7-i 

CHAPTER 7. MARKUPS ANALYSIS

TABLE OF CONTENTS

7.1 INTRODUCTION .............................................................................................................. 7-1

7.1.1 Baseline Markups................................................................................................. 7-3

7.1.2 Incremental Markups ........................................................................................... 7-4

7.1.3 Overall Markups .................................................................................................. 7-5

7.2 ESTIMATION OF OEM, WHOLESALER, CONTRACTOR, AND SALES TAX 

MARKUPS ......................................................................................................................... 7-5

7.2.1 Financial Information Sources ............................................................................. 7-5

7.2.2 Weighted Markups ............................................................................................. 7-10

7.2.3 Sales Tax ............................................................................................................ 7-11

REFERENCES .......................................................................................................................... 7-13

LIST OF TABLES

Table 7.2.1 Gross Profit Margins for Fixture OEMs*

 .................................................................. 7-7

Table 7.2.2 Gross Profit Margins for Electrical Wholesalers* ..................................................... 7-7

Table 7.2.3 Gross Profit Margins for Home Improvement Retailers* ......................................... 7-8

Table 7.2.4 Calculated OEM Baseline Markups for Fluorescent Lamp Ballasts ........................ 7-8

Table 7.2.5 Calculated Electrical Wholesaler Baseline Markups for Fluorescent Lamp 

Ballasts ............................................................................................................................. 7-8

Table 7.2.6 Calculated Home Improvement Retailer Baseline Markups for Fluorescent 

Lamp Ballasts................................................................................................................... 7-8

Table 7.2.7 Calculated OEM Incremental Markups for Fluorescent Lamp Ballasts* ................. 7-9

Table 7.2.8 Calculated Electrical Wholesaler Incremental Markups for Fluorescent Lamp 

Ballasts*

.......................................................................................................................... 7-10

Table 7.2.9 Calculated Home Improvement Retailer Incremental Markups for Fluorescent 

Lamp Ballasts* ............................................................................................................... 7-10

Table 7.2.10 Weighted Total Baseline and Incremental Markups for Fluorescent Lamp 

Ballasts ........................................................................................................................... 7-11

Table 7.2.11 State and Local Sales Tax Rates ........................................................................... 7-11

LIST OF FIGURES

Figure 7.1.1 Distribution Channels for Commercial and Industrial Ballasts ............................... 7-2
7-1 

CHAPTER 7. MARKUPS ANALYSIS

7.1 INTRODUCTION

This chapter describes the methodology the U.S. Department of Energy (DOE) followed 

in developing end-user prices and sales tax in its analyses for the fluorescent lamp ballasts notice 

of proposed rulemaking (NOPR). In this rulemaking, DOE performed teardown analyses and a 

manufacturer markup analysis to develop manufacturer selling prices (MSPs) for representative 

ballast designs (NOPR technical support document [TSD] chapter 5). DOE then applied 

distribution channel markups and sales tax to derive end-user prices. By combining the 

engineering analysis results and the distribution channel markups analysis, DOE derived typical 

inputs for use in the life-cycle cost (LCC) analysis and the national impact analysis (NIA). In 

particular, DOE developed end-user prices for ballast designs associated with evaluated 

efficiency levels. 

The end-user equipment price depends on how the end-user purchases the equipment. For 

commercial and industrial ballast designs, two types of distribution channels describe how most 

ballasts pass from the manufacturer to the end user. The first distribution channel applies to 

ballasts installed in fixtures. In this distribution channel, the manufacturer sells the ballast to an 

original equipment manufacturer (OEM)—in this case, the fixture manufacturer—who in turn 

sells it to an electrical wholesaler (i.e., distributor), who sells it to a contractor, who passes it on 

to the end user. The second distribution channel applies to ballasts not installed in fixtures (e.g., 

replacement ballasts). In this distribution channel, the manufacturer sells the ballast to an

electrical wholesaler, who sells it to a contractor, who passes it on to the end user. Figure 7.1.1

illustrates the two main distribution channels for commercial and industrial ballasts. For 

residential ballast designs, DOE assumed that the manufacturer sells the ballast to an OEM who 

in turn sells it in a fixture to a home improvement retailer, where it is purchased by the end user.
7-2 

