Johnson City is not an exception to Tennessee’s reputation for having high sales taxes. Johnson City’s current sales tax rate is 9.75%, which is made up of a 7% state sales tax, a 2.25% county sales tax, and a 0.5% municipal sales tax. Accordingly, $9.75 of every $100 bought in Johnson City is used to pay sales tax.
But why is Tennessee’s sales tax one of the highest in the nation? One factor is Tennessee’s lack of a state income tax, which leaves it significantly dependent on sales tax receipts to pay for state and local government services. Furthermore, low-income households are disproportionately impacted by Tennessee’s high sales tax on food and other necessities.
The Tennessee sales tax does, however, have several exceptions. Prescription drugs, medical equipment, and groceries are just a few examples of things that are excluded from the state sales tax. Additionally, several Tennessee counties and towns have implemented local choice sales taxes, which may provide a lower tax rate or an exemption for specific items.
Tennessee does not tax Social Security payments, which makes it a desirable option for retirees living on a fixed income. Retirees may be interested to know this. Tennessee also does not impose a state income tax, which is advantageous for retirees with additional sources of income.
However, Tennessee is not the only state that provides tax advantages to retirees. Some states don’t tax Social Security benefits or state income, including Florida and Nevada. Others don’t tax retirement income or have a state income tax, like Wyoming and South Dakota.
However, in 2021, several states will have the highest tax rates. For instance, New York’s total state and local tax rate of 12.7% is the highest in the nation. This comprises a local sales tax of up to 4.5% and a state income tax rate of up to 8.82%.
In conclusion, Johnson City now has one of the highest sales tax rates in the nation at 9.75%. Tennessee does not have a state income tax, so much of the money used to pay for government services comes from sales taxes. Tennessee’s lack of a state income tax and its exemption from Social Security taxes may make it a desirable option for retirees. However, certain states, like New York, will have the highest rates in 2021, while others, like Florida and Nevada, also provide tax incentives for retirees.
New York, Hawaii, Vermont, Maine, and Minnesota are the five states in the union with the highest tax burdens.