Five states have no sales tax at all
Alaska, Delaware, Montana, New Hampshire, and Oregon do not charge a statewide sales tax. This means when you buy something in these states, you pay only the price on the tag — no additional percentage is added at checkout.
However, the absence of a statewide tax does not mean shopping is tax-free everywhere within those states. Alaska allows municipalities to charge local sales taxes, and some cities and boroughs do. Delaware, Montana, New Hampshire, and Oregon have no local sales tax either, making them the only four states with zero sales tax at any level of government.
If you live in or are moving to one of these states, you will not see sales tax on receipts. If you are buying something online from a retailer based in one of these states, the tax treatment depends on where you live and the retailer's tax collection policies, not where the seller is located.
Key Takeaways
- Alaska, Delaware, Montana, New Hampshire, and Oregon have no statewide sales tax.
- Alaska permits local sales taxes in some cities and boroughs, so you may still pay tax depending on your location within the state.
- Delaware, Montana, New Hampshire, and Oregon have no sales tax at the state or local level.
- Online purchases are taxed based on where you live, not where the seller is located or incorporated.
How Alaska's local sales tax works
Alaska has no statewide sales tax, but it gives cities and boroughs the power to impose their own. About 100 municipalities in Alaska do charge local sales tax, with rates ranging from 1% to over 7% depending on the location.
If you live in Anchorage, Fairbanks, Juneau, or other municipalities that have adopted local sales tax, you will pay tax on most purchases. If you live in an unincorporated area or a municipality that has not adopted a local tax, you will not. Before moving to Alaska or making a large purchase there, check whether your specific city or borough charges sales tax.
Why some states chose not to tax sales
Each of these five states made different historical and policy choices about how to fund government. New Hampshire and Montana have traditionally relied on other revenue sources, including property taxes and business taxes. Oregon has a high income tax instead. Delaware has historically attracted businesses by keeping sales and income taxes low. Alaska uses oil revenue to fund state operations.
These choices are not recent — most date back decades. They reflect each state's tax philosophy and revenue structure, not a temporary exemption. If you are considering a move or a business location based on sales tax, understand that these policies are stable but that other taxes (income tax, property tax, business tax) may be higher in these states to make up the difference.
Sales tax in states that border no-tax states
If you live near Alaska, Montana, New Hampshire, Oregon, or Delaware, you might be tempted to cross the border to avoid sales tax. This strategy has limits. Most states tax purchases based on where you live, not where you buy. If you live in Washington and buy something in Oregon, you typically owe Washington sales tax on that purchase — you do not get to skip it just because you bought it out of state.
Some people register vehicles or make large purchases in no-tax states to avoid their home state's tax. States have rules against this, and enforcement varies. If you are considering this approach for a significant purchase, research your home state's tax laws or speak with a tax professional, because the tax authority may assess tax and penalties after the fact.
Online shopping and sales tax in no-tax states
When you order something online, the sales tax you pay depends on where you live, not where the retailer is based or where the item ships from. If you live in Oregon and order from a company in New York, you will not pay New York sales tax — you will pay Oregon's rate, which is zero.
If you live in a state with sales tax and order from a retailer in Delaware, you still owe sales tax to your home state. Large online retailers now collect sales tax for most states regardless of where they are located. Smaller sellers may not, but your state may require you to report and pay tax on those purchases yourself.
Income tax and other taxes in no-sales-tax states
The absence of sales tax does not mean these states are tax-free. Four of the five states have income tax. Alaska and New Hampshire have no income tax on wages, but New Hampshire taxes interest and dividend income. Montana, Oregon, and Delaware all have state income taxes that can be substantial.
Property taxes, business taxes, and other fees also vary widely. Before deciding to move or relocate a business based on the lack of sales tax, compare the total tax burden — income tax, property tax, and any business-specific taxes. A state with no sales tax may have higher income or property taxes that offset the savings.
Frequently Asked Questions
Do I have to pay sales tax if I buy something online from a no-tax state?
No. Sales tax is based on where you live, not where the seller is located. If you live in Oregon and buy from a retailer anywhere in the country, you pay Oregon's rate, which is zero. If you live in a state with sales tax and buy from an Oregon retailer, you owe tax to your home state.
Can I register my car in Alaska or Montana to avoid sales tax?
You can register a vehicle in any state where you have a valid reason to do so, but most states tax vehicle purchases based on where you live. If you live in Washington and buy a car in Montana, Washington will likely assess sales tax on that purchase. Attempting to avoid your home state's tax through out-of-state registration can result in penalties.
Does Alaska have sales tax everywhere in the state?
No. Alaska has no statewide sales tax, but about 100 cities and boroughs have adopted local sales taxes ranging from 1% to over 7%. Check your specific municipality before making a purchase or moving to Alaska.
Which no-tax state has the lowest overall taxes?
That depends on your income, property, and spending. Alaska and New Hampshire have no income tax, but Alaska has local sales taxes in many areas and New Hampshire taxes investment income. Montana, Oregon, and Delaware have income taxes. Compare all taxes — income, property, sales, and business — for your situation.