Figure 7.1.1 Distribution Channels for Commercial and Industrial Ballasts 

For commercial and industrial ballast designs, DOE assumed ballasts in fixtures represent 

63 percent of the market and replacement ballasts represent 37 percent. These percentages are 

from the Fluorescent Ballasts Energy Conservation Standards Final Rule published on 

September 19, 2000 (hereafter “the 2000 Ballast Rule”). 65 FR 56740. DOE could not obtain 

retailer sales data detailing the breakdown between residential fixture ballasts and replacement 

ballasts, and therefore assumed that ballasts in fixtures represented 100 percent of the residential 

market. 

To meet new or amended energy conservation standards, manufacturers often introduce 

design changes to their product lines that result in increased production costs and MSPs. DOE

assumed that some or all of the increased production costs can be passed through the distribution

channels and eventually to end users in the form of higher sales prices. 

At each point in the distribution channel, companies apply “markup” to the MSP to cover 

their business costs and profit margin. DOE models this markup as a multiplier. In financial 

statements, gross profit is the difference between the company revenue and the company cost of 

sales. It includes all corporate overhead costs (sales, general, and administration), materials and 

labor costs, research and development and interest expenses, depreciation and taxes, and profits. 

For sales of a product to contribute positively to company cash flow, the product’s markup must 

be greater than the sum of cost of sales and business costs for that product. DOE calculated the 

end-user sales price by multiplying the MSP by the various markups and applying sales tax. 

The end-user prices and installation costs are key inputs to the LCC analysis, payback 

period (PBP) analysis, and the NIA. Using the distribution channel markups and installation 

costs, DOE calculated the initial costs that customers would face under the various efficiency

levels evaluated. DOE evaluated the tradeoff between the increase in first cost and the resulting 

BALLAST MANUFACTURER

OEM FIXTURE 

MANUFACTURER

ELECTRICAL WHOLESALER

CONTRACTOR

END-USER OF LIGHTING SYSTEM

FIXTURE

BALLASTS

REPLACEMENT

BALLASTS
7-3 

energy cost savings at each efficiency level in the LCC and PBP analyses (NOPR TSD chapter 

8) and NIA analysis (NOPR TSD chapter 11).

The following equation describes how DOE determined the equipment prices for 

commercial and industrial ballast designs installed in fixtures: 

END MFR MUPP OEM ××= MUWHOLE MUCONT ×× MUTAX ) ( Eq. 7.1

 Where:

PEND = equipment price to the end user ($), 

PMFR = MSP of baseline or standard-level equipment ($), 

MUOEM = OEM markup, 

MUWHOLE = wholesaler markup, 

MUCONT = contractor markup, and 

MUTAX = sales tax markup.

For replacement ballasts, the equation is the same as above except that the OEM markup 

( MUOEM ) is omitted. For residential ballast designs, DOE substituted a home improvement 

retailer markup ( MURETAILER ) for the wholesaler markup, and eliminated the contractor markup 

(to reflect the end user’s direct purchase).

For each party involved in the distribution of the equipment, the markups presented 

above are further differentiated between a “baseline markup” and an “incremental markup,” as 

described below. A third type of markup, the “overall markup,” describes the product of all the 

markups within a distribution channel. 

7.1.1 Baseline Markups

Baseline markups are defined as coefficients that relate the manufacturer price of baseline 

ballast designs to the OEM, wholesaler, or contractor baseline sales price, as shown in the 

following equations: 

POEM _ BASE = PMFR _ BASE × ( MUOEM _ BASE) Eq. 7.2

PWHOLE _ BASE = POEM _ BASE × ( MUWHOLE _ BASE) Eq. 7.3

PCONT _ BASE = (PWHOLE _ BASE × MUCONT _ BASE) Eq. 7.4

PEND _ BASE = (PCONT _ BASE × MUTAX ) Eq. 7.5

 

 Where:

POEM _ BASE = OEM selling price of baseline equipment ($), 

PMFR _ BASE = MSP of baseline equipment ($), 

MUOEM _ BASE = OEM markup for baseline equipment, 
7-4 

PWHOLE _ BASE = wholesaler selling price of baseline equipment ($),

MUWHOLE _ BASE = wholesaler markup for baseline equipment, 

PCONT _ BASE = contractor selling price of baseline equipment ($),

MUCONT _ BASE = contractor markup for baseline equipment, 

PEND _ BASE = end-user purchase price for baseline equipment ($), and 

MUTAX = sales tax markup.

