Which State Taxes the Most? New Study Breaks Down Local Sales Taxes

As state lawmakers debate how to close their chronically inflated deficits, a new study shows that some parts of the country are already imposing a sales tax that approaches 10 percent.

The nonpartisan Tax Foundation released a report on Thursday sorting out which states have the highest sales tax -- factoring in both state sales tax and average local sales tax.

Topping the list? Tennessee, California and Arizona.

Not all the high-taxing states have an outrageously high state sales tax. But when combined with local taxes -- something 33 states allow -- the actual rate customers pay climbs significantly. In Tennessee, the state sales tax is 7 percent. Combined with the average local rate, the Tax Foundation estimated the real sales tax is 9.44 percent.

In California, the combined rate was calculated at 9.08 percent. And in Arizona, that rate was 9.01 percent.

Louisiana, Washington and New York also had unusually high rates.

Naturally, states with no sales tax -- Delaware, Montana, New Hampshire and Oregon -- ranked at the bottom. Alaska, which has no state sales tax but permits local taxes, had a combined rate of just 1.1 percent.

Of those states with a state sales tax, Hawaii had the lowest, at 4.35 percent, followed by Maine and Virginia with 5 percent each.