Tax Foundation sales tax rates (July 1, 2026) · Merchants Payments Coalition / Nilson Report (2025 fees) · LegiScan bill status · Last updated October 2, 2026
When a customer pays by card, you also pay a swipe fee on the sales tax you collect for the state. At the 2.36% average credit card fee, that costs about $2,391 per $1 million in taxable card sales in Louisiana, the state with the highest combined sales tax rate. Illinois is the only state with a law to stop it, and it is on hold. Colorado passed one in 2026 and the governor vetoed it.
Key findings
- Swipe fees hit a record $198.25 billion in 2025, up 5.9% from 2024, according to the Nilson Report as cited by the Merchants Payments Coalition (March 18, 2026). Credit cards made up $157.8 billion of that.
- The average Visa and Mastercard credit card fee was 2.36% of the sale in 2025, up from 2.35% in 2024 (Merchants Payments Coalition, a retailer group).
- The fee on sales tax alone runs from $430 (Alaska) to $2,391 per $1 million in card sales in states with a sales tax. Louisiana (10.13%), Tennessee (9.61%) and Washington (9.57%) have the highest combined rates. Delaware, Montana, New Hampshire and Oregon have no general sales tax, and Alaska has local sales taxes only.
- Only Illinois has passed a ban. Its law is now set to start July 1, 2027, and a federal court blocked it for national banks and the card networks on June 1, 2026.
- Colorado’s ban passed both chambers but was vetoed by Gov. Jared Polis on June 3, 2026.
- Lawmakers in 23 other states and D.C. filed related bills in the 2025-2026 sessions. None had passed as of October 2, 2026.
Fee on the sales tax, by state
Map: bills to stop swipe fees on sales tax
All 50 states and D.C.
Sorted by combined sales tax rate. Click a column heading to sort. “No bill found” means our LegiScan search of 2025-2026 sessions found no bill, not that one could never be filed.
| State | Combined sales tax | State rate | Fee on the tax per $100k card sales | Per $1M | 2025-26 bill status | Details |
|---|---|---|---|---|---|---|
| Louisiana | 10.13% | 5.00% | $239 | $2,391 | No bill found | No 2025-26 bill found in LegiScan search |
| Tennessee | 9.61% | 7.00% | $227 | $2,268 | Bill filed, not passed | Would exclude state and local taxes from swipe fees; in committee. Bills: HB0967, SB0370 |
| Washington | 9.57% | 6.50% | $226 | $2,259 | Bill filed, not passed | Tips only (not sales tax); in committee. Bills: SB5070 |
| Arkansas | 9.48% | 6.50% | $224 | $2,237 | No bill found | No 2025-26 bill found in LegiScan search |
| Alabama | 9.46% | 4.00% | $223 | $2,233 | No bill found | No swipe fee bill found. Separate law SB221 (enacted April 2026) keeps card fees out of the sales tax calculation. Bills: SB221 |
| Oklahoma | 9.06% | 4.50% | $214 | $2,138 | Bill filed, not passed | Would exclude amounts from swipe fees; placed on the Senate calendar March 10, 2026; did not pass. Bills: SB1940, SB1095 |
| California | 9.03% | 7.25% | $213 | $2,131 | Bill filed, died | Consumer Inflation Reduction and Tax Fairness Act; filed away Feb. 2, 2026. Bills: AB1065 |
| Illinois | 8.98% | 6.25% | $212 | $2,119 | Law passed (on hold) | Interchange Fee Prohibition Act (2024) bars swipe fees on the sales tax and tip part of a sale. Start date pushed to July 1, 2027 (Public Act 104-0532). A federal court blocked it on June 1, 2026 for national banks, out-of-state banks, federal savings associations and card networks. Repeal bills also filed. Bills: HB1822, SB3237 |
| Kansas | 8.71% | 6.50% | $206 | $2,056 | Bill filed, not passed | Would exempt the tax and tip part of a sale; in committee. Bills: HB2089 |
| Arizona | 8.54% | 5.60% | $202 | $2,015 | Bill filed, not passed | Interchange fee bill; read a second time Jan. 26, 2026; did not pass. Bills: HB2768 |
| New York | 8.54% | 4.00% | $202 | $2,015 | Bill filed, not passed | Two bill pairs to exclude taxes (and tips) from swipe fees; in committee. Bills: A06603, S05558, A04017, S05587 |
| Missouri | 8.44% | 4.23% | $199 | $1,992 | No bill found | No 2025-26 bill found in LegiScan search |
| Nevada | 8.24% | 6.85% | $194 | $1,945 | No bill found | No 2025-26 bill found in LegiScan search |
