Five states do not charge sales tax on retail purchases
Alaska, Delaware, Montana, New Hampshire, and Oregon do not impose a statewide sales tax. This means when you buy something in one of these states, you pay only the price on the tag — no additional percentage is added at checkout.
However, the absence of statewide sales tax does not mean zero tax in all cases. Alaska allows municipalities to charge local sales taxes, and some cities and boroughs do. Delaware, Montana, New Hampshire, and Oregon have no local sales tax either, making them the only truly sales-tax-free states for all purchases.
If you live in or travel to one of these states, the lack of sales tax affects groceries, clothing, vehicles, and most other goods. Some states without statewide sales tax still tax specific items like fuel or alcohol differently, so the rules vary by product and location.
Key Takeaways
- Delaware, Montana, New Hampshire, and Oregon have no statewide or local sales tax on any purchases.
- Alaska has no statewide sales tax, but some cities and boroughs within Alaska do charge local sales tax.
- The five no-sales-tax states still collect revenue through other taxes, such as income tax, property tax, or business taxes.
- If you buy something online from a seller in a no-sales-tax state, you may still owe sales tax to your own state depending on state law and the seller's location.
How each no-sales-tax state handles revenue
States without sales tax replace that revenue through other means. New Hampshire and Tennessee are the only states that do not tax income, but New Hampshire taxes interest and dividends. Montana, Oregon, and Delaware all have income taxes that fund state services.
Alaska has no income tax and no statewide sales tax, but it funds government through oil revenue, property taxes, and business taxes. This unusual combination is possible because Alaska's oil industry generates substantial state income. Other states without sales tax cannot rely on a single large revenue source, so they use income tax instead.
Understanding how a state funds itself matters if you are considering a move or planning a major purchase. A state with no sales tax but high income tax may cost you more overall than a state with both, depending on your income level and spending habits.
Sales tax when buying from out-of-state sellers
If you order something online from a seller in Delaware, Montana, New Hampshire, or Oregon, you do not automatically avoid sales tax. Your own state's tax rules determine whether you owe tax on that purchase. Most states require you to pay sales tax on items shipped to you, even if the seller is in a no-sales-tax state.
The seller's location matters less than the buyer's location for online purchases. If you live in a state with sales tax and buy from an Oregon seller, Oregon does not charge tax, but your state may require the seller to collect tax on your behalf — or you may owe "use tax" directly to your state. Check your state's rules or ask the seller whether tax will be added to your order.
Why some states chose not to adopt sales tax
The five no-sales-tax states made different choices at different times in history. Delaware and Montana never adopted sales tax as a revenue source. New Hampshire and Oregon rejected it as a policy decision. Alaska, which became a state in 1959, never implemented sales tax at the state level, though it allows local governments to do so.
These decisions reflect each state's political and economic priorities. Some states viewed sales tax as regressive — meaning it takes a larger percentage from lower-income households. Others had alternative revenue sources or different philosophies about taxation. Once a state does not have sales tax, removing it later or adding it is politically difficult because residents and businesses have built their expectations around the current system.
What you actually pay in no-sales-tax states
Even in states without sales tax, you still pay taxes on many purchases — just not at the register. Gasoline, alcohol, and tobacco are often taxed through excise taxes in no-sales-tax states. These taxes are built into the wholesale price rather than added at checkout, so you do not see them separately on your receipt.
Property tax, income tax, and business taxes fund schools, roads, and public services in these states just as they do elsewhere. The difference is that you do not see a sales tax line item when you buy groceries or clothing. Over a year, your total tax burden may be similar to or higher than in a sales-tax state, depending on your income and property value.
Frequently Asked Questions
Do I have to pay sales tax if I move to one of these states?
No. Once you establish residency in a no-sales-tax state, you do not pay sales tax on purchases there. However, you will likely pay income tax or property tax instead, depending on the state. The total tax you owe may be higher or lower than in your previous state.
Can I buy something in a no-sales-tax state and bring it home to avoid tax?
No. Your home state can charge you "use tax" on items you bring in from out of state. Use tax is meant to equal the sales tax you would have paid at home. Most people do not report use tax on small purchases, but it is technically owed.
Why does Alaska allow some cities to charge sales tax if the state does not?
Alaska's constitution allows municipalities to set their own tax policy. Some cities and boroughs chose to adopt local sales tax to fund schools and services. Others did not. This creates variation within the state depending on where you shop.
If I buy online from a no-sales-tax state, will the seller charge me tax?
It depends on your state's law and the seller's policy. Most online sellers are required to charge sales tax based on where you live, not where they are located. Check the seller's tax policy or your state's rules before checkout.