State sales tax history and operation
Since the tax shift in 1981, Nevada Government at every level has depended heavily on sales tax revenue. The shift was designed to reduce and then cap the growth of property taxes to convince Nevada voters not to pass a version of California’s Proposition 13.
In the process, the sales tax was increased significantly from its historic 3 percent rate. With a couple of additions since the shift, the basic statewide rate is now 6.5 percent.
Several optional increases have also been authorized by the Legislature for such things as local government roads and infrastructure, pushing the tax as high as 7.75 percent in Clark County.
Lyon remains at the base 6.5 percent while Douglas has enacted a quarter percent levy to help pay for airports, parks, libraries and other projects, raising its rate to 6.75 percent. Carson City’s combined rate is 7.125 percent including options for road construction, the V&T Railway and city infrastructure.
The state gets 2 percent, which generated nearly $1 billion last year statewide. The state sales tax makes up about one-third of the state’s general fund revenue.
Schools receive 2.25 percent and each district gets the amount raised within its county whether it was generated by in-state or out-of-state sales.
Cities and counties get a half percent of basic support tax plus the 1.75 percent Supplemental City/County Relief Tax, a total of 2.25 percent. Each county and its municipalities keep the Basic City/County Relief Tax collected within the county. The basic relief tax generated from out-of-state sales is divided among all counties according to each county’s percentage of total state population.
But the supplemental relief tax collected from out-of-state sales, which makes up about 10 percent of the total, is run through the formula which first provides the guarantee to small counties. That guarantee is raised each year either by the percentage growth in the out-of-state supplemental relief tax or by inflation and population growth, which ever is lower.
After the guarantee money comes off the top, the rest of the cash is divided among the nonguarantee counties based on their percentage of the total state population. Carson City has about 1.4 percent of the state’s population.
The basic relief tax and supplemental relief tax together generated more than $1 billion last year for local governments. The local options generate widely different amounts depending on which county they are levied.
The Local School Support Tax generated another $1 billion plus for Nevada’s 17 school districts.
By the numbers
State Sales and Use Tax: 2%
Total Local Government: 2.25%
• Basic City/County Relief Tax: 0.5%
• Supplemental City/County Relief Tax: 1.75%
Local School Support Tax: 2.25%
Base statewide tax: 6.5%