For residential fixture ballast designs, the equations are same as above except that the 

wholesaler is replaced with a home improvement retailer and the retailer baseline selling price is 

determined by applying the retailer baseline markup to the MSP for the OEM fixture. Because 

the contractor is omitted, the end-user baseline price is determined by applying sales tax to the 

retailer baseline selling price:

PRETAILER _ BASE = POEM _ BASE × ( MURETAILER _ BASE) Eq. 7.6 

PEND _ BASE = (PRETAILER _ BASE × MUTAX ) Eq. 7.7

For replacement ballasts (commercial and industrial only), the equations are the same as 

above except that the OEM ( POEM _ BASE = PMFR _ BASE × ( MUOEM _ BASE) ) is omitted and the 

wholesaler baseline selling price is determined by applying the wholesaler baseline markup to 

the MSP for baseline products: 

PWHOLE _ BASE = PMFR _ BASE × ( MUWHOLE _ BASE) Eq. 7.8 

7.1.2 Incremental Markups

Incremental markups are defined as coefficients that relate changes in the manufacturer 

price of higher efficiency equipment to change the OEM, wholesale, or contractor sales price, as 

shown in the following equations: 

POEM _ INCR = PMFR _ INCR × ( MUOEM _ INCR) Eq. 7.9

PWHOLE _ INCR = POEM _ INCR × ( MUWHOLE _ INCR) Eq. 7.10

PCONT _ INCR = (PWHOLE _ INCR × MUCONT _ INCR) Eq. 7.11

PEND _ INCR = (PWHOLE _ INCR × MUTAX ) Eq. 7.12

Where:

POEM _ INCR = incremental OEM price for equipment with increased efficiency ($),

PMFR _ INCR = incremental manufacturer price for equipment with increased 

efficiency ($), 

MUOEM _ INCR = incremental OEM markup for equipment with increased efficiency,

PWHOLE _ INCR = incremental wholesaler price for equipment with increased efficiency ($),
7-5 

MUWHOLE _ INCR = incremental wholesaler markup for equipment with increased 

efficiency,

PCONT _ INCR = incremental contractor price for equipment with increased efficiency ($),

MUCONT _ INCR = incremental contractor markup for equipment with increased 

efficiency,

PEND _ INCR = incremental end-user price for baseline equipment ($), and

MUTAX = sales tax markup.

For residential fixture ballast designs, the equations are same as above except that the 

wholesaler is replaced with a home improvement retailer and the incremental retailer selling 

price is determined by applying the retailer incremental markup to the incremental MSP for the 

OEM fixture. Because the contractor is omitted, the end-user baseline price is determined by 

applying sales tax to the incremental retailer selling price:

PRETAILER _ INCR = POEM _ INCR × ( MURETAILER _ INCR) Eq. 7.13 

PEND _ INCR = (PRETAILER _ INCR × MUTAX ) Eq. 7.14

For replacement ballasts, the equations are the same as above except that incremental 

OEM ( POEM _ INCR = PMFR _ INCR × ( MUOEM _ INCR) ) is omitted and the incremental wholesaler price is 

determined by applying the incremental wholesaler markup to the incremental manufacturer 

price for equipment with increased efficiency: 

PWHOLE _ INCR = PMFR _ INCR × ( MUWHOLE _ INCR) Eq. 7.15

7.1.3 Overall Markups

Overall markups, including both overall baseline and overall incremental markups, relate 

the manufacturer price to the final customer price ( PEND ) as indicated by the following equation: 

END = PP END _ BASE + PEND _ INCR) ( Eq. 7.16

7.2 ESTIMATION OF OEM, WHOLESALER, CONTRACTOR, AND SALES TAX

MARKUPS

7.2.1 Financial Information Sources 

Publicly owned companies are required by law to disclose financial information on a 

regular basis by filing different forms with the U.S. Securities and Exchange Commission (SEC).

