Five states do not charge sales tax on retail purchases
Alaska, Delaware, Montana, New Hampshire, and Oregon do not have a statewide sales tax. This means when you buy something in these states, you pay only the price on the tag — no additional tax is added at checkout. However, the absence of a statewide tax does not mean purchases are tax-free everywhere within those states, and it does not mean there are no other taxes you might encounter.
Alaska allows individual cities and boroughs to charge local sales taxes, so some purchases in Anchorage or Juneau will include a tax even though the state does not. Delaware, Montana, New Hampshire, and Oregon have no local sales taxes either, making them the only truly tax-free states for retail purchases. This matters most if you live in or frequently travel to these states, or if you order items from out-of-state sellers.
Key Takeaways
- Alaska, Delaware, Montana, New Hampshire, and Oregon have no statewide sales tax, though Alaska allows local taxes in some cities.
- The other 45 states and Washington, D.C. charge sales tax, with rates ranging from about 4 percent to over 7 percent depending on the state.
- Online purchases from out-of-state sellers may still be subject to sales tax in your home state, regardless of whether the seller's state has sales tax.
- Some states without sales tax fund government services through income tax, property tax, or other fees instead.
- If you live in a no-sales-tax state, you may still owe use tax on items you purchase from other states and bring home.
How the five no-sales-tax states handle government funding
States without sales tax must fund schools, roads, and public services through other revenue sources. New Hampshire and Tennessee rely heavily on income tax — though New Hampshire taxes only investment income and dividends, not wages. Alaska uses oil revenue and a permanent fund dividend to offset the lack of sales tax. Oregon and Montana depend on income tax and property tax to replace the revenue a sales tax would generate.
This means living in or doing business in a no-sales-tax state does not necessarily mean lower overall taxes. A resident of New Hampshire or Oregon may pay more in income tax than a resident of a state with both income tax and sales tax. The trade-off is visible at the register — you see the full price immediately — but the cost is distributed differently across the year through paychecks and property bills.
What happens when you order from a no-sales-tax state online
If you live in a state that has sales tax and you order something from a seller in Alaska, Delaware, Montana, New Hampshire, or Oregon, you may still owe sales tax. The rule depends on where you live, not where the seller is located. Most states now require online sellers to collect sales tax based on the buyer's address, even if the seller is in a no-sales-tax state.
The exception is if you order from a very small seller — some states do not require collection from sellers below a certain sales threshold — but most major retailers collect tax on all orders shipped to taxable states. If you are ordering from a small business in one of these five states and no tax is charged, you may owe use tax to your home state. Use tax is a self-reported tax on items you purchase out of state and bring home; most people do not pay it, but it is technically owed.
Sales tax rates in the 45 states that do charge tax
The states with sales tax range from about 4 percent to over 7 percent at the statewide level. Colorado, Georgia, Hawaii, Louisiana, New York, and Wyoming are among the lowest at around 4 percent. California, Tennessee, and Texas are in the middle range at around 8 to 8.25 percent. Local taxes can push the total much higher — some cities in California, Louisiana, and Tennessee see combined rates above 9 percent.
The exact rate you pay depends on both the state and the city or county where you make the purchase. A purchase in Denver, Colorado will have a different total tax rate than one in a rural Colorado town. This is why the same item costs different amounts depending on where you buy it, even within the same state. If you frequently cross state lines to shop, the sales tax difference can add up over time.
Which items are taxed and which are not
Even in states with sales tax, not everything is taxed the same way. Most states do not tax groceries or prescription medications, though some tax prepared food or non-prescription health items. Clothing is taxed in most states but not in New York, New Jersey, and Pennsylvania. Services like haircuts, repairs, and professional fees are usually not taxed, though this varies by state.
The five no-sales-tax states have their own rules about what would be taxed if they had a sales tax — but since they do not, this matters only if you are comparing the cost of living or understanding why certain items cost more in neighboring states. If you move from a no-sales-tax state to one that has sales tax, your grocery bill and other regular purchases will increase by the sales tax percentage, even if the base prices are the same.
How to find the sales tax rate where you live or are traveling
Your state's Department of Revenue or Department of Taxation website lists the current statewide rate and often provides a tool to look up local rates by city or zip code. If you are traveling or shopping online, you can search "[state name] sales tax rate" to find the official rate. Keep in mind that rates change occasionally, so the number you find online may differ by a fraction of a percent from what you saw last year.
If you are buying something expensive — a car, furniture, or electronics — the sales tax can be a significant amount. In those cases, it is worth looking up the exact rate for your location before you finalize the purchase. Some people who live near state borders shop in the lower-tax state when making large purchases, though this only works if you actually travel there; you cannot avoid your home state's tax by ordering online from a neighboring state.
Frequently Asked Questions
Do I have to pay sales tax if I buy something in Alaska and bring it home to another state?
No. Sales tax is charged where the purchase happens, not where you live. If you buy something in Alaska and pay no sales tax there, you do not owe sales tax to your home state on that item. However, if you order something online from Alaska and have it shipped to your home state, your home state's sales tax may apply depending on the seller and your state's rules.
Why do some states not have sales tax?
States without sales tax chose to fund government services through other taxes instead — usually income tax, property tax, or in Alaska's case, oil revenue. This is a policy choice made by each state's legislature. Some states believe income tax is fairer; others rely on natural resources or tourism revenue. There is no single reason across all five states.
If I move to a no-sales-tax state, will my taxes be lower?
Not necessarily. While you will not pay sales tax, you may pay higher income tax or property tax. New Hampshire and Oregon have significant income taxes. Alaska has no income tax but high property taxes in some areas. The total tax burden depends on your income, property value, and spending habits, not just the presence or absence of sales tax.
Can I order from a no-sales-tax state to avoid paying sales tax?
No. Most states now require online sellers to collect sales tax based on where you live, not where the seller is located. Even if you order from a seller in Oregon or New Hampshire, if you live in a state with sales tax, that tax will be charged. The only exception is very small sellers below certain thresholds, but major retailers collect tax on all orders.
Are there any other states considering eliminating sales tax?
No state has eliminated sales tax in recent decades. Sales tax is a major revenue source for most states, and eliminating it would require replacing that revenue through income tax, property tax, or cuts to services. While some states debate tax policy regularly, moving away from sales tax entirely is not a current trend.