| Texas | 8.20% | 6.25% | $194 | $1,935 | Bill filed, died | Swipe fee bills left pending in committee in 2025; next regular session 2027. Bills: HB4124, SB2026 |
| Minnesota | 8.14% | 6.88% | $192 | $1,921 | Bill filed, not passed | Ban on fees on state and local taxes; in committee. Bills: HF4956 |
| Colorado | 7.89% | 2.90% | $186 | $1,862 | Passed, then vetoed | SB26-134 passed both chambers; Gov. Polis vetoed it June 3, 2026. Bills: SB134 |
| New Mexico | 7.68% | 4.88% | $181 | $1,812 | No bill found | No 2025-26 bill found in LegiScan search |
| Georgia | 7.56% | 4.00% | $178 | $1,784 | Bill filed, not passed | Limit on swipe fees at retail; in committee. Bills: HB431, SB512 |
| South Carolina | 7.49% | 6.00% | $177 | $1,768 | Bill filed, not passed | Sales Tax Swipe Fee Fairness Act; in committee. Bills: H4613 |
| Utah | 7.42% | 6.10% | $175 | $1,751 | No bill found | No 2025-26 bill found in LegiScan search |
| Ohio | 7.29% | 5.75% | $172 | $1,720 | No bill found | No 2025-26 bill found in LegiScan search |
| North Carolina | 7.10% | 4.75% | $168 | $1,676 | Bill filed, not passed | No Interchange Fees on Sales Tax or Tips; in committee. Bills: H650 |
| North Dakota | 7.09% | 5.00% | $167 | $1,673 | No bill found | No 2025-26 bill found in LegiScan search |
| Mississippi | 7.06% | 7.00% | $167 | $1,666 | Bill filed, died | Retailer Tax Fairness Act; died in committee Feb. 25, 2026. Bills: HB606, SB3121 |
| Indiana | 7.00% | 7.00% | $165 | $1,652 | Bill filed, not passed | Interchange fee regulation; in committee. Bills: HB1215 |
| Rhode Island | 7.00% | 7.00% | $165 | $1,652 | Bill filed, not passed | Bans on fees on taxes and tips; held for further study. Bills: H7607, H8212, S2344, S2522 |
| Florida | 6.98% | 6.00% | $165 | $1,647 | No bill found | No 2025-26 bill found in LegiScan search |
| Nebraska | 6.98% | 5.50% | $165 | $1,647 | No bill found | No 2025-26 bill found in LegiScan search |
| Iowa | 6.94% | 6.00% | $164 | $1,638 | Bill filed, not passed | Would exclude fees on certain taxes; subcommittee backed it March 5, 2026. Bills: HSB324, SSB1229 |
| New Jersey | 6.60% | 6.63% | $156 | $1,558 | Bill filed, not passed | Bans on fees on sales tax and tips; in committee. Bills: A5014, S4360, A5008, S4160 |
| West Virginia | 6.60% | 6.00% | $156 | $1,558 | Bill filed, not passed | Would keep sales tax out of card surcharges charged to customers (a different approach); in committee. Bills: HB4396 |
| Vermont | 6.43% | 6.00% | $152 | $1,517 | Bill filed, not passed | Ban on card fees on taxes and tips; in committee. Bills: H0317 |
| Connecticut | 6.35% | 6.35% | $150 | $1,499 | No bill found | No 2025-26 bill found in LegiScan search |
| Pennsylvania | 6.34% | 6.00% | $150 | $1,496 | Bill filed, not passed | Limits on card network fee practices; in committee. Bills: HB2090, SB1202 |
| Massachusetts | 6.25% | 6.25% | $148 | $1,475 | Bill filed, not passed | Ban on fees on tax and tips; sent to a study order July 31, 2026. Bills: S688, H1259 |
| South Dakota | 6.11% | 4.20% | $144 | $1,442 | No bill found | No 2025-26 bill found in LegiScan search |
| Idaho | 6.03% | 6.00% | $142 | $1,423 | No bill found | No 2025-26 bill found in LegiScan search |
| District of Columbia | 6.00% | 6.00% | $142 | $1,416 | Bill filed, not passed | Fair Swipe Act: ban on fees on tax and tips; in committee. Bills: B26-0138 |
| Kentucky | 6.00% | 6.00% | $142 | $1,416 | No bill found | No 2025-26 bill found in LegiScan search |
| Maryland | 6.00% | 6.00% | $142 | $1,416 | No bill found | No 2025-26 bill found in LegiScan search |
| Michigan | 6.00% | 6.00% | $142 | $1,416 | No bill found | No 2025-26 bill found in LegiScan search |
| Virginia | 5.77% | 5.30% | $136 | $1,362 | No bill found | No 2025-26 bill found in LegiScan search |
| Wisconsin | 5.72% | 5.00% | $135 | $1,350 | No bill found | No 2025-26 bill found in LegiScan search |
| Maine | 5.50% | 5.50% | $130 | $1,298 | No bill found | No 2025-26 bill found in LegiScan search |
| Wyoming | 5.39% | 4.00% | $127 | $1,272 | No bill found | No 2025-26 bill found in LegiScan search |
| Hawaii | 4.50% | 4.00% | $106 | $1,062 | No bill found | No 2025-26 bill found in LegiScan search |