Filed annually, the SEC form 10-K provides a comprehensive overview of the company’s 

business and financial conditions. Relevant information in the 10-K reports includes the 

company’s revenues and direct and indirect costs. To generate markups for this rulemaking, 

DOE used 10-K reports from publicly owned lighting fixture manufacturers, electrical 

wholesalers, and home improvement retailers. 

Because SEC financial data represents overall company conditions and is not productspecific, DOE investigated how markups derived from 10-K reports compared to actual product 
7-6 

markups. With assistance from the National Electrical Manufacturers Association (NEMA), 

DOE attempted to contact several representative fixture OEMs regarding markups for fixture 

ballasts, but did not receive feedback in time for publication of the proposed rule. DOE 

coordinated with the National Association of Electrical Distributors (NAED) in contacting two 

representative electrical wholesalers, who confirmed that DOE’s calculated markups were 

consistent with their actual ballast markups.1, 2 To validate its retail markups for residential 

ballasts, DOE contacted The Home Depot and Lowe’s,3, 4 but both organizations declined to 

comment, citing competition concerns. Based on this research and absent other data sources, 

DOE used SEC form 10-K data in developing markups for the proposed rule. 

The financial figures necessary for calculating the company markup are net sales, costs of 

sales, and gross profit. The income statement section of the 10-K reports often lists these figures.

DOE used averages of the financial figures spanning 2005 to 2009 to calculate the markups. 

DOE used the following equations to calculate the gross profit and gross profit margins: 

Gross Profit ($) = Net Sales – Cost of Sales Eq. 7.17

Gross Profit Margin

Gross Profit

Net Sales = Eq. 7.18

To calculate the time-average gross profit margin for each company, DOE first summed 

the gross profit for all the years and then divided the result by the sum of the net sales for the 

same years. DOE then used the gross profit margins to calculate baseline markups on existing 

equipment (i.e., prior to efficiency changes resulting from enactment of proposed efficiency 

standards). Each company’s baseline markup was calculated as: 

 ofCost Sales

SalesNet 

Profit Gross1( Margin)

1 Baseline Markup = − = Eq. 7.19

Table 7.2.1, Table 7.2.2, and Table 7.2.3 contain the calculated gross profit margins for a 

sample of fixture OEMs, electrical wholesalers, and home improvement retailers, respectively. 
7-7 

Table 7.2.1 Gross Profit Margins for Fixture OEMs

*

Company Financial 

Figure

$

Year

2009 2008 2007 2006 2005

A Net Sales 1,657,404 2,026,644 1,964,781 1,841,039 2,172,854

Cost of Sales 1,022,308 1,210,849 1,220,466 1,188,202 1,324,311

Gross Profit 635,096 815,795 744,315 652,837 848,543

Gross Profit 

Margin (%)

38.3 40.3 37.9 35.5 39.1

Average Gross Profit Margin: 38.2%

B Net Sales 5,069,600 6,521,300 5,903,100 5,184,600 4,730,400

Cost of Sales 3,483,800 4,396,700 3,970,000 3,521,500 3,243,800

Gross Profit 1,585,800 2,124,600 1,933,100 1,663,100 1,486,600

Gross Profit 

Margin (%) 

31.3 32.6 32.7 32.1 31.4

Average Gross Profit Margin: 32.0%

C Net Sales 2,355,600 2,704,400 2,533,900 2,414,300 2,104,900

Cost of Sales 1,629,700 1,901,000 1,798,100 1,757,500 1,509,900

Gross Profit 725,900 803,400 735,800 656,800 595,000

Gross Profit 

Margin (%) 

30.8 29.7 29.0 27.2 28.3

Average Gross Profit Margin: 29.0% * Unless noted, all numbers are in thousands of dollars. This table includes 2005, 2006, 

2007, 2008, and 2009 SEC 10-K reports.

