Five U.S. States Have No Sales Tax
Alaska, Delaware, Montana, New Hampshire, and Oregon do not impose a statewide sales tax. This means when you buy most goods in these states, you pay only the price on the tag — no additional percentage is added at checkout. However, the absence of a statewide tax does not mean zero tax everywhere: Alaska and Montana allow cities and boroughs to collect local sales taxes, so the total tax you pay depends on where in the state you are shopping.
The other three states — Delaware, New Hampshire, and Oregon — have no sales tax at any level, state or local. This makes them genuinely tax-free for retail purchases. New Hampshire does tax meals at restaurants and some services, and Delaware taxes restaurant meals as well, so the picture is more complex than "no tax at all," but clothing, groceries, and most goods carry no sales tax in these states.
Understanding which states have no sales tax matters if you live near a border, shop online from out of state, or are considering a move. It also matters for business owners deciding where to locate, though that involves other tax considerations beyond sales tax.
Key Takeaways
- Alaska, Delaware, Montana, New Hampshire, and Oregon have no statewide sales tax, though Alaska and Montana permit local taxes in some cities.
- Delaware, New Hampshire, and Oregon have no sales tax at any level — state or local — on most retail goods.
- New Hampshire and Delaware do tax restaurant meals and some services, so the tax picture is not identical across all purchases.
- If you live near a state border, knowing which side has no sales tax can affect where you choose to shop for large purchases.
How Alaska and Montana Differ From the Other Three
Alaska and Montana have no statewide sales tax, but they allow local governments to impose their own. In Alaska, cities and boroughs can set sales tax rates, and many do — Anchorage, for example, has a 12% tax rate. In Montana, cities and counties can impose local sales taxes that vary by location. This means your tax bill in Anchorage is very different from your tax bill in a rural Alaskan town with no local tax.
Delaware, New Hampshire, and Oregon do not allow any sales tax — not at the state level and not at the local level. No city, county, or municipality in these states can impose a sales tax on retail goods. This creates a uniform experience: a purchase in Portland, Oregon costs the same tax-wise as a purchase in a small Oregon town.
The reason these states have no sales tax varies. Some rely more heavily on income tax or other revenue sources. Others have historical or political reasons for the policy. Understanding the reason does not change what you pay, but it explains why the policy has remained stable for decades.
What Is and Is Not Taxed in No-Sales-Tax States
In the five no-sales-tax states, most tangible goods — clothing, electronics, furniture, groceries — are not subject to sales tax. However, services and certain categories are often taxed differently or not covered by the "no sales tax" rule.
New Hampshire taxes restaurant meals and prepared food, even though it has no sales tax on groceries or most goods. Delaware also taxes restaurant meals. Oregon does not tax restaurant meals. All three states may tax services like haircuts, repairs, or professional fees, though the rules vary by service type and state. Alaska and Montana, where local taxes exist, may tax services at the local level even if the state does not.
If you are planning a large purchase or move, check the specific rules for services or categories that matter to you. A state's "no sales tax" label does not mean every transaction is tax-free.
Why People Move to or Shop in No-Sales-Tax States
The absence of sales tax is one reason people choose to live in or near these states, though it is rarely the only reason. For someone buying a car, boat, or other high-value item, the sales tax difference can be thousands of dollars. A $50,000 car purchase in a state with 8% sales tax costs $4,000 more than the same car in Oregon or Delaware.
People who live near state borders sometimes cross over for major purchases. Someone in Massachusetts might drive to New Hampshire to buy a computer or furniture and avoid the 6.25% Massachusetts sales tax. However, most states require you to pay sales tax on out-of-state purchases when you bring them home, so the savings may not be legal — though enforcement is inconsistent.
For online shopping, sales tax rules have changed significantly in recent years. Most large online retailers now collect sales tax based on where the item is being shipped, regardless of where the retailer is located. This means buying from Amazon and having it shipped to Oregon does not automatically mean no tax, because Amazon collects tax based on Oregon's rules (which in this case means no sales tax, but the retailer decides, not the state).
Income Tax and Other Taxes in No-Sales-Tax States
States without sales tax often rely on other revenue sources, particularly income tax. New Hampshire and Tennessee are the only two states with no sales tax and no income tax on wages — though New Hampshire does tax investment income and dividends. This makes New Hampshire unusual: no sales tax, no wage income tax, but tax on certain types of income.
Alaska, Delaware, Montana, and Oregon all have income taxes. Alaska's income tax is lower than most states, and it has an oil dividend program that pays residents annually. Delaware has a moderate income tax. Montana and Oregon both have income taxes that vary by income level. The total tax burden — sales tax plus income tax plus property tax — is what matters for your overall cost of living, not sales tax alone.
If you are considering a move based on taxes, compare the full picture: income tax rate, property tax, and any other state taxes. A state with no sales tax but high income tax may not save you money overall.
How to Know What Tax You Will Pay in These States
If you live in or are visiting one of these five states, the easiest way to know your tax is to look at the receipt after you buy something. The receipt shows exactly what was taxed and what was not. For large purchases, you can call the store or check the state's tax authority website before you buy.
Each state has a tax department or revenue office with a website listing what is and is not taxed. Alaska's Department of Revenue, Delaware's Division of Revenue, Montana's Department of Revenue, New Hampshire's Department of Revenue Administration, and Oregon's Department of Revenue all publish guides. These guides are detailed and sometimes confusing, but they are the official source.
For online purchases, check the retailer's tax policy or the shipping address rules. Most major retailers display the estimated tax before you complete your purchase, so you can see the total cost.
Frequently Asked Questions
Do I have to pay sales tax if I buy something in a no-sales-tax state and bring it home to my state?
Most states require you to pay sales tax on out-of-state purchases you bring home, even if you bought them in a state with no sales tax. This is called "use tax." However, enforcement is weak, and most people do not pay it. Legally, you may owe it; practically, you probably will not be caught. Check your home state's tax rules if you are making a very large purchase.
Can I order something online from a no-sales-tax state and avoid sales tax?
Not usually. Most online retailers collect sales tax based on where the item is being shipped, not where the retailer is located. If you order from Oregon but have it shipped to California, you will likely pay California sales tax. The retailer decides the tax based on the destination address.
Does New Hampshire really have no income tax?
New Hampshire has no tax on wages or salaries, which is unusual. However, it does tax investment income, dividends, and interest. It also has no sales tax but does tax restaurant meals. So while it is one of the most tax-friendly states for wage earners, it is not tax-free across the board.
If I move to Alaska, do I automatically pay no sales tax?
It depends on where in Alaska you live. Alaska has no statewide sales tax, but many cities and boroughs impose local sales taxes. Anchorage has a 12% tax. Some rural areas have no local tax. Check the specific city or borough where you plan to live.
Are groceries taxed in these states?
In the five no-sales-tax states, groceries are generally not subject to sales tax. However, prepared foods, restaurant meals, and some convenience items may be taxed differently. Check your receipt or the store's policy if you are unsure about a specific item.