Five states do not charge a sales tax on purchases
Alaska, Delaware, Montana, New Hampshire, and Oregon have no statewide sales tax. This means when you buy something in these states, the price on the tag is the price you pay at checkout — no additional tax is added.
However, the absence of a statewide tax does not mean shopping is tax-free everywhere in these states. 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 there is no sales tax at any level in those jurisdictions.
These states fund government services through other means: income tax, property tax, business taxes, or excise taxes on specific goods like fuel or alcohol. The funding method varies by state and does not affect what you pay when you shop.
Key Takeaways
- Alaska, Delaware, Montana, New Hampshire, and Oregon have no statewide sales tax, though Alaska allows some cities to charge local sales tax.
- In Delaware, Montana, New Hampshire, and Oregon, there is no sales tax at the state or local level.
- States without sales tax use other revenue sources such as income tax, property tax, or business taxes to fund services.
- If you live in or travel to one of these states, the final price you pay at checkout will not include sales tax.
How Alaska's local sales tax works
Alaska has no statewide sales tax, but the state allows individual cities and boroughs to impose their own local sales taxes. This means your tax bill depends on where in Alaska you are shopping.
In Anchorage, the local sales tax is 3.5 percent. In Juneau, it is 5 percent. In Fairbanks, there is no local sales tax. Other cities and towns set their own rates or choose not to tax sales at all. Before shopping in Alaska, check the specific city or borough where you are making the purchase, because the tax rate is not uniform across the state.
This patchwork approach means you cannot assume Alaska is tax-free. A visitor to Anchorage will pay sales tax on most purchases, while a visitor to Fairbanks will not. If you live in Alaska or plan to spend time there, knowing your local rate helps you understand what you will actually pay.
Delaware, Montana, New Hampshire, and Oregon have no sales tax at any level
These four states prohibit both statewide and local sales taxes. When you buy something in Wilmington, Delaware; Billings, Montana; Manchester, New Hampshire; or Portland, Oregon, there is no sales tax added to your purchase, regardless of the city or county.
This does not mean these states have no taxes. Delaware and Montana have no income tax but use property taxes and business taxes. New Hampshire has no income tax or sales tax but funds services through property tax and a tax on business profits. Oregon has no sales tax but charges income tax on wages and business income. Each state has chosen a different mix of revenue sources.
Why some states chose not to have sales tax
The decision to avoid sales tax reflects each state's history and political choices about how to fund government. Some states adopted income tax early and never added sales tax. Others, like Montana and New Hampshire, have strong political traditions against broad-based consumption taxes.
The absence of sales tax does not mean lower overall taxes. A person living in Oregon pays income tax on their wages, which can be substantial. A person in New Hampshire pays property tax and business taxes. The total tax burden depends on your income, property value, and spending patterns, not just whether sales tax exists.
How sales tax works if you order from a no-sales-tax state
If you order something online from a retailer in Alaska, Delaware, Montana, New Hampshire, or Oregon, you will usually pay sales tax based on where the item is being shipped, not where the retailer is located. This is called destination-based sales tax.
For example, if you order from an Oregon retailer and have it shipped to California, you pay California sales tax. If you have it shipped to Oregon, you pay no sales tax. The retailer collects tax based on the delivery address, not their home state. This rule applies to most online orders, though some small retailers may not collect tax depending on their size and the state's rules.
The key point is that your shipping address determines the tax, not the seller's location. This means ordering from a no-sales-tax state does not automatically save you money if you live in a state that has sales tax.
Frequently Asked Questions
Do I pay sales tax if I buy something online from a no-sales-tax state?
You pay sales tax based on where the item is shipped, not where the seller is located. If you live in a state with sales tax and order from Oregon, you still owe your state's sales tax on that purchase.
Can cities in Delaware, Montana, New Hampshire, or Oregon add their own sales tax?
No. These four states prohibit local sales taxes entirely. Only Alaska allows cities and boroughs to set their own sales tax rates.
Do these states have income tax instead?
It varies. Alaska and New Hampshire have no income tax. Delaware, Montana, and Oregon have income tax. Each state funds services through a different combination of income tax, property tax, business taxes, and excise taxes.
Is it cheaper to live in a state with no sales tax?
Not necessarily. A state without sales tax may have higher income tax or property tax. Your total tax burden depends on your income, property value, and spending habits, not just the presence or absence of sales tax.