Sales Tax Slice: What Do the 2013 Tax Rate Changes Tell Us About the Future?


The beginning of a new year means reviewing the prior year’s important developments as a means of predicting what lies ahead.  

In 2013, a handful of states passed legislation mid-year to either increase or decrease  statewide sales and use tax rates. But an analysis of the changes yields few discernible patterns. For each state, the new rate took effect in the second half of the year.

That’s where the similarities appear to end. There was almost an even split between the states that raised and lowered their rates. It also seemed to make little difference whether the state was controlled by the Democratic or Republican party. The District of Columbia, a historically “blue” jurisdiction, lowered its sales tax. Meanwhile, Ohio, in which Republicans control the Legislature and the Governor’s Office, raised its rate.  

Below is a quick recap:

The following states lowered their sales and use tax rates mid-2013:

·         Arizona- effective June 1, 2013, the rates decreased from 6.5 to 5.6 percent after a temporary 1 percent rate increase terminated;

·         District of Columbia- effective Oct. 1, 2013, the rates decreased from 6 to 5.7 percent; and

·         Kansas- effective July 1, 2013, the rates decreased from 6.3 to 6.15 percent.

The following states raised  their sales and use tax rates mid-2013:

·         Arkansas- effective July 1, 2013, the gross receipts and compensating tax rates increased from 6 to 6.5 percent;

·         Maine- effective Oct. 1, 2013, the rates increased from 5 to 5.5 percent;

·         Ohio- effective Sept. 1, 2013, the rates increased from 5.5 to 5.75 percent; and

·         Virginia- effective July 1, 2013, the rates increased from 4 to 4.3 percent.

Continue the discussion on Bloomberg BNA’s State Tax LinkedIn Group . Do you believe the tax rate changes in 2013 provide any hints as to what may happen this year?

By Ean Hamilton

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