least. For the states at the tail end of the spectrum, which are the least competitive in terms of sales and excise taxes, rankings are from 50 for the least competitive to 40 for the state with the highest comparative score.
Read on to see which states were the most — and least — competitive when it comes to these tax areas.
10 states with the most and least competitive sales and excise taxes in 2025
10 most competitive
| 2025 Rank | State | 2025 Score | 2024 Rank | 2023 Rank | 2022 Rank | 2021 Rank | 2020 Rank |
| 1 (tie) | New Hampshire | 8.93 | 1 | 1 | 1 | 2 | 1 |
| 1 (tie) | Delaware | 8.93 | 2 | 2 | 2 | 1 | 2 |
| 3 | Montana | 8.85 | 3 | 3 | 3 | 3 | 3 |
| 4 | Oregon | 8.62 | 4 | 4 | 4 | 4 | 4 |
| 5 | Alaska | 7.86 | 5 | 5 | 5 | 5 | 5 |
| 6 | Wisconsin | 6 | 6 | 6 | 6 | 7 | 7 |
| 7 | Wyoming | 5.97 | 7 | 7 | 7 | 6 | 6 |
| 8 | Maine | 5.86 | 8 | 8 | 8 | 9 | 8 |
| 9 | Idaho | 5.46 | 11 | 12 | 12 | 12 | 12 |
| 10 | Virginia | 5.43 | 9 | 11 | 10 | 10 | 10 |
10 least competitive
| 2025 Rank | State | 2025 Score | 2024 Rank | 2023 Rank | 2022 Rank | 2021 Rank | 2020 Rank |
| 50 | Washington | 2.94 | 50 | 49 | 49 | 49 | 49 |
| 49 | Alabama | 3.17 | 49 | 50 | 50 | 50 | 50 |
| 48 | Louisiana | 3.23 | 48 | 48 | 48 | 48 | 48 |
| 47 | Tennessee | 3.66 | 47 | 47 | 47 | 47 | 47 |
| 46 | California | 3.81 | 46 | 46 | 44 | 43 | 44 |
| 45 | Arizona | 3.84 | 45 | 45 | 45 | 45 | 45 |
| 44 | Arkansas | 3.89 | 44 | 44 | 43 | 44 | 43 |
| 42 (tie) | Ohio | 3.97 | 43 | 43 | 42 | 41 | 41 |
| 42 (tie) | New York | 3.97 | 40 | 41 | 41 | 42 | 42 |
| 40 (tie) | District of Columbia | 4.01 | 43 | 41 | 41 | 41 | 41 |
| 40 (tie) | New Mexico | 4.01 | 42 | 42 | 46 | 46 | 46 |
