Five states have no statewide sales tax

Alaska, Delaware, Montana, New Hampshire, and Oregon do not charge a statewide sales tax. That means when you buy something in those states, you pay only the price on the tag — no additional percentage added at checkout.

This does not mean everything in those states is tax-free. Alaska allows cities and boroughs to charge local sales taxes, so some purchases in Anchorage or Juneau will have tax added. The other four states have no local sales tax either, so residents and visitors pay the same rate everywhere within the state.

The absence of sales tax does not mean these states collect no tax revenue. Most use income tax, property tax, or both to fund schools, roads, and services. New Hampshire and Alaska have no income tax but rely on other sources. Understanding the full tax picture matters if you are comparing the real cost of living or planning a purchase in a different state.

Key Takeaways

  • Alaska, Delaware, Montana, New Hampshire, and Oregon charge no statewide sales tax, though Alaska allows local taxes in some cities.
  • These five states fund government services through income tax, property tax, business taxes, or other revenue sources instead.
  • If you live in a state with sales tax and buy something online from a no-sales-tax state, you may still owe tax to your own state depending on state law.
  • The cost of living in a no-sales-tax state is not automatically lower, because property taxes, income taxes, or utility costs may be higher.

How Alaska's local sales taxes work differently

Alaska is the only state without sales tax that allows cities and boroughs to impose their own. Anchorage, Juneau, Fairbanks, and dozens of smaller communities charge local sales taxes ranging from 0% to over 7%, depending on the municipality.

If you buy something in Anchorage, you pay Anchorage's local tax. If you buy the same item in a neighboring area with no local tax, you pay nothing extra. This creates variation within the state that does not exist in Delaware, Montana, New Hampshire, or Oregon, where the rate is zero everywhere.

Some Alaska communities also charge taxes on specific items like alcohol or hotel stays, even if they have no general sales tax. Before making a large purchase in Alaska, check the tax rate for that specific city or borough.

What these states use instead of sales tax

States without sales tax still need revenue. The methods vary:

  • New Hampshire and Alaska have no income tax and no statewide sales tax. They rely on property taxes, business taxes, and other sources like fuel taxes and licensing fees.
  • Oregon has no sales tax but charges income tax on wages and business income. Oregon's income tax rate is among the highest in the nation.
  • Montana has no sales tax but charges income tax. Montana also taxes certain services and has a lodging tax that applies to hotel stays.
  • Delaware has no sales tax but charges income tax on wages and business income. Delaware also relies on corporate taxes and has no tax on intangible property.

The total tax burden in a no-sales-tax state is not necessarily lower than in a state with sales tax. A state with no sales tax might have higher income tax or property tax that offsets the savings.

How online purchases are taxed if you live in a sales tax state

If you live in a state that has sales tax and buy something online from a seller in a no-sales-tax state, you may still owe tax. Most states now require you to pay sales tax on online purchases, even if the seller is located in a state without sales tax.

This is called use tax. It applies to items you buy outside your state and bring into your state for use. In practice, most individual buyers do not pay use tax on small purchases, but the law requires it. Large purchases — vehicles, equipment, or bulk orders — are more likely to be tracked.

If you are buying from a business, that business may be required to collect and send the tax to your state, regardless of where the business is located. The rules depend on the seller's size and the type of item. When in doubt, assume you owe tax at your home state's rate.

Why some states chose not to have sales tax

The five states without sales tax made that choice at different times and for different reasons. Some were early states that never adopted sales tax when it became common in the 1930s and 1940s. Others removed it or chose not to add it as a policy decision.

New Hampshire and Alaska, both with no income tax and no sales tax, have historically relied on other revenue sources and have resisted adding broad-based taxes. Oregon voters have repeatedly rejected sales tax proposals. Montana and Delaware have income taxes but chose to avoid sales tax.

These decisions reflect each state's history, politics, and revenue needs. They are not permanent — states can and do change their tax systems. But as of now, these five remain the only states without a statewide sales tax.

Frequently Asked Questions

If I move to a no-sales-tax state, will my cost of living go down?

Not necessarily. While you will not pay sales tax, you may pay higher income tax, property tax, or utility costs. Compare the total tax burden, not just sales tax. A state with no sales tax might be more expensive overall depending on your income and property value.

Can I buy something in Oregon and avoid paying tax in my home state?

No. If you live in a state with sales tax and buy something in Oregon, you owe use tax to your home state at your state's rate. The seller may or may not collect it at the time of purchase, but the tax obligation is yours.

Does Delaware's lack of sales tax apply to everything?

Yes. Delaware has no sales tax on any retail purchase. However, Delaware does charge income tax, property tax, and other taxes. The lack of sales tax is one part of Delaware's overall tax structure.

What if I live in Alaska but in a city with local sales tax?

You pay that city's local sales tax on purchases made in that city. If you travel to another Alaska city with a different rate or no local tax, the rate changes. Check the specific city or borough where you are shopping.

Are there any other taxes I should know about in no-sales-tax states?

Yes. All states tax gasoline, alcohol, and cigarettes at the pump or point of sale. Some no-sales-tax states also tax hotel stays, rental cars, or specific services. These are separate from sales tax and apply in addition to the base price.