Table 7.2.2 Gross Profit Margins for Electrical Wholesalers*

Company Financial 

Figure

$

Year

2009 2008 2007 2006 2005

A Net Sales 4,377,882 5,400,154 5,258,301 5,009,143 4,288,043

Cost of Sales 3,522,932 4,354,935 4,225,983 4,047,692 3,477,009

Gross Profit 854,950 1,045,219 1,032,318 961,451 811,034

Gross Profit 

Margin (%) 

19.5 19.4 19.6 19.2 18.9

Average Gross Profit Margin: 19.3%

B Net Sales 4,263,954 6,110,840 6,003,452 5,320,603 4,421,103

Cost of Sales 3,724,061 4,904,164 4,781,336 4,234,079 3,580,398

Gross Profit 539,893 1,206,676 1,222,116 1,086,524 840,705

Gross Profit 

Margin (%) 

12.7 19.7 20.4 20.4 19.0

Average Gross Profit Margin: 18.4% * Unless noted, all numbers are in thousands of dollars. This table includes 2005, 2006, 

2007, 2008, and 2009 SEC 10-K reports.
7-8 

Table 7.2.3 Gross Profit Margins for Home Improvement Retailers*

Company Financial Figure

$ 

Year

2009 2008 2007 2006 2005

A Net Sales 71,288,000 77,349,000 79,022,000 77,019,000 73,094,000

Cost of Sales 47,298,000 51,352,000 52,476,000 51,081,000 48,664,000

Gross Profit 23,990,000 25,997,000 26,546,000 25,938,000 24,430,000

Gross Profit Margin (%) 33.7 33.6 33.6 33.7 33.4

Average Gross Profit Margin: 33.6%

B Net Sales 48,230,000 48,283,000 46,927,000 43,243,000 36,464,000

Cost of Sales 31,729,000 31,556,000 30,729,000 28,453,000 24,224,000

Gross Profit 16,501,000 16,727,000 16,198,000 14,790,000 12,240,000

Gross Profit Margin (%) 34.2 34.6 34.5 34.2 33.6

Average Gross Profit Margin: 34.2% * Unless noted, all numbers are in thousands of dollars. This table includes 2005, 2006, 2007, 2008, and 2009

SEC 10-K reports.

The baseline markup covers non-production costs and profit. Table 7.2.4, Table 7.2.5, 

and Table 7.2.6 show the baseline markups using this method for OEMs, electrical wholesalers, 

and home improvement retailers, respectively. 

Table 7.2.4 Calculated OEM Baseline Markups for Fluorescent Lamp Ballasts

Company Baseline Markup

OEM – A 1.62

OEM – B 1.47

OEM – C 1.41

Average 1.50

Table 7.2.5 Calculated Electrical Wholesaler Baseline Markups for Fluorescent Lamp 

Ballasts 

Company Baseline Markup

Wholesaler A 1.24

Wholesaler B 1.23

Average 1.23

Table 7.2.6 Calculated Home Improvement Retailer Baseline Markups for Fluorescent 

Lamp Ballasts 

Company Baseline Markup

Wholesaler A 1.51

Wholesaler B 1.52

Average 1.51

The incremental markup applied to higher-efficiency equipment is lower than the 

baseline markup because DOE assumes that expenses like labor and occupancy costs remain 

fixed and need not be recovered in the markup. Profits and other operating costs are assumed to 

be variable and to scale with the MSP. 

The surveyed SEC 10-K reports did not typically separate labor and occupancy costs 

from overall expenses, so DOE assumed that these fixed costs are encompassed by “Selling, 

Distribution, and Administrative Expenses” (the most common terminology observed in the 

surveyed reports). DOE assumed that “Operating Profit” (operating income) covers other 
7-9 

operating costs and profit (i.e., variable costs). Each company’s incremental markup was 

calculated as:





 



 +=

 ofCost Sales

Operating Profit lIncrementa Markup 1 Eq. 7.20

Table 7.2.7, Table 7.2.8, and Table 7.2.9 contain the calculated incremental markups for 

the sampled fixture OEMs, electrical wholesalers, and home improvement retailers, respectively. 

