Five states have no sales tax at all
Alaska, Delaware, Montana, New Hampshire, and Oregon do not impose a statewide sales tax. If you live in or buy from one of these states, you will not pay sales tax on most purchases. However, this does not mean everything is tax-free — some of these states tax specific goods like groceries or fuel, and local taxes may still apply in certain areas.
The reason these five states avoid sales tax varies. Some rely more heavily on income tax or other revenue sources. Others have historical reasons rooted in how they structured their tax systems when they became states. Understanding which state you are in matters because it changes what you actually pay at checkout.
Key Takeaways
- Alaska, Delaware, Montana, New Hampshire, and Oregon have no statewide sales tax, though some tax specific items like groceries or fuel.
- Even in no-sales-tax states, local governments may charge sales tax in certain cities or counties, so your final price depends on where you shop.
- Online purchases from no-sales-tax states do not automatically avoid tax — your home state's tax laws apply to what you order.
- Some no-sales-tax states use income tax, property tax, or other revenue sources instead, so living there does not mean lower overall taxes.
What each no-sales-tax state does tax instead
Alaska has no statewide sales tax and no income tax. However, some cities and boroughs charge local sales tax ranging from 0% to 7.5%. Groceries are generally not taxed. Alaska relies on oil revenue and property taxes to fund state services.
Delaware has no sales tax on any purchase, including groceries and clothing. The state does tax income, and it is a common reason people incorporate businesses there. Delaware also charges property tax and has a gross receipts tax on certain businesses.
Montana has no sales tax but does tax groceries at 0% and most other items at 0% statewide — however, some cities and counties impose local sales taxes up to 3%. Montana taxes income and property. Fuel is not subject to sales tax, though it carries a separate fuel excise tax.
New Hampshire has no sales tax and no income tax on wages. The state does tax interest and dividends, and it charges a "meals and rooms" tax of 9% on restaurant food and hotel stays. Property tax is high in New Hampshire. Groceries are not taxed.
Oregon has no sales tax statewide, though some counties and cities charge local tax up to 3%. Groceries are not taxed. Oregon taxes income and property. Fuel carries a separate excise tax but no sales tax.
Local sales taxes in no-sales-tax states
Even though five states have no statewide sales tax, local governments within those states can and do charge sales tax. This means your actual tax bill depends on which city or county you shop in, not just which state.
Alaska allows cities and boroughs to set their own sales tax rates. Juneau, Anchorage, and Fairbanks all charge local sales tax, while some rural areas do not. Montana and Oregon also permit local sales taxes in certain jurisdictions. New Hampshire and Delaware do not allow local sales taxes, so if you shop there, you pay nothing.
If you are moving to or ordering from one of these states, check your specific city or county, not just the state name. A purchase in Anchorage, Alaska will be taxed differently than a purchase in a rural Alaskan town.
How sales tax works when you order online from a no-sales-tax state
Ordering something from a business in Alaska, Delaware, or Oregon does not automatically mean you avoid sales tax. Your home state's tax laws apply to what you receive, not the seller's location. If you live in a state with sales tax and order from a no-sales-tax state, you may still owe tax.
Many online retailers now collect sales tax based on where the buyer lives, regardless of where the seller is located. This is true even if the seller is in a no-sales-tax state. The rule changed in 2018 when the U.S. Supreme Court ruled that states can require online sellers to collect tax on out-of-state purchases.
The exception is small sellers — some states do not require businesses below a certain sales threshold to collect tax from out-of-state buyers. But most major retailers collect tax on your home state's behalf, so the no-sales-tax state of the seller matters less than it once did.
Income tax and property tax in no-sales-tax states
States without sales tax do not have lower overall taxes — they simply collect revenue differently. Most shift the burden to income tax, property tax, or both. Understanding this matters if you are considering moving or comparing your total tax cost.
Delaware and Alaska have no income tax, which is rare. New Hampshire taxes only interest and dividends, not wages. But Oregon and Montana tax income at rates comparable to many other states. All five states charge property tax, and rates vary widely by county.
If you are moving to a no-sales-tax state hoping to save money on taxes, calculate your income tax and property tax first. A state with no sales tax but high income tax may cost you more overall than a state with both sales tax and lower income tax.
Frequently Asked Questions
Do I pay sales tax on groceries in no-sales-tax states?
Most no-sales-tax states do not tax groceries. Alaska, Delaware, New Hampshire, and Oregon all exempt food from sales tax. Montana does not tax groceries either. However, prepared foods, restaurant meals, and items like vitamins may be taxed differently depending on the state.
Can I avoid sales tax by ordering from Alaska or Oregon?
Not reliably. Your home state's tax laws apply to what you order, and most online retailers now collect sales tax based on where you live, not where the seller is. Small sellers may not collect tax, but major retailers do regardless of their location.
Is it cheaper to live in a no-sales-tax state?
Not necessarily. States without sales tax typically charge higher income tax or property tax to make up the revenue. Compare your total tax burden — income, property, and any local taxes — before assuming a no-sales-tax state will save you money.
Do no-sales-tax states charge tax on fuel?
Sales tax does not apply to fuel in these states, but fuel carries a separate excise tax that functions similarly. Alaska, Montana, and Oregon all charge fuel excise tax. The amount varies by state and changes with fuel prices.
What about local taxes in cities within no-sales-tax states?
Local sales taxes exist in parts of Alaska, Montana, and Oregon, even though the state has no statewide sales tax. New Hampshire and Delaware do not permit local sales taxes. Always check your specific city or county, not just the state.