Five states have no statewide sales tax
Alaska, Delaware, Montana, New Hampshire, and Oregon do not charge a statewide sales tax. This means when you buy something in these states, you pay only the item's price — no additional percentage added at checkout.
However, "no sales tax" does not mean tax-free shopping everywhere. Alaska allows 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. The other four states prohibit local sales taxes entirely, so purchases are truly tax-free statewide.
The absence of sales tax does not mean these states have no taxes at all. They fund government services through other methods: income tax, business taxes, property taxes, or in Alaska's case, oil revenue. New Hampshire, for example, has no sales tax but does tax interest and dividend income.
Key Takeaways
- Alaska, Delaware, Montana, New Hampshire, and Oregon have no statewide sales tax, though Alaska permits local taxes in some cities.
- The other 45 states and Washington, D.C. charge sales tax, with rates ranging from roughly 4 percent to over 7 percent depending on location.
- States without sales tax typically fund services through income tax, business taxes, or other revenue sources instead.
- If you live in a no-sales-tax state and buy something online from a retailer in another state, you may still owe sales tax depending on where the retailer is located and your state's rules.
How no-sales-tax states compare to the rest of the country
The 45 states that do charge sales tax set their own rates. State rates typically range from about 4 percent to 7.25 percent, and many states allow counties or cities to add local taxes on top. A purchase in Tennessee, for example, might include a 9.55 percent total tax — 7 percent state plus 2.55 percent local — even though the state rate alone is 7 percent.
Living in a no-sales-tax state saves money on everyday purchases: groceries, clothing, gas, and restaurant meals. Over a year, a family in Oregon or New Hampshire will spend noticeably less on the same items than a family in a high-tax state like Louisiana or Arkansas. The difference compounds on large purchases like cars or furniture.
The tradeoff is that residents of no-sales-tax states often pay higher income tax or property tax. New Hampshire residents, for instance, pay no sales tax but do pay tax on investment income. Alaska residents pay no income tax and no sales tax in most places, but property taxes and other fees offset the savings.
What happens when you buy from out of state
If you live in a no-sales-tax state and order something online from a retailer in a state with sales tax, you typically do not pay that state's sales tax. The retailer collects tax based on where they are located or where the item ships to, not where you live.
However, some no-sales-tax states have begun requiring online retailers to collect tax on purchases shipped into the state, even though the state itself has no sales tax. This is less common than in states with sales tax, but it is changing. Check your state's department of revenue website if you want to know the current rule.
If you buy something in person while traveling to a state with sales tax, you pay that state's tax at the register. There is no way around it, and you cannot claim a refund when you return home.
Which no-sales-tax state has the highest cost of living
Alaska has the highest overall cost of living among the five no-sales-tax states, driven by shipping costs, limited competition, and remote location. Groceries, gas, and housing are significantly more expensive than in the continental United States. The sales tax savings are often offset by these higher base prices.
Oregon and New Hampshire have moderate costs of living compared to the national average. Delaware's cost of living is close to the national average, though housing near Wilmington and the Philadelphia suburbs is higher. Montana has one of the lowest costs of living in the country, and the lack of sales tax makes it even more affordable for everyday purchases.
States that tax some items but not others
Several states with sales tax create exceptions for specific items. These are different from the five states with no sales tax at all, but they are worth knowing about if you shop across state lines.
New York, Pennsylvania, and several other states do not tax groceries or prescription medications, even though they tax most other purchases. Some states exempt clothing below a certain price. These partial exemptions reduce the tax burden on essentials but do not eliminate sales tax the way Alaska, Delaware, Montana, New Hampshire, and Oregon do.
Frequently Asked Questions
Do I pay sales tax on groceries in no-sales-tax states?
No. Since these states have no sales tax at all, groceries are not taxed. This is different from states that exempt groceries specifically — in Alaska, Delaware, Montana, New Hampshire, and Oregon, nothing is subject to sales tax at the state level.
Can I move to Alaska to avoid paying sales tax?
Moving for tax reasons alone is rarely practical. Alaska's higher cost of living, remote location, and harsh climate offset the sales tax savings. Additionally, you must establish residency and meet state requirements, which takes time and money. The tax savings would take years to recoup.
What if I order something online and have it shipped to a no-sales-tax state?
Most online retailers do not charge sales tax on orders shipped to Alaska, Delaware, Montana, New Hampshire, or Oregon, since these states have no sales tax to collect. However, some retailers may have their own policies, so check before checkout if you want to confirm.
Does Delaware really have no sales tax?
Yes. Delaware has no statewide or local sales tax. However, it does charge income tax and property tax. Delaware is popular with online retailers partly because of the sales tax exemption, though federal law now requires many large retailers to collect sales tax regardless of state rules.
If I live in Oregon and buy something in California, do I owe Oregon sales tax?
No. Oregon has no sales tax, so there is nothing to owe. You would pay California's sales tax at the register in California, but Oregon would not charge you anything when you return home with the item.