Five states have no sales tax at all
Alaska, Delaware, Montana, New Hampshire, and Oregon do not charge a statewide sales tax. If you live in one of these states, you will not pay sales tax on most purchases at the register. However, this does not mean everything is tax-free — some of these states tax specific items, and local taxes may still apply in certain areas.
The reason these states have no sales tax varies. Some chose not to implement one when they were founded. Others rely more heavily on income tax, property tax, or resource extraction taxes (like oil in Alaska) to fund state services. The result is the same for shoppers: no percentage added to your bill at checkout.
If you are moving to or shopping in one of these states, understanding what is and is not taxed will help you budget accurately. The lack of sales tax does not mean lower overall taxes — many of these states compensate with higher income tax or other fees.
Key Takeaways
- Alaska, Delaware, Montana, New Hampshire, and Oregon have no statewide sales tax, though some tax specific goods like fuel or groceries.
- Local sales taxes may still exist in parts of Alaska and Montana, so you should check your city or county rules.
- No sales tax does not mean no taxes overall — these states often rely on income tax, property tax, or other revenue sources.
- If you purchase items online from a no-sales-tax state and have them shipped to you, the tax rules of your state typically apply, not the seller's state.
What each no-sales-tax state actually taxes
Alaska has no statewide sales tax, but some cities and boroughs charge local sales taxes ranging from 0% to 7.5%. Anchorage, for example, has a 3.7% local tax. Fuel and certain other items may be taxed differently depending on location.
Delaware has no sales tax on anything — not groceries, not clothing, not vehicles. This is the broadest exemption of the five states. Delaware also has no tax on services. However, Delaware does charge income tax and property tax.
Montana has no statewide sales tax, but allows local governments to impose local sales taxes. Some cities and counties charge between 0% and 3%. Groceries are not taxed, but prepared food and restaurant meals are taxed in some areas.
New Hampshire has no sales tax and no income tax on wages. However, it does tax meals and rooms (hotel stays) at 9%, and it taxes interest and dividend income. Groceries are not taxed.
Oregon has no sales tax statewide. However, it does tax some services and has a high income tax. Groceries are not taxed, but prepared food and restaurant meals are taxed.
How local taxes work in no-sales-tax states
Even though a state has no sales tax, cities and counties within that state may impose their own local sales taxes. This is most common in Alaska and Montana. If you live in Anchorage, Alaska, you pay the local tax even though Alaska itself has none. If you live in rural Alaska, you may pay nothing.
Before assuming you pay no sales tax, check your specific city or county. The local government's website or tax assessor's office can tell you the exact rate. Some areas have no local tax; others charge 1% to 3%.
Sales tax on online and mail orders from no-sales-tax states
If you order something online from a retailer in Delaware or Oregon and have it shipped to your home in another state, you typically owe sales tax based on your state's tax rate, not the seller's state. The seller may not collect it at checkout, but your state may require you to pay "use tax" on the purchase.
In practice, most individual shoppers do not pay use tax on small online purchases. However, the law requires it, and some states are beginning to enforce it more strictly. If you are buying large items or running a business, you should understand your state's use tax rules.
If you are a resident of a no-sales-tax state ordering from another state, the seller's state tax does not apply to you. You pay based on where you live.
Income tax and other taxes in no-sales-tax states
States without sales tax often make up the revenue through other taxes. New Hampshire and Alaska have no income tax on wages, which is rare. Delaware, Montana, and Oregon all have income taxes that range from moderate to high.
Oregon has one of the highest income tax rates in the country. Montana's income tax is moderate. Delaware's income tax is moderate but has a low rate on the first bracket. These states also charge property tax, vehicle registration fees, and other taxes that vary by location.
When comparing the true tax burden of living in a no-sales-tax state versus another state, look at the whole picture: income tax, property tax, vehicle fees, and any local taxes. A state with no sales tax may still have a higher overall tax burden than a state with sales tax.
Frequently Asked Questions
Do I pay sales tax if I buy something in a no-sales-tax state and bring it home?
Not in the state where you bought it. However, your home state may require you to pay use tax on the purchase. Most states do not actively enforce use tax on individual shoppers for small items, but the legal obligation exists. Check your state's tax department website for details.
Can I save money by shopping in a no-sales-tax state?
For large purchases, yes — you avoid sales tax. However, these states often have higher income tax or property tax, so the overall savings depend on your situation. If you are a resident of a high-sales-tax state and make a one-time large purchase in a no-sales-tax state, you may save money on that transaction.
Does New Hampshire really have no income tax?
New Hampshire has no tax on wages and salaries. It does tax interest, dividends, and capital gains. It also taxes meals and hotel rooms at 9%. So while wage earners pay no income tax, other income sources are taxed.
What about groceries in these states?
Most of these states do not tax groceries. Alaska, Montana, New Hampshire, and Oregon all exempt unprepared food. Delaware taxes nothing, including groceries. However, prepared food, restaurant meals, and alcohol are often taxed even in these states.
If I move to a no-sales-tax state, will my taxes go down?
Not necessarily. You will avoid sales tax, but you may pay higher income tax, property tax, or other fees. Compare the total tax burden of your current state to your new state before moving. State tax calculators and tax professionals can help you estimate the difference.