| Alaska | 1.82% | 0.00% | $43 | $430 | Bill filed, not passed | Ban on fees on tax and tips; in committee since April 2025. Bills: HB171 |
| Delaware | 0.00% | 0.00% | $0 | $0 | Bill filed, not passed | Credit card fee bill; reported out of committee March 10, 2026. Bills: HB315 |
| Montana | 0.00% | 0.00% | $0 | $0 | No bill found | No 2025-26 bill found in LegiScan search |
| New Hampshire | 0.00% | 0.00% | $0 | $0 | No bill found | No 2025-26 bill found in LegiScan search |
| Oregon | 0.00% | 0.00% | $0 | $0 | No bill found | No 2025-26 bill found in LegiScan search |
The federal bill
The Credit Card Competition Act of 2026 (S.3623, from Sens. Roger Marshall and Dick Durbin, and H.R.7035 in the House) was introduced January 13, 2026. Banks with at least $100 billion in assets would have to let their credit cards run on at least one network other than Visa or Mastercard. It does not set a fee cap. As of October 2, 2026, both versions were still in committee.
What you can do now
- Check your processor statement. Look for the “effective rate”: total fees divided by total card sales.
- Know the surcharge rules. Card brands and some states limit adding a fee for card payments. See sales tax on services bills by state for tax changes that affect what you collect.
- Illinois businesses: watch for processor notices before July 1, 2027 about sending tax and tip amounts with each sale.
Cite or share this data
Source: StartBusinessByState.com, Credit card swipe fees on sales tax by state (updated October 2, 2026). https://startbusinessbystate.com/credit-card-swipe-fees-by-state/
Sources and methods
- Sales tax rates. Tax Foundation, State and Local Sales Tax Rates, Midyear 2026 (rates as of July 1, 2026). Local rates are population-weighted averages.
- Fee rate and totals. Merchants Payments Coalition, press release, March 18, 2026, citing the Nilson Report. The 2.36% figure is MPC’s average for Visa and Mastercard credit cards. MPC is a retailer coalition that backs swipe fee limits. Debit fees are usually lower, so a business with many debit sales pays less.
- Estimate. Fee on tax = taxable card sales x combined rate x 2.36%. It assumes all sales are taxable and paid by credit card.
- Bills. LegiScan full-text searches of 2025-2026 sessions for “interchange” and “swipe fee” bills, run October 2, 2026, then checked one by one. Illinois: Public Act 104-0532 (new start date July 1, 2027) and Illinois Bankers Association v. Raoul, N.D. Ill., order of June 1, 2026. Colorado: SB26-134, vetoed June 3, 2026.
- Not legal or tax advice.
FAQ
What is a swipe fee?
It is the fee your card processor takes out of each card sale. Most of it is the “interchange” fee set by Visa or Mastercard and paid to the bank that issued the card. The Merchants Payments Coalition, a retailer group, says the average Visa and Mastercard credit card fee was 2.36% of the sale in 2025.
Do I really pay a fee on the sales tax I collect?
Usually, yes. The fee is a percentage of the full amount charged, and that amount includes sales tax. You pass the tax on to the state, but the fee on that part stays with the card system.
How did you estimate the fee on sales tax?
Taxable card sales x combined state and local sales tax rate x 2.36%. For $1 million in taxable card sales in Louisiana: $1,000,000 x 10.13% x 2.36% = about $2,391. Your real number depends on your processor, card mix (debit costs less) and local rate.
Is the Illinois law in effect?
Not yet. Illinois moved the start date to July 1, 2027. A federal judge also ruled on June 1, 2026 that the state cannot enforce the fee limit against national banks, banks chartered in other states, federal savings associations or the card networks. More appeals are possible.
What is the Credit Card Competition Act?
A federal bill (S.3623 in the Senate, H.R.7035 in the House, both introduced January 13, 2026). It would make big card-issuing banks let credit cards run on at least one network besides Visa or Mastercard. As of October 2, 2026, both versions were still in committee.
Can I use this data?
Yes. Please credit StartBusinessByState.com and link to this page. The full table is free to download as a CSV.