Five states charge no sales tax at all
Alaska, Delaware, Montana, New Hampshire, and Oregon do not impose a statewide sales tax. If you live in or move to one of these states, you will not pay sales tax on most purchases at the register. However, this does not mean everything is tax-free — some of these states tax specific goods, and local taxes may still apply in certain areas.
The absence of sales tax does not mean these states have no tax revenue. Most fund government services through income tax, property tax, or other levies. New Hampshire and Alaska have no income tax either, which is why they are sometimes cited as "tax-free" states, but that distinction is separate from sales tax policy.
If you are considering a move or planning a purchase in one of these states, understanding what is and is not taxed matters. The rules vary enough that a product taxed in one no-sales-tax state might be untaxed in another.
Key Takeaways
- Alaska, Delaware, Montana, New Hampshire, and Oregon have no statewide sales tax, though some allow local sales taxes in specific areas.
- Alaska and New Hampshire also have no income tax, but Delaware, Montana, and Oregon do tax income.
- Even in states with no sales tax, certain items like gasoline, alcohol, or groceries may be subject to excise taxes or special levies.
- Local jurisdictions in some of these states can impose their own sales taxes, so the tax rate depends on where you shop.
State-by-state breakdown of no-sales-tax rules
Alaska has no statewide sales tax and no income tax. However, some municipalities impose local sales taxes ranging from 1% to 7.5%. Anchorage, for example, has a 3.5% local sales tax. Alcohol and fuel are subject to excise taxes.
Delaware has no sales tax on any purchase, including groceries, clothing, and prepared food. It does tax income. Delaware is one of the few states where the no-sales-tax rule is absolute — there are no local sales taxes either.
Montana has no sales tax on most goods, but it does tax groceries at 0% (meaning groceries are exempt). It taxes income. Some local jurisdictions do not impose sales taxes, but a few do, so the rate depends on your county.
New Hampshire has no sales tax and no income tax. It does tax meals and rooms (hotel stays) at 9%, and it taxes alcohol. Groceries and most retail goods are untaxed.
Oregon has no sales tax on any purchase. It taxes income. Some counties and cities do not impose local sales taxes, but a few do, so check your specific location.
What is and is not taxed in no-sales-tax states
Even though these five states do not charge sales tax, they often tax specific categories of goods or services. Excise taxes — taxes on particular items — are common. Gasoline, alcohol, and tobacco are taxed in most or all of these states, even though general sales tax does not apply.
Groceries are untaxed in New Hampshire, Delaware, and Oregon. Montana exempts groceries from sales tax (though it has no sales tax anyway). Alaska does not tax groceries either. This is a significant difference from states with sales tax, where groceries are often taxed at a reduced rate or not at all depending on the state.
Prepared food — restaurant meals, takeout, and deli items — is handled differently in each state. New Hampshire taxes prepared food. Oregon and Delaware do not. Alaska and Montana vary by municipality.
Services like haircuts, repairs, and professional fees are generally not subject to sales tax in these states, though some services may be taxed under different rules.
Local sales taxes in no-sales-tax states
The phrase "no sales tax state" can be misleading because some of these states allow cities and counties to impose their own sales taxes. You may live in a no-sales-tax state but still pay sales tax depending on your address.
Alaska allows municipalities to set their own sales tax rates. About 100 cities and boroughs impose local sales taxes. If you shop in Anchorage, Juneau, or Fairbanks, you will pay local sales tax even though Alaska has no statewide tax.
Montana and Oregon allow some local jurisdictions to impose sales taxes, though most do not. Check your specific city or county to know whether local tax applies.
Delaware and New Hampshire do not allow local sales taxes. If you shop in these states, you pay no sales tax regardless of where you are.
Income tax and other taxes in these states
No sales tax does not mean low overall taxes. Three of the five states — Delaware, Montana, and Oregon — impose income tax. The other two, Alaska and New Hampshire, have no income tax, which is why they are sometimes called "tax havens," but that status is separate from sales tax policy.
All five states tax property. Property tax rates vary widely by county and municipality. Alaska and New Hampshire tend to have lower property taxes than the national average, but Delaware, Montana, and Oregon vary by location.
These states also impose excise taxes on fuel, alcohol, and tobacco. Some impose taxes on hotel rooms, rental cars, or other specific services. The total tax burden depends on what you buy and where you live within the state.
How to find the tax rate where you live or shop
If you live in or are moving to one of these states, confirm the tax rate for your specific address. Even within a no-sales-tax state, local taxes can apply.
Contact your city or county tax assessor's office, or search the state's tax department website. Most states publish tax rate tables by zip code or municipality. For Alaska, the Municipality of Anchorage, City of Juneau, and other local governments publish their own rates. For Montana and Oregon, check your county assessor's office.
If you are shopping online or by mail, the seller's location and your location both matter. Federal law does not require out-of-state sellers to collect sales tax in states with no sales tax, but some sellers do anyway. Check the seller's tax policy before checkout.
Frequently Asked Questions
Do I pay sales tax if I buy something online in a no-sales-tax state?
It depends on the seller's policy and your location. If you live in a no-sales-tax state and the seller is based there, you typically will not pay sales tax. If the seller is based in another state, they may or may not collect tax. Check the seller's website or contact them before you buy.
Are groceries really untaxed in all five states?
Groceries are untaxed in all five states. However, prepared food — restaurant meals and deli items — is taxed in New Hampshire and varies by location in Alaska and Montana. Raw groceries you cook at home are always untaxed in these states.
If I move to Alaska or New Hampshire, do I pay no taxes at all?
No. Both states have no income tax and no sales tax, but they tax property, gasoline, alcohol, and tobacco. You will also pay local sales taxes if you live in an Alaskan municipality that imposes them. Overall tax burden depends on your income, property value, and spending habits.
Can I avoid sales tax by shopping in a no-sales-tax state if I live elsewhere?
Not reliably. Most states require sellers to collect sales tax based on the buyer's address, not the seller's location. If you live in a state with sales tax and buy from a seller in a no-sales-tax state, you may still owe tax. Check your state's tax rules.
Do no-sales-tax states have higher income taxes to make up the difference?
Not necessarily. Alaska and New Hampshire have no income tax. Delaware, Montana, and Oregon do tax income, but their rates vary and are not always higher than other states. The total tax burden depends on the mix of taxes, not just one type.