Five states have no statewide sales tax
Alaska, Delaware, Montana, New Hampshire, and Oregon do not impose 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, "no sales tax" does not mean tax-free shopping everywhere. Alaska allows cities and boroughs to collect local sales taxes, so some purchases in Anchorage or Juneau will still be taxed. The other four states prohibit local sales taxes entirely, making them genuinely tax-free for most purchases.
The specifics matter because tax treatment varies by product category. New Hampshire taxes prepared food and restaurant meals but not groceries. Montana taxes some services but not others. Delaware taxes most goods but has historically been used as a mailing address for mail-order purchases to avoid sales tax — a practice that has largely ended as online retailers now collect tax in most states regardless of where they are based.
Key Takeaways
- Alaska, Delaware, Montana, New Hampshire, and Oregon have no statewide sales tax, but Alaska allows local taxes in some cities.
- New Hampshire taxes restaurant meals and prepared food but not groceries or clothing.
- Montana taxes some services and specific goods but not others, depending on the category.
- Using a no-sales-tax state address to avoid tax on online purchases no longer works, because most online retailers now collect sales tax based on where you live, not where they ship from.
- If you live in a no-sales-tax state, you may still owe use tax on items purchased elsewhere — though enforcement varies widely.
What each no-sales-tax state actually taxes
Alaska has no statewide sales tax, but Anchorage, Juneau, Fairbanks, and other municipalities impose local taxes ranging from 0% to 7.5%. If you buy something in Anchorage, you pay the local rate. If you buy it in an unincorporated area, you may pay nothing. Online purchases shipped to Alaska are generally not taxed unless the seller has a physical location in Alaska.
Delaware taxes most retail goods and some services. It does not tax groceries, prescription medications, or clothing. Services like haircuts, repairs, and professional fees are generally not taxed. Delaware has no local sales tax. Online retailers typically do not collect Delaware sales tax on purchases shipped to Delaware residents, though this can vary by seller.
Montana taxes retail goods but not groceries, prescription drugs, or most medical equipment. It taxes some services — such as repairs and installation — but not others. Prepared food is taxed; unprepared food is not. Montana has no local sales tax. The state tax rate is 0%, but individual cities and counties can impose local taxes up to 3%, so the actual rate depends on where you are located.
New Hampshire taxes most retail goods but not groceries or clothing. Restaurant meals and prepared food are taxed; food you cook at home is not. Services are generally not taxed. New Hampshire has no local sales tax. Online purchases are typically not taxed unless the seller has a physical presence in New Hampshire.
Oregon taxes most retail goods but not groceries or prescription medications. Services are generally not taxed. Oregon has no local sales tax. Online retailers typically do not collect Oregon sales tax on purchases shipped to Oregon residents, though some large retailers may.
How online shopping works in no-sales-tax states
If you live in one of these five states and order something online, whether you pay sales tax depends on the seller's location and size, not on your state's tax laws. Large online retailers — Amazon, Walmart, Target, and most national chains — now collect sales tax on purchases shipped to every state, regardless of whether that state has a sales tax. This happened after the 2018 Supreme Court decision in South Dakota v. Wayfair, which allowed states to require out-of-state sellers to collect tax.
Smaller online retailers may not collect sales tax on shipments to no-sales-tax states. If you buy from a small seller based outside your state and no tax is collected, you may technically owe use tax to your state — a tax on items purchased elsewhere and brought into your state. However, enforcement of use tax on individual purchases is rare, and most people do not report these purchases.
The practical effect is that shopping online from a no-sales-tax state usually results in no sales tax, but not because of your state's laws — it is because the seller either collects tax in all states or does not collect it anywhere.
Use tax: what you might owe even in a no-sales-tax state
Most states, including the five with no sales tax, have a use tax. This is a tax on items you purchase outside your state and bring into your state. The rate is usually the same as the sales tax rate would be if the item were purchased locally.
For residents of no-sales-tax states, use tax is typically 0% — because there is no sales tax to mirror. However, if you live in Alaska and buy something in Washington (which has sales tax), you may owe Alaska use tax on that purchase when you bring it home. The rate depends on Alaska's local tax rate where you live.
In practice, use tax is almost never collected on individual consumer purchases. It is designed for businesses that buy goods out of state for resale. Individuals are technically required to report use tax on their state tax returns, but very few do, and states rarely pursue individual taxpayers for small purchases.
Why these five states have no sales tax
Each state arrived at no sales tax through different historical and political paths. Alaska has oil revenue, which historically reduced the need for sales tax. Delaware built its economy partly on corporate law and mail-order retail, and kept sales tax low to attract business. Montana and Oregon have had strong political resistance to sales tax for decades. New Hampshire has a "Live Free or Die" political culture that has consistently rejected broad-based taxes.
These reasons matter because they explain why these states are unlikely to adopt sales tax soon. A state does not add a major tax without significant political change, and in these five states, the political consensus against sales tax remains strong.
How no-sales-tax states fund services
States without sales tax still need revenue for schools, roads, police, and other services. They fund these through other means: income tax, property tax, business taxes, excise taxes on specific goods, or natural resource revenue.
Alaska relies heavily on oil revenue and has no state income tax. Delaware has a high corporate tax and business-friendly laws that attract company registrations. Montana and Oregon both have state income taxes. New Hampshire has no income tax but taxes interest and dividends, and relies on property taxes and business taxes.
The point is that no sales tax does not mean no taxes. It means the tax burden is distributed differently — usually toward income tax or property tax rather than consumption tax.
Frequently Asked Questions
If I live in a no-sales-tax state and order from Amazon, do I pay sales tax?
Yes, Amazon collects sales tax on most orders shipped to every state, including the five with no statewide sales tax. The tax rate depends on your location. If you live in Alaska, you pay the local rate where you live. If you live in Delaware, Oregon, New Hampshire, or Montana, you typically pay 0% because those states have no sales tax.
Can I use a no-sales-tax state address to avoid paying sales tax on online orders?
No. Online retailers collect sales tax based on where the item is being shipped, not based on the address you provide. If you ship to a no-sales-tax state, you pay that state's rate (usually 0%). If you ship to a state with sales tax, you pay that rate, regardless of what address you used to register your account.
Do I have to pay sales tax on groceries in these states?
No. All five states exempt groceries from sales tax. New Hampshire also exempts clothing. If you buy prepared food at a restaurant, the rules vary: New Hampshire taxes it, Montana taxes it, and the others generally do not.
What if I buy something in a state with sales tax and bring it home to a no-sales-tax state?
You may owe use tax to your home state. However, for residents of no-sales-tax states, the use tax rate is typically 0%, so you would owe nothing. If you live in Alaska, the use tax rate is your local rate, so you might owe tax on out-of-state purchases.
Are these states planning to add sales tax?
There is no current movement in any of these five states to adopt a statewide sales tax. Each has strong political opposition to sales tax, and the revenue sources they currently use remain politically acceptable. However, state budgets change, and long-term fiscal pressure could eventually force the issue.