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 these states, you pay only the price on the tag — no additional percentage added at checkout.

This does not mean these states have no taxes at all. They fund schools, roads, and services through other methods: income tax, property tax, business taxes, or a combination. New Hampshire and Tennessee are the only two states with no sales tax and no income tax on wages, though both tax investment income and dividends.

If you live in one of these five states, you still may pay sales tax when you buy from out-of-state sellers online. Federal law now requires large online retailers to collect sales tax based on where you live, not where they are located. So an order shipped to Alaska from a retailer in California will not have California sales tax added — but Alaska's lack of sales tax means nothing gets added there either.

Key Takeaways

  • Alaska, Delaware, Montana, New Hampshire, and Oregon collect no statewide sales tax on purchases.
  • These states fund government services through income tax, property tax, business taxes, or other revenue sources instead.
  • Online retailers must collect sales tax based on your state of residence, so living in a no-sales-tax state means no sales tax is added to most online orders.
  • Some cities and counties in states with sales tax add local taxes on top of the state rate, making the total tax you pay vary by location.

How these states replace sales tax revenue

Alaska relies heavily on oil revenue and has no income tax. The state funds services through oil taxes, corporate taxes, and investment returns from the Alaska Permanent Fund.

Delaware has no sales tax but charges income tax on wages and investment income. The state also collects corporate income tax and property tax. Delaware's lack of sales tax has made it a destination for online retailers and credit card companies, which pay corporate taxes that offset lost sales revenue.

Montana has no sales tax but charges income tax on wages and investment income. Property tax is also significant in Montana. The state taxes lodging and some services separately rather than through a general sales tax.

New Hampshire has no sales tax and no income tax on wages. The state taxes investment income, dividends, and interest at 5 percent. It also collects property tax and taxes on business profits. New Hampshire calls this approach "Live Free or Die" taxation — no broad income tax, but targeted taxes on specific income types.

Oregon has no sales tax but charges income tax on wages and investment income. Property tax is also a major revenue source. Oregon taxes some services that other states do not, such as certain professional services.

What happens when you buy from another state

If you live in a no-sales-tax state and order from a retailer in a state with sales tax, the retailer will not charge you that state's sales tax. The tax owed is based on where the buyer lives, not where the seller is located.

Large online retailers — generally those with more than $1 million in annual sales — must now collect sales tax based on your address. If you live in Alaska and order from Amazon, no sales tax is added because Alaska has no sales tax. If you live in Oregon and order from the same retailer, no sales tax is added because Oregon has no sales tax.

Small retailers may not be required to collect sales tax in all states. The rules depend on the retailer's total sales volume and whether they have a physical presence in your state. If you are unsure whether sales tax should have been charged, check your receipt or contact the retailer.

Sales tax in states that do have it

The other 45 states and Washington, D.C., all charge sales tax. The statewide rate ranges from 2.89 percent (Colorado) to 7.25 percent (California, Tennessee). Most states fall between 5 and 7 percent.

Many states allow cities and counties to add local sales tax on top of the statewide rate. In Louisiana, for example, the statewide rate is 4.45 percent, but local taxes can push the total to 11.45 percent depending on the parish. In New York, the statewide rate is 4 percent, but New York City adds 4.5 percent for a combined 8.5 percent.

Some states exempt certain items from sales tax — groceries, prescription medications, or clothing — while others tax everything. These rules vary widely and change frequently, so the tax you pay depends on what you buy, where you buy it, and which state and city you live in.

How to find the sales tax rate where you live

If you live in one of the five no-sales-tax states, your rate is zero. If you live elsewhere, your combined state and local rate depends on your address.

To find your exact rate, search "[your city], [your state] sales tax rate" or visit your state's department of revenue website. Most state revenue departments publish a table of rates by county or city. You can also ask a retailer — they are required to know the rate for their location and can tell you what you will pay before checkout.

When you move to a new state or city, your sales tax rate may change significantly. This is one reason people moving from a high-tax state to a low-tax state often see a noticeable difference in what they spend on everyday purchases.

Frequently Asked Questions

Do I have to pay sales tax if I buy something in person in a no-sales-tax state?

No. If you are physically in Alaska, Delaware, Montana, New Hampshire, or Oregon and buy something in a store, you pay no sales tax. The price on the tag is what you pay at checkout. This applies whether you live in that state or are visiting.

Can I order online from a no-sales-tax state to avoid sales tax?

No. Online retailers collect sales tax based on where you live, not where they are located. If you live in a state with sales tax and order from a retailer in Oregon, you will still owe your state's sales tax. The retailer's location does not matter.

Do these five states have any taxes at all?

Yes. All five states tax income, property, or business activity in some form. Alaska is unique because oil revenue funds most services, so residents pay no income tax. New Hampshire also has no income tax on wages, but it taxes investment income. Delaware, Montana, and Oregon all charge income tax on wages.

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

Not necessarily. These states make up lost sales tax revenue through other taxes. New Hampshire and Alaska have no income tax, so moving there could lower your tax burden if you earn significant income. But property taxes, business taxes, or other fees may be higher. Compare your total tax burden before and after, not just sales tax.

Are there any cities in these states that charge local sales tax?

No. Alaska, Delaware, Montana, New Hampshire, and Oregon prohibit cities and counties from charging sales tax. If you live in any of these states, you pay no sales tax anywhere within that state, regardless of which city you are in.