New Milwaukee sales tax rates take effect Monday: How it will affect you
MILWAUKEE (CBS 58) -- Most items will cost more starting Monday when a new Milwaukee city sales tax goes into effect, and Milwaukee County's existing sales tax increases.
The city of Milwaukee will enact a 2% sales tax, which the Common Council approved in July after the state allowed such a tax to exist as part of a law increasing state aid to all local governments. Milwaukee County's sales tax will increase from 0.5% to 0.9%.
On Sunday afternoon, Reiad Kharoub said he was bracing for questions from customers about final prices. Kharoub is the general manager of his family business, Ultimate Home Furniture, which his father took over in 2007.
"I feel like people are gonna be taken off guard by it because, honestly, the only reason why I know is because my dad's letting me know every month," Kharoub said.
Under the new tax rate, a $2,000 furniture set will now ring up an additional $158 in sales taxes. That number had been $110 under the old tax rate.
"They're gonna ask for a bargain. They're gonna ask for me to not do the sales tax and stuff like that," Kharoub said. "But unfortunately, it's not me pocketing the money, so we have to collect."
Not every item is subject to the sales tax. Essentials, such as groceries, prescription drugs and some medical devices, are exempt from the tax.
For motor vehicles and boats, there's no escaping the tax by seeking dealerships outside of Milwaukee. State law calls for those items to be taxed at the rate for the city and county in which the item will be kept.
Click here to read a full Wisconsin Department of Revenue recap of how the Milwaukee sales tax will be enforced.
Projections put together by Milwaukee's budget office over the summer estimated the tax will cost working-class families about $230 more per year. Median-income families would pay $365 more.
How the rate compares to similar cities
The new tax rate will have Milwaukee on par with the majority of cities its size. Combining the state, city and county sales tax rates, Milwaukee's 7.9% tax is higher than Louisville and Baltimore, which have 6% total sales tax rates.
Memphis and Kansas City still have higher sales tax rates, checking in at 9.75% and 9.98%, respectively.
Claire Koenig, communications director for Visit Milwaukee, said the city's tourism chamber supported the tax because it would mean tourists and commuters start paying a bigger share of the costs for the services they use, such as road maintenance and public safety.
"Visitors use those services, too, and so, for us, it was an easy 'yes.' We are all-in on a higher sales tax," Koenig said. "Because visitors are users of those, but they're also payers of those."