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, there is no sales tax added at the register by the state government itself.
However, the absence of state sales tax does not mean zero tax on purchases. Alaska allows municipalities to charge local sales taxes, and some cities do. Delaware, Montana, New Hampshire, and Oregon have no local sales taxes either, making them the only states with truly no sales tax at any level of government.
The reason these states have no sales tax varies. Some rely more heavily on income tax or other revenue sources. New Hampshire and Tennessee, for instance, tax investment income and dividends instead. Alaska has oil revenue. Others, like Montana and Oregon, have chosen not to implement sales tax as part of their tax structure.
Key Takeaways
- Delaware, Montana, New Hampshire, and Oregon have no sales tax at the state or local level, making them the only truly tax-free shopping states.
- Alaska has no state sales tax but allows cities and boroughs to charge local sales taxes, so the tax rate depends on where you shop within the state.
- No sales tax does not mean no tax on purchases—some of these states tax income, investment gains, or other transactions instead.
- If you live in or move to a no-sales-tax state, you still owe sales tax in other states when you buy items there or have them shipped to you.
Alaska: State tax-free, but local taxes vary by city
Alaska has no statewide sales tax, but the state allows cities, boroughs, and other local governments to charge their own sales taxes. This means the tax rate depends entirely on where you are shopping. Some Alaska cities have no local sales tax at all, while others charge rates between 1 and 7.5 percent.
Anchorage, Juneau, and Fairbanks each have different local tax rates. Before making a large purchase in Alaska, check what the local rate is in that specific city or borough. The Alaska Department of Revenue publishes a list of local tax rates by municipality.
Delaware, Montana, New Hampshire, and Oregon: No sales tax anywhere
These four states have no sales tax at the state level and no local sales taxes either. When you buy something in any city or county in these states, no sales tax is added.
Delaware is a popular state for online shopping partly because of this. However, if you live outside Delaware and order from a Delaware business, you may still owe sales tax in your own state depending on that state's laws. Montana, New Hampshire, and Oregon residents also pay no sales tax on in-state purchases, but the same rule applies to out-of-state orders.
How no-sales-tax states fund government services
States without sales tax must fund schools, roads, and public services through other means. New Hampshire and Tennessee tax investment income, capital gains, and dividends—a way to raise revenue without a sales tax. Alaska uses oil revenue and other natural resource income. Montana and Oregon rely on income tax and other state taxes.
The trade-off is that residents in these states often pay higher income taxes or other taxes than residents in states with sales tax. There is no universal rule about which approach costs residents more overall; it depends on your income level and spending habits.
Sales tax still applies when you leave these states
Living in a no-sales-tax state does not exempt you from sales tax everywhere. If you travel to another state and make a purchase there, you pay that state's sales tax. If you order something online from a business in a state with sales tax, you typically owe that state's sales tax on the order.
The only exception is if the business has no physical presence in that state and the state has not passed a law requiring remote sellers to collect tax. However, most states now require online retailers to collect sales tax regardless of where the business is located, so this exception is rare.
What counts as a purchase in these states
Sales tax applies to tangible goods—items you can touch and take home. In most states, services are not taxed. However, some states have specific rules about what counts as a service versus a good.
In the no-sales-tax states, groceries, clothing, and household items are not taxed. Haircuts, repairs, and professional services are also not taxed. The rules are simpler in these states because there is no sales tax category to navigate at all.
Frequently Asked Questions
If I move to a no-sales-tax state, do I pay sales tax on my move?
No. Moving services and shipping are generally not subject to sales tax in any state. However, if you purchase new furniture or goods in your new state, you will not pay sales tax if you are in Delaware, Montana, New Hampshire, or Oregon, or in an Alaska city with no local tax.
Can I order online from a no-sales-tax state to avoid sales tax?
Not reliably. Most online retailers now collect sales tax based on the state where you live, not where the business is located. Even if you order from a Delaware business, you will likely owe your home state's sales tax. Check the retailer's tax policy before ordering.
Do these states charge tax on groceries?
No. Delaware, Montana, New Hampshire, and Oregon do not tax groceries because they have no sales tax at all. Alaska does not tax groceries at the state level, but some Alaska cities with local sales taxes may tax certain food items—check your local rules.
Is sales tax the only tax I pay in these states?
No. These states use income tax, property tax, and other taxes to fund services. New Hampshire and Tennessee tax investment income. Alaska has no income tax but charges property taxes. Compare the total tax burden, not just sales tax, when considering the cost of living.
What if I buy something in a no-sales-tax state and have it shipped to another state?
You owe sales tax in the state where you live, not the state where the seller is located. The retailer should collect that tax at checkout. If they do not, your home state may require you to report and pay the tax yourself, though enforcement is uncommon for individual purchases.