Five states do not charge sales tax on purchases
Alaska, Delaware, Montana, New Hampshire, and Oregon do not have a statewide sales tax. If you live in or buy from one of these states, you will not pay sales tax at checkout — though that does not mean purchases are entirely tax-free everywhere within those states.
Alaska allows municipalities to charge local sales tax, so some cities and towns add their own tax on top of the zero state rate. Delaware, Montana, New Hampshire, and Oregon have no state or local sales tax at all. The rules differ slightly by state, and some have specific carve-outs for certain goods or services.
If you are shopping online or from out of state, the tax you pay depends on where the seller is located and where you live, not which state has no sales tax. That is a separate question from whether a state itself charges tax.
Key Takeaways
- Alaska, Delaware, Montana, New Hampshire, and Oregon charge no statewide sales tax, though Alaska allows local taxes in some cities.
- Having no state sales tax does not mean all purchases are tax-free — some states exempt certain items like groceries or clothing.
- Online purchases are taxed based on the seller's location and your state's rules, not on whether the state you are buying from has sales tax.
- Some states with no sales tax have other taxes instead, such as income tax or business taxes, so the total tax burden varies.
How Alaska's local sales tax works
Alaska has no statewide sales tax, but about 100 municipalities and boroughs within Alaska charge their own local sales tax. The rate varies by location — some towns charge 0%, while others charge up to 7.5% or higher. You only pay the local rate in the specific city or borough where you make the purchase.
If you buy something in Anchorage, you pay Anchorage's local tax. If you buy the same item in Juneau, you pay Juneau's rate, which may be different. Mail order and online purchases shipped to an Alaska address are usually taxed based on the delivery address, so the local rate of your city applies.
Delaware, Montana, New Hampshire, and Oregon have zero sales tax everywhere
These four states charge no sales tax at the state level and do not allow local jurisdictions to add their own. A purchase in Wilmington, Delaware costs the same as one in Dover — no tax is added at any stage.
New Hampshire and Montana also have no income tax, which is why some people move there for the tax structure. Delaware and Oregon do have income tax, so residents pay tax on wages even though they do not pay sales tax on purchases. The total tax burden in each state reflects this mix.
What happens when you buy from a no-sales-tax state online
Buying from a retailer in Alaska, Delaware, Montana, New Hampshire, or Oregon does not automatically mean you pay no sales tax. The tax you owe depends on where you live, not where the seller is located.
If you live in a state with sales tax and order from a no-sales-tax state, your state may require you to pay sales tax on the purchase. Many states have "use tax" laws that require residents to pay tax on out-of-state purchases. The retailer may or may not collect it at checkout — if they do not, you may be responsible for reporting and paying it yourself, though enforcement is rare for individual purchases.
If you live in a no-sales-tax state and order from anywhere, you typically pay no sales tax regardless of where the seller is based.
States that tax some items but not others
Several states have no statewide sales tax but still tax specific goods. For example, some states tax prepared food but not groceries, or tax clothing but not medicine. This is different from the five states listed above, which have no sales tax on any purchase.
If you are in a state that taxes selectively, the item itself determines whether tax applies. A loaf of bread might be tax-free while a restaurant meal is taxed. These rules vary widely and change by state, so check your state's tax authority website for specifics on what is and is not taxed in your location.
Why some states have no sales tax
States without sales tax fund government services through other taxes instead. New Hampshire and Montana rely heavily on income tax. Delaware has no income tax but charges business taxes and other fees. Alaska has oil revenue that historically funded state operations, though that has shifted over time.
The choice to have or not have sales tax is a state policy decision, not a federal rule. Each state sets its own tax structure based on how it wants to fund schools, roads, and public services.
Frequently Asked Questions
Do I pay sales tax if I live in a no-sales-tax state?
No. If you live in Alaska, Delaware, Montana, New Hampshire, or Oregon, you do not pay sales tax on purchases made in that state. If you order online from out of state, you typically still do not pay sales tax because you live in a no-tax state.
Can I avoid sales tax by ordering from Alaska or Delaware?
Not if you live in a state with sales tax. Your state's use tax law requires you to pay tax on out-of-state purchases. The retailer may not collect it, but you are technically responsible for reporting it. In practice, enforcement on individual purchases is rare.
Does Alaska have any sales tax at all?
Alaska has no statewide sales tax, but about 100 cities and towns charge local sales tax ranging from 0% to over 7%. The rate depends on where you make the purchase within Alaska. Mail orders to an Alaska address are taxed based on the delivery city.
Which state has the lowest sales tax?
Five states have zero sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon. Among states that do charge sales tax, Colorado, Georgia, Hawaii, Louisiana, and Wyoming have the lowest statewide rates, around 4%. Local taxes can add to the state rate.
Do these states have income tax instead?
It varies. New Hampshire and Montana have no income tax or sales tax. Delaware and Oregon have no sales tax but do charge income tax. Alaska has no income tax and no statewide sales tax, though local taxes apply in some cities. Each state funds services differently.