Five states have no statewide sales tax at all
Alaska, Delaware, Montana, New Hampshire, and Oregon do not charge a statewide sales tax. That means when you buy something in these states, you do not pay a percentage tax added to the price at checkout. The price on the shelf is the price you pay.
This does not mean these states have zero tax revenue. Most of them tax other things instead — income, property, business activity — or rely more heavily on those sources than states with sales tax do. Alaska, for example, has no statewide income tax and no sales tax, but collects revenue from oil production and property taxes.
If you live in one of these five states, you will not see sales tax on groceries, clothing, gasoline, or any other purchase at a store. If you move to or visit a state that does have sales tax, the tax will appear as a separate line on your receipt or be included in the final total, depending on how the store displays it.
Key Takeaways
- Alaska, Delaware, Montana, New Hampshire, and Oregon charge no statewide sales tax on retail purchases.
- Some of these states still allow cities or counties to add local sales taxes, so the total tax you pay can vary by location even within a no-sales-tax state.
- States without sales tax often rely on income tax, property tax, or other revenue sources instead.
- If you buy something online from a seller in a no-sales-tax state and have it shipped to your home state, your home state's sales tax usually applies.
Local taxes still apply in some no-sales-tax states
Even though these five states have no statewide sales tax, some of them allow cities, counties, or other local governments to add their own sales tax. This means you might pay tax in one city but not in another, even though you are in a state with no sales tax.
Alaska and Montana allow local sales taxes in some areas. New Hampshire, Delaware, and Oregon do not allow any local sales tax. So if you shop in Anchorage, Alaska, you will pay a local sales tax, but if you shop in Juneau, you will not. In New Hampshire, you pay nothing anywhere in the state.
The local tax rates vary widely. Some Alaska cities charge 1 percent; others charge up to 7.5 percent. Before you make a large purchase in Alaska or Montana, it is worth checking what the local rate is in that specific city or town.
How sales tax works when you buy online
If you order something online from a retailer in a no-sales-tax state and have it shipped to your home, the tax you pay depends on where you live, not where the seller is located. If you live in a state with sales tax, you owe that tax. If you live in one of the five no-sales-tax states, you typically owe nothing.
Large online retailers like Amazon now collect sales tax based on your shipping address in almost all cases, regardless of where their warehouse is. Smaller retailers may not, but you are technically responsible for reporting and paying tax on out-of-state purchases in your home state — though most people do not.
The rule is: your home state's tax law applies to what you buy, not the seller's state. This is true whether you order online, by phone, or by mail.
Why some states chose not to have sales tax
Each of these five states made different choices about how to fund government services. Alaska has oil revenue and does not tax income or sales. Montana and Oregon both tax income but chose not to add sales tax on top of that. New Hampshire and Delaware have low income taxes and no sales tax, which has made them attractive to certain types of businesses and residents.
These choices happened over decades and reflect each state's economy, history, and political decisions. They are not mistakes or oversights — they are deliberate policy. Some states have tried to add sales tax and voters rejected it. Others have kept the system they built long ago.
If you are considering moving to one of these states partly for tax reasons, remember that the lack of sales tax is only one piece of the tax picture. You should also look at income tax rates, property tax rates, and what services cost in that state overall.
States with very low sales tax rates
If you live outside these five states, you might be in a state with a lower-than-average sales tax rate. Several states charge 4 percent or less statewide, though local taxes can add to that total. Colorado, Georgia, Hawaii, Louisiana, and Wyoming all have statewide rates of 4 percent or lower.
The highest statewide sales tax rates are in California, Tennessee, and Arkansas, which charge 7.25 percent before any local tax is added. When you include local taxes, some cities in these states can reach 10 percent or higher.
Sales tax rates change occasionally when states pass new laws, so if you are planning a move or a large purchase, check your state's current rate through your state revenue department website.
What you should know about sales tax on specific items
Even in states with sales tax, not everything is taxed the same way. Most states do not tax groceries or prescription medications, though the definition of "groceries" varies. Some states tax prepared food but not raw ingredients. Some tax clothing but not shoes. These rules are state-specific and sometimes change.
In the five no-sales-tax states, you do not have to worry about these exceptions because there is no sales tax to begin with. But if you move to a state with sales tax, it is worth learning what is and is not taxed in your new location, especially if you buy a lot of one category of item.
Frequently Asked Questions
Do I have to pay sales tax if I live in Alaska but order something from another state?
No. Your home state's tax law applies. Since Alaska has no sales tax, you do not owe sales tax on purchases shipped to Alaska, regardless of where the seller is located. The retailer should not charge you sales tax for an Alaska delivery.
Can I avoid sales tax by having something shipped to New Hampshire and then bringing it home?
No. The tax you owe is based on where you live and where the item is delivered, not where you pick it up. If you have it shipped to New Hampshire but then bring it to your home state, your home state may consider that a taxable purchase. This strategy does not work and can create legal problems.
If I move from a sales-tax state to Oregon, will my existing purchases be taxed?
No. Sales tax is charged at the time of purchase based on the delivery address. Once you own something, it is not taxed again when you move. You can bring your belongings to Oregon without paying Oregon sales tax on them.
Do these five states charge tax on services like haircuts or car repairs?
No statewide service tax exists in any of these five states. However, some cities in Alaska and Montana may have local taxes that apply to services. Check with your city or county if you are in one of those states and want to know about a specific service.
What happens to sales tax revenue in states that do not have it?
These states fund government services through other taxes. Alaska relies on oil revenue and property taxes. Montana and Oregon use income tax. New Hampshire and Delaware use income tax on dividends and interest, property tax, and business taxes. Each state's budget reflects its own revenue sources.