Oregon, Montana, New Hampshire, and Delaware have no state sales tax
Four states do not charge a state sales tax at all: Oregon, Montana, New Hampshire, and Delaware. If you live in or buy from one of these states, you pay no state tax on most purchases. However, this does not mean zero tax everywhere — some of these states tax specific categories like groceries or services, and local taxes may still apply in certain areas.
If you are comparing states by overall tax burden rather than just sales tax, the picture changes. New Hampshire and Delaware have no income tax either, which makes them genuinely low-tax states. Oregon and Montana do tax income, so residents pay that cost instead of a sales tax. The choice between a sales tax state and an income tax state depends on your situation: high earners often prefer sales tax states, while lower-income households may pay less in a state with income tax but no sales tax.
Key Takeaways
- Oregon, Montana, New Hampshire, and Delaware charge no state sales tax on most purchases.
- New Hampshire and Delaware also have no state income tax, making them the lowest-tax states overall.
- Oregon and Montana tax income instead, so residents pay through payroll or tax returns rather than at the register.
- Some states with no sales tax still tax groceries, prepared food, or services, so the tax picture varies by what you buy.
- Local and county taxes can add to the total even in no-sales-tax states, depending on where you shop or live.
How the four no-sales-tax states differ from each other
Oregon has no state sales tax but taxes income at rates from 4.75% to 9.9% depending on income level. Groceries are not taxed. Oregon allows local governments to add taxes in some areas, though most do not.
Montana has no state sales tax and taxes income at rates from 1% to 6.9%. Groceries are not taxed. Montana allows local option taxes in some counties, but most areas have no local sales tax.
New Hampshire has no state sales tax and no state income tax. It does tax meals and prepared food at 9%, and it taxes hotel stays. Groceries are not taxed. New Hampshire has no local sales tax.
Delaware has no state sales tax and no state income tax. It does not tax groceries or prepared food. Delaware allows counties to add local sales taxes, which range from 0% to 1.5% depending on the county.
States with the lowest sales tax rates (where sales tax exists)
If you live in a state that does charge sales tax, the lowest rates are in Colorado, Georgia, Hawaii, Louisiana, New York, and Wyoming, all at 4%. These are state rates only; local taxes stack on top and vary by city and county.
The combined rate (state plus local) is what you actually pay at the register. For example, Colorado's state rate is 4%, but Denver adds 3.62%, bringing the total to 7.62%. Wyoming's state rate is 4%, but some counties add up to 2%, reaching 6% total. Always check your specific city or county for the full picture.
States with 5% state sales tax include Alabama, Georgia (in some counties), Kentucky, Mississippi, and South Carolina. Again, local taxes add to these amounts.
Why some states tax income instead of sales
States choose their tax structure based on revenue needs and policy goals. Oregon and Montana chose to tax income rather than sales, which means they collect tax from residents based on what they earn, not what they spend. This approach can feel less visible — you do not see it at the register — but it affects your paycheck or tax bill.
Income tax states argue this method is fairer because it taxes based on ability to pay. Sales tax states argue their approach is simpler and does not discourage work. Neither approach is objectively better; it depends on your income level, spending habits, and whether you prefer visible or invisible taxation.
Local taxes complicate the picture in every state
Even in states with low or no state sales tax, cities and counties can add their own taxes. Delaware has no state sales tax, but some counties charge up to 1.5% local tax. Oregon has no state sales tax, but some cities add local taxes. New Hampshire and Montana generally do not allow local sales taxes, which is one reason they remain genuinely low-tax.
If you are moving or making a large purchase, check both the state rate and your specific city or county rate. Your local government's tax assessor website or the state revenue department can tell you the combined rate for your address.
Groceries and prepared food: what gets taxed and what does not
Most states exempt groceries from sales tax, but the definition varies. Unprepared food you cook at home is usually not taxed. Prepared food, restaurant meals, and takeout are usually taxed. Some states tax both; some tax neither.
In New Hampshire, which has no sales tax, prepared food and meals are taxed at 9%. In Oregon and Montana, groceries are not taxed but prepared food may be. In Delaware, neither groceries nor prepared food are taxed. If you buy a lot of prepared food or eat out frequently, this difference matters to your actual tax bill.
Frequently Asked Questions
Can I avoid sales tax by buying online from a no-sales-tax state?
Not reliably. Most online retailers now collect sales tax based on where you live, not where they are located. If you live in a sales tax state, you typically pay that state's tax even when buying from an Oregon or Montana business. Some exceptions exist for small sellers, but the general rule is: your home state's tax applies.
Do all four no-sales-tax states really have no tax on anything?
No. New Hampshire taxes prepared food and hotel stays. Delaware, Oregon, and Montana tax income (except Delaware). All four allow some local taxes in certain areas. "No sales tax" means no general sales tax on retail goods, but specific categories and income may still be taxed.
Is moving to a no-sales-tax state worth it for tax savings?
It depends on your income and spending. If you earn a high income, Oregon and Montana's income tax may cost more than you save on sales tax. If you earn less, the savings might be real. New Hampshire and Delaware have genuinely low overall taxes, but housing and other costs may be higher, offsetting the tax benefit.
What is the highest sales tax rate in the country?
California has the highest state rate at 7.25%, but combined with local taxes, some California cities reach 8.5% to 10.75%. Tennessee, Louisiana, and Arkansas also have combined rates above 9% in some areas. The actual rate depends on your city and county, not just the state.
Do I pay sales tax on services like haircuts or car repairs?
It varies by state. Most states do not tax services, but some do. A few states tax specific services like repairs or labor. Check your state revenue department website for what counts as taxable in your area, since the rules differ widely.