Table 7.2.7 Calculated OEM Incremental Markups for Fluorescent Lamp Ballasts*

Company Financial 

Figure

$

Year

2009 2008 2007 2006 2005

A Cost of Sales 1,022,308 1,210,849 1,220,466 1,188,202 1,324,311

Operating Profit 153,753 261,060 222,423 152,119 106,745

Calculated 

Incremental 

Markup

1.15 1.22 1.18 1.13 1.08

Average Incremental Markup: 1.15

B Cost of Sales 3,483,800 4,396,700 3,970,000 3,521,500 3,243,800

Operating Profit 544,100 877,600 844,100 694,100 559,800

Calculated 

Incremental 

Markup

1.16 1.20 1.21 1.20 1.17

Average Incremental Markup: 1.19

C Cost of Sales 1,629,700 1,901,000 1,798,100 1,757,500 1,509,900

Operating Profit 294,700 346,000 299,400 233,900 226,800

Calculated 

Incremental 

Markup

1.18 1.18 1.17 1.13 1.15

Average Incremental Markup: 1.16

ALL Average Incremental Markup (All OEMs): 1.17 * Except for calculated incremental markup, all numbers are in thousands of dollars. This 

table includes 2005, 2006, 2007, 2008, and 2009 SEC 10-K reports.
7-10

Table 7.2.8 Calculated Electrical Wholesaler Incremental Markups for Fluorescent Lamp 

Ballasts*

Company Financial 

Figure

$

Year

2009 2008 2007 2006 2005

A Cost of Sales 3,522,932 4,354,935 4,225,983 4,047,692 3,477,009

Operating Profit 72,498 151,863 161,787 122,022 64,789

Calculated 

Incremental 

Markup

1.02 1.03 1.04 1.03 1.02

Average Incremental Markup: 1.03

B Cost of Sales 3,724,061 4,904,164 4,781,336 4,234,079 3,580,398

Operating Profit 179,952 345,667 394,224 364,983 209,286

Calculated 

Incremental 

Markup

1.05 1.07 1.08 1.09 1.06

Average Incremental Markup: 1.07

ALL Average Incremental Markup (All Wholesalers): 1.05 * Except for calculated incremental markup, all numbers are in thousands of dollars. This 

table includes 2005, 2006, 2007, 2008, and 2009 SEC 10-K reports.

Table 7.2.9 Calculated Home Improvement Retailer Incremental Markups for Fluorescent 

Lamp Ballasts*

Company Financial 

Figure

$

Year

2009 2008 2007 2006 2005

A Cost of Sales 47,298,000 51,352,000 52,476,000 51,081,000 48,664,000

Operating Profit 4,359,000 7,242,000 8,866,000 9,047,000 7,926,000

Calculated 

Incremental 

Markup

1.09 1.14 1.17 1.18 1.16

Average Incremental Markup: 1.15

B Cost of Sales 31,729,000 31,556,000 30,729,000 28,453,000 24,224,000

Operating Profit 3,506,000 4,511,000 4,998,000 4,496,000 3,520,000

Calculated 

Incremental 

Markup

1.11 1.14 1.16 1.16 1.15

Average Incremental Markup: 1.14

ALL Average Incremental Markup (All Wholesalers): 1.15 * Except for calculated incremental markup, all numbers are in thousands of dollars. This 

table includes 2005, 2006, 2007, 2008, and 2009 SEC 10-K reports.

7.2.2 Weighted Markups

For commercial and industrial ballast designs, DOE adjusted the calculated average 

baseline and incremental markups to reflect estimated proportions of ballasts sold through the 

OEM and wholesaler distribution channels. DOE used information from the 2000 Ballast Rule, 

which estimates that ballasts sold to OEM fixture manufacturers represent 63 percent of the 

market while ballasts sold to electrical wholesalers represent 37 percent of the market. DOE then 

multiplied by a contractor markup of 1.13 (obtained from the 2000 Ballast Rule) to the resulting 

weighted average baseline and incremental markups to develop total weighted markups. For 

residential ballast designs, DOE could not obtain retailer sales data detailing the breakdown 
7-11

between residential fixture ballasts and replacement ballasts, and therefore assumed that ballasts 

in fixtures represented 100 percent of the residential market.The weighted total baseline and 

incremental markups are provided in Table 7.2.10. 

