Five states do not charge a statewide sales tax
Alaska, Delaware, Montana, New Hampshire, and Oregon do not impose a statewide sales tax. This does not mean shopping is tax-free in those states — the situation is more complicated than that, and it varies by state and by what you are buying.
Alaska allows cities and boroughs to charge local sales taxes, so you may still pay tax depending on where you shop. Delaware, Montana, New Hampshire, and Oregon have no statewide or local sales tax on most purchases. However, some of these states tax specific items like groceries, prepared food, or services in ways that other states do not.
If you live in or are moving to one of these states, understanding what is and is not taxed matters for budgeting. If you are shopping across state lines, knowing which states have no sales tax can help you understand why prices differ.
Key Takeaways
- Alaska, Delaware, Montana, New Hampshire, and Oregon have no statewide sales tax, but Alaska allows local taxes and the other four states tax certain items.
- Alaska cities and boroughs can charge between 1 and 7.5 percent local sales tax, so your actual tax rate depends on your location within the state.
- New Hampshire taxes prepared food and restaurant meals but not groceries, while Montana taxes no food but does tax some services.
- Oregon and Delaware have the broadest exemptions from sales tax, though both states may tax specific services or business transactions.
- No state has eliminated all taxes on purchases — states without sales tax typically rely on income tax, property tax, or other revenue sources instead.
How Alaska's local sales tax works
Alaska has no statewide sales tax, but that does not mean you pay nothing. Municipalities — cities and boroughs — can impose their own local sales tax. The rate varies by location and ranges from 0 to 7.5 percent depending on where you live and shop.
Anchorage charges 3.5 percent. Juneau charges 5 percent. Some smaller towns charge nothing, while others charge up to 7.5 percent. If you move to Alaska or shop there, you need to know your local rate because it applies to most goods and some services.
Groceries, prescription medications, and some medical equipment are exempt from Alaska's local sales tax. Prepared food, restaurant meals, and alcohol are taxed. This means your grocery bill is lower than it would be in a state with a statewide sales tax, but eating out costs more.
What New Hampshire taxes and does not tax
New Hampshire has no sales tax on most goods, which is why it is known as a shopping destination for people in neighboring states. However, New Hampshire does tax prepared food and restaurant meals at 8.5 percent. This includes takeout, delivery, and food from a deli counter.
Groceries — raw ingredients you cook at home — are not taxed. Clothing is not taxed. Most retail goods are not taxed. The state also does not tax services like haircuts, car repairs, or plumbing, which many other states do.
New Hampshire funds state operations through an income tax on interest and dividends, property taxes, and other revenue sources. This is why residents can shop without a sales tax but still pay taxes in other ways.
What Montana, Oregon, and Delaware exempt from tax
Montana has no sales tax on any food, including groceries and prepared food. This is unusual — most states that have a sales tax make an exception for groceries but tax restaurant meals. Montana taxes some services, such as repairs and certain professional services, but not others.
Oregon has no sales tax on goods or most services. Groceries are not taxed. Clothing is not taxed. Most retail purchases are not taxed. Oregon does tax some business-to-business services and specific transactions, but a typical shopper will not encounter these taxes.
Delaware has no sales tax on goods. Groceries are not taxed. Clothing is not taxed. Most retail purchases are not taxed. Delaware does tax some services, including certain professional and personal services, but the tax does not apply to most everyday shopping.
Why states without sales tax still collect taxes
A state without a sales tax does not have no taxes — it has different taxes. Alaska, Delaware, Montana, New Hampshire, and Oregon all collect revenue through income tax, property tax, business taxes, or other mechanisms.
New Hampshire and Tennessee are the only two states that do not tax wages or salaries, but New Hampshire taxes investment income. Montana has a state income tax. Oregon has a state income tax. Delaware has a state income tax. Alaska has no state income tax but relies on oil revenue, property taxes, and other sources.
The total tax burden — what you pay in all forms of tax combined — is not necessarily lower in a no-sales-tax state than in a state with sales tax. A state without sales tax may have higher income tax or property tax to make up the difference.
How to find the tax rate where you live or shop
If you live in one of these five states, your local tax rate depends on your city or county. For Alaska, contact your city or borough government or check the municipality's website. For the other four states, you can assume most purchases are not taxed, but confirm the status of specific items if you are unsure.
If you are shopping across state lines, remember that sales tax is based on where you make the purchase, not where you live. If you buy something in a state with sales tax, you pay that state's tax, even if you live in a no-sales-tax state. Online purchases are more complicated — the seller's location, your location, and the type of item all affect whether tax applies.
State tax laws change, and specific items may have different rules. If you are making a large purchase or need to know the exact tax on a specific item, contact the state's revenue department or the retailer directly.
Frequently Asked Questions
Do I pay sales tax if I buy something online from a no-sales-tax state?
It depends on where the seller is located and what you are buying. If the seller has a physical location or employees in your state, they must collect sales tax even if they are shipping from a no-sales-tax state. If the seller has no presence in your state, they typically do not collect tax, though you may owe use tax to your own state.
Is everything really tax-free in these five states?
No. All five states tax some items or services. New Hampshire taxes prepared food. Montana and Oregon tax some services. Alaska taxes prepared food and allows local taxes. Delaware taxes some services. Groceries are generally not taxed in all five states, but check the specific item if you are unsure.
Can I move to one of these states to avoid taxes?
Moving to avoid sales tax alone is usually not worthwhile. These states have other taxes — income tax, property tax, or both — that may offset the savings from no sales tax. The total tax burden depends on your income, property value, and spending habits. Compare your overall tax situation before deciding.
What about shipping and delivery fees — are those taxed?
Shipping and delivery fees are generally not taxed in these five states, but the item itself may be. If you order groceries for delivery in New Hampshire, the groceries are not taxed, but prepared food delivered is taxed. Check with the retailer if you are unsure whether a specific purchase includes tax.