Five States Charge No Sales Tax at All
Five states have no sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon. If you live in or buy from one of these states, you will not pay a statewide sales tax on most purchases. However, the absence of a statewide tax does not mean zero tax in all cases — Alaska allows cities and boroughs to collect local sales taxes, and some do. The other four states prohibit local sales taxes entirely.
This matters most if you live in one of these states or buy items shipped from them. A purchase that costs $100 in Oregon stays $100 at checkout, while the same item in a neighboring state with sales tax would cost more. Over time, residents of no-sales-tax states save money on groceries, clothing, electronics, and other everyday goods.
Key Takeaways
- Alaska, Delaware, Montana, New Hampshire, and Oregon have no statewide sales tax, though Alaska allows local taxes in some cities.
- Most other states charge between 4 and 7 percent sales tax, with some cities adding local taxes on top.
- Online purchases are taxed based on where the seller is located or where you live, depending on the retailer's policies and state law.
- Some no-sales-tax states use other taxes — like income tax or fuel tax — to fund government services instead.
How These Five States Fund Government Without Sales Tax
States without sales tax still need money to pay for schools, roads, and public services. They use different revenue sources. Alaska relies heavily on oil revenue and does not have a statewide income tax either. Delaware uses corporate income tax and business licensing fees — it is a popular state for incorporating businesses partly because of its tax structure. Montana and Oregon both collect income tax from residents and businesses. New Hampshire has no income tax on wages but taxes investment income and uses property taxes.
This means residents of these states may pay higher income tax or property tax than residents of states with sales tax. The total tax burden varies by income level and property value, so living in a no-sales-tax state is not automatically cheaper overall — it depends on your personal situation.
Local Sales Taxes in Alaska
Alaska is the only no-sales-tax state where you may still pay sales tax. Cities and boroughs can set their own local sales taxes, and many do. Anchorage, Juneau, Fairbanks, and dozens of smaller communities charge local sales tax ranging from 0 to 7.5 percent. If you buy something in Anchorage, you pay 3.5 percent tax. The same item in a borough with no local tax costs less.
If you live in Alaska, check your city or borough's tax rate before assuming you pay nothing. If you are buying from an Alaska retailer online, the tax depends on where the seller is located and their tax policies — not on your location.
How Online Shopping Works in No-Sales-Tax States
Buying online from a no-sales-tax state does not automatically mean no tax. Major retailers like Amazon, Walmart, and Target now collect sales tax in every state where they have a physical presence or warehouse, regardless of the state's statewide tax rate. This is because of federal rules that require retailers to collect tax based on where they ship to, not where they are based.
Smaller online sellers may not collect tax if they have no physical location in your state. However, you are technically responsible for paying "use tax" — a tax on purchases made outside your state — when you file your state income tax return. Most people do not report this, but the obligation exists in states that have income tax.
Comparison: Sales Tax Rates in Other States
| State Group | Statewide Sales Tax Rate | Examples |
|---|---|---|
| No sales tax | 0% | Alaska, Delaware, Montana, New Hampshire, Oregon |
| Lowest rates | 4% | Alabama, Georgia, Hawaii, Louisiana, Wyoming |
| Mid-range rates | 5–6% | Arizona, Colorado, Florida, Illinois, Michigan, New York |
| Highest rates | 7–7.25% | California, Indiana, Mississippi, Rhode Island, Tennessee |
Local taxes add to these statewide rates in most states. A city in California might charge an additional 1 to 2.5 percent, bringing the total to 8.5 percent or higher. No-sales-tax states have no statewide layer, but Alaska's local taxes can still reach 7.5 percent in some cities.
What Items Are Taxed Differently Across States
Even in states with sales tax, some items are taxed at lower rates or not at all. Groceries are often untaxed or taxed at a reduced rate in many states, though rules vary widely. Clothing is untaxed in several states, including New York and Pennsylvania. Prescription medications are usually untaxed everywhere.
In no-sales-tax states, these items are straightforward not taxed at all — there is no reduced rate because there is no tax. This is one reason grocery shopping and clothing purchases feel cheaper in these states. However, other items like gasoline, alcohol, and tobacco are often taxed at higher rates in no-sales-tax states to make up for lost revenue.
Moving to or Buying From a No-Sales-Tax State
If you are considering a move to save on sales tax, remember that income tax and property tax may offset the savings. New Hampshire has no income tax but higher property taxes. Oregon has no sales tax but charges income tax on all income levels. Montana has no sales tax but also charges income tax. Compare your total tax burden, not just sales tax.
If you are buying from out of state, the tax you pay depends on the retailer's location and policies, not on where you live or where the seller is based. Large retailers collect tax in your state regardless of their headquarters. Small sellers may not, but you may owe use tax when you file your return.
Frequently Asked Questions
Can I avoid sales tax by buying online from Oregon or Delaware?
Not if you are buying from a major retailer. Amazon, Walmart, and similar companies collect sales tax in your state regardless of where they are based. Smaller sellers may not collect tax, but you are responsible for reporting use tax on your state income tax return if your state requires it.
Does Alaska really have no sales tax anywhere?
Alaska has no statewide sales tax, but many cities and boroughs charge local sales tax between 0 and 7.5 percent. Anchorage charges 3.5 percent. Check your specific city or borough to know what you will pay.
If I move to New Hampshire, will I pay no taxes at all?
New Hampshire has no sales tax and no income tax on wages, but it does tax investment income and uses property tax to fund schools. Your total tax burden depends on your income sources and property value, not just sales tax.
Why do some states have no sales tax?
States without sales tax fund government through other means: Alaska uses oil revenue, Delaware uses corporate taxes, Montana and Oregon use income tax, and New Hampshire uses property tax and investment income tax. Each state chose a different revenue model.
Do I have to pay sales tax if I buy something in person in a no-sales-tax state?
No, not in Delaware, Montana, New Hampshire, or Oregon. In Alaska, you pay local sales tax if your city or borough charges it. If you live elsewhere and buy in person while visiting, you pay no statewide tax, but you may owe use tax in your home state when you file your return.