Table 7.2.10 Weighted Total Baseline and Incremental Markups for Fluorescent Lamp 

Ballasts 

Weighted Total Markups

Ballast Design Baseline Incremental

Commercial/Industrial 1.83 1.30

Residential 2.27 1.34

7.2.3 Sales Tax 

The sales tax represents state and local sales taxes applied to end-user cost and is a 

multiplicative factor that increases the end-user cost. DOE obtained information on state and 

local sales tax from the Sales Tax Clearinghouse (Table 7.2.11).5 These data represent weighted 

averages that include county and city rates. DOE then calculated population-weighted average 

tax values for each census division and four large states. These values allowed DOE to correlate 

the sales tax distribution with the electricity price distribution (NOPR TSD chapter 8) and the 

operating hour distribution (NOPR TSD chapter 6) that DOE uses in the LCC spreadsheet. DOE 

also calculated a national population-weighted average sales tax for use as a single-value input to 

the LCC, should users want single-average results. DOE also used this result in the NIA, where 

DOE did not use a distribution of inputs.6 

Table 7.2.11 State and Local Sales Tax Rates 

State Combined State 

and Local Tax Rate

% 

State Combined State 

and Local Tax Rate

% 

State Combined State 

and Local Tax Rate

% 

Alabama 

Alaska 

Arizona 

Arkansas 

California 

Colorado 

Connecticut

Delaware 

D.C. 

Florida 

Georgia 

Hawaii 

Idaho 

Illinois 

Indiana 

Iowa 

Kansas 

8.20

1.40 

8.15

8.20

9.15

6.40

6.00

0.00

6.00

6.70

6.90 

4.40

6.05 

8.20 

7.00

6.85 

8.05

Kentucky 

Louisiana 

Maine 

Maryland 

Massachusetts 

Michigan 

Minnesota 

Mississippi 

Missouri 

Montana 

Nebraska 

Nevada 

New Hampshire 

New Jersey 

New Mexico 

New York 

North Carolina 

6.00

8.75 

5.00

6.00

6.25

6.00

7.20

7.00

7.35

0.00

6.00

7.85

0.00

6.95

6.55

8.45 

7.80

North Dakota 

Ohio 

Oklahoma 

Oregon 

Pennsylvania 

Rhode Island 

South Carolina 

South Dakota 

Tennessee 

Texas 

Utah 

Vermont 

Virginia 

Washington 

West Virginia 

Wisconsin 

Wyoming 

5.80

6.80 

8.15 

0.00

6.40

7.00

7.05

5.50

9.40

8.05 

6.70 

6.05

5.00

8.75 

6.00

5.45 

5.15

Table 7.2.12 shows the distribution of sales tax rates that DOE developed for the LCC 

and PBP analyses. The distribution ranges from a minimum of 5.21 percent in the Pacific census 

division to a maximum of 9.15 percent in California with a weighted average value of 

7.25 percent nationwide. 
7-12

Table 7.2.12 Regional Average Tax Rates 

Region or 

Large State

Weighted 

Sales Tax 

%

New England 5.55

Mid Atlantic 6.62

East North Central 6.88

West North Central 7.09

South Atlantic 6.43

East South Central 7.90

West South Central 8.41

Mountain 6.81

Pacific 5.21

New York 8.45

California 9.15

Texas 8.05

Florida 6.70 

U.S. Average 7.25
7-13

REFERENCES

1. Clark, J. 2010. Personal communication. International Electrical Supply Co., Dallas, TX. 

Telephone conversation with Robert Lingard, Pacific Northwest National Laboratory. August 

4, 2010. 

2. Brnik, M. 2010. Personal communication. Schaedler/YESCO, Harrisburg, PA. Telephone 

conversation with Robert Lingard, Pacific Northwest National Laboratory. August 10, 2010. 

3. Kleinhenz, M. 2010. Personal communication. Lowe’s Companies, Inc., Mooresville, NC. 

Email to Robert Lingard, Pacific Northwest National Laboratory. August 30, 2010. 

4. Fernandez, J. 2010. Personal communication. The Home Depot, Atlanta, GA. Email to 

Robert Lingard, Pacific Northwest National Laboratory. September 1, 2010. 

5. The Sales Tax Clearinghouse. State Aggregate Tax Rates. 2010. (Last accessed July 20, 

2010.) <http://thestc.com/STrates.stm> 

6. U.S. Census Bureau. Population Estimates Change: April 1, 2000 to July 1, 2009. 2009. (Last 

accessed July 20, 2010.) <www.census.gov/popest/states/tables/NST-EST2009-01.csv>