Oregon, Montana, New Hampshire, and Delaware have no state sales tax
Four states do not charge a state sales tax at all: Oregon, Montana, New Hampshire, and Delaware. If you live in or buy from one of these states, you pay no state-level sales tax on most purchases. However, this does not mean zero tax — local taxes, use taxes, and specific product taxes still apply in some of these states, and the rules differ significantly from state to state.
The next-lowest state rate is Alaska at 0% state sales tax, though Alaska allows municipalities to set their own local sales taxes, which range from 0% to 7.5%. So your actual tax rate in Alaska depends entirely on which city or borough you are in.
After those five states, the lowest state sales tax rates are Colorado, Georgia, Hawaii, Louisiana, New York, and Wyoming, all at 4%. However, these states all allow local jurisdictions to add their own taxes on top, so your total rate will be higher than the state rate alone.
Key Takeaways
- Oregon, Montana, New Hampshire, and Delaware charge no state sales tax, making them the lowest in the nation.
- Alaska has no state sales tax, but cities and boroughs can charge local sales tax ranging from 0% to 7.5%.
- Even in no-sales-tax states, you may still owe use tax on items bought from out of state, or local taxes on specific products.
- The state rate is only part of your total tax — local and municipal taxes add on top in most states.
- Your actual tax rate depends on both your state and your specific city or county, not just the state alone.
How each no-sales-tax state handles other taxes
Oregon has no state or local sales tax on most goods. However, Oregon does tax services in some cases and has a state income tax. Oregon also allows counties to charge a tax on lodging (hotel stays), which ranges from 6% to 12% depending on the county.
Montana has no state sales tax but does allow cities and counties to charge local sales taxes on certain items. Most Montana purchases are not taxed locally, but some counties tax groceries or prepared food. Montana also has a state income tax. If you buy something in Montana and take it to another state, you may owe use tax in your home state.
New Hampshire has no sales tax on most items, including groceries and clothing. However, New Hampshire taxes prepared food, restaurant meals, and some services. New Hampshire also has no state income tax on wages, but does tax interest and dividend income. Rooms and lodging are taxed at 9%.
Delaware has no state sales tax and no local sales tax. Delaware does have a state income tax. Because Delaware has no sales tax, it is a common destination for large purchases like cars and furniture, though you may owe use tax in your home state if you bring the item back.
What is use tax and when you owe it
Use tax is a tax you owe to your home state when you buy something in a no-sales-tax state and bring it back home. The rate is usually the same as your state's sales tax. For example, if you live in California (7.25% sales tax) and buy a car in Oregon (no sales tax), you owe California use tax on that car.
Use tax is meant to prevent people from avoiding sales tax by shopping in neighboring states. Most people do not report use tax on small purchases, and enforcement is difficult. However, large purchases like vehicles, real estate, and business equipment are tracked, and you will owe the tax when you register the item or file your state return.
If you order something online from a no-sales-tax state and have it shipped to your home state, your home state's sales tax usually applies at checkout. Use tax only applies when you physically buy and transport the item yourself.
Local taxes in Alaska and other low-tax states
Alaska has no state sales tax, but this does not mean you pay nothing. Municipalities in Alaska can set their own sales tax rates. Anchorage charges 0%, Juneau charges 5%, and some smaller towns charge up to 7.5%. Your actual tax rate depends on which city or borough you are shopping in.
States with low state rates like Colorado (4%), Georgia (4%), and Wyoming (4%) all allow counties and cities to add local taxes on top. In Colorado, for example, Denver adds 3.65% to the state rate, bringing the total to 7.65%. In Georgia, Atlanta adds 4%, making the total 8%. You cannot assume the state rate is your final rate.
When you move to or shop in a low-tax state, check your specific city or county tax rate, not just the state rate. Many state tax websites have a local tax lookup tool where you can enter your address and see the combined rate.
States that tax groceries or specific items differently
Even in states with sales tax, some items are taxed at a lower rate or not taxed at all. Montana and New Hampshire do not tax groceries, which saves money on everyday purchases. However, Montana allows some counties to tax groceries locally, so the rule varies by location.
Most states tax prepared food and restaurant meals, even if they do not tax groceries. New Hampshire taxes prepared food at the full rate but not raw groceries. Oregon taxes some services but not most goods. These differences matter if you spend a lot on food or services.
Clothing is tax-free in New Hampshire, New Jersey, New York, and Pennsylvania. Some states tax clothing at the full rate. If you buy a lot of clothes, shopping in a no-clothing-tax state can add up to real savings.
How to find your exact local sales tax rate
Your state tax rate is not your final rate. To find what you actually pay, you need your city and county. Most state revenue departments have a sales tax lookup tool on their website. You enter your address, and the tool shows you the combined state, county, and city rate.
You can also call your local tax assessor's office or city hall and ask for the current sales tax rate. Rates change occasionally, so calling is more reliable than looking at an old website. When you move or start a business, this is worth doing once so you know your actual rate.
If you shop online, the retailer's website usually calculates tax based on your shipping address. If you pick up an order in-store, the tax is based on the store's location, not your home address. This matters if you live near a state border and can drive to a lower-tax area.
Frequently Asked Questions
Do I owe sales tax if I buy something in Oregon and take it home to California?
You owe California use tax on the purchase. The rate is California's sales tax rate (7.25% state, plus local taxes). You are responsible for reporting and paying this tax, though enforcement on small purchases is rare. Large purchases like vehicles are tracked when you register them.
Can I order online from a no-sales-tax state to avoid tax?
No. When you order online and have it shipped to your home state, your home state's sales tax applies at checkout. The retailer collects it. Use tax only applies when you physically buy and transport the item yourself across state lines.
Does Alaska really have no sales tax?
Alaska has no state sales tax, but cities and boroughs charge local sales tax. Anchorage has 0%, Juneau has 5%, and some areas have up to 7.5%. Your rate depends on where you are shopping, not just that you are in Alaska.
Which state is cheapest for buying a car?
Delaware and Oregon have no sales tax, so buying a car there saves you the sales tax you would pay at home. However, you owe use tax to your home state when you register it. The real savings depends on your home state's rate and whether you can avoid paying use tax, which is difficult for vehicles.
Do grocery stores charge sales tax in no-sales-tax states?
In Oregon, Montana, New Hampshire, and Delaware, groceries are generally not taxed. However, prepared food, restaurant meals, and some services may be taxed. Check your specific state and county, as some areas have local taxes on specific items.