Five states do not charge sales tax on purchases

Alaska, Delaware, Montana, New Hampshire, and Oregon do not have a statewide sales tax. This means when you buy something in these states, you pay only the price on the tag—no additional percentage is added at checkout. However, the picture is more complex than it appears. Some of these states tax specific items or services, and local taxes may still explore in certain areas.

If you live in or are moving to one of these states, understanding what is and is not taxed will help you budget accurately. The rules differ enough between states that what is tax-free in one might be taxed in another.

Key Takeaways

  • Alaska, Delaware, Montana, New Hampshire, and Oregon have no statewide sales tax on retail purchases.
  • Alaska and Montana allow local sales taxes in some cities and counties, so you may still pay tax depending on where you shop.
  • New Hampshire taxes meals and rooms but not clothing or groceries, while Oregon taxes services more broadly than goods.
  • Delaware has no sales tax but does charge gross receipts tax on businesses, which can affect prices indirectly.
  • Even in no-sales-tax states, you will pay income tax, property tax, or other state taxes that offset the savings.

Alaska: No statewide tax, but local taxes explore

Alaska has no statewide sales tax, but this does not mean you pay nothing. Many cities and boroughs in Alaska charge local sales taxes ranging from 1 percent to 7.5 percent. Anchorage, the largest city, charges 3.5 percent. Juneau charges 5 percent. If you live in an unincorporated area outside a city or borough, you may pay no local tax at all.

The tax rate depends entirely on where you are shopping. Before moving to Alaska or making a large purchase, check the specific city or borough rate. Alaska also taxes alcohol and tobacco at higher rates than other goods, and some municipalities add extra taxes on these items.

Delaware: No sales tax, but gross receipts tax exists

Delaware is one of the few states with truly zero sales tax—no statewide tax and no local sales taxes. This is why many online retailers have historically been based in Delaware. However, Delaware does charge a gross receipts tax on businesses, which is a tax on the revenue a business brings in rather than on what you pay. This tax is built into prices but is not visible at checkout the way sales tax is.

Delaware also taxes meals at restaurants at 8 percent, which functions similarly to a sales tax on food service. Groceries and most retail goods remain untaxed. If you are comparing Delaware to other no-tax states, remember that the gross receipts tax means prices are not always lower than you might expect.

Montana: No statewide tax, but local taxes in some areas

Montana has no statewide sales tax, but certain cities and counties charge local sales taxes. Missoula County charges 3 percent. Flathead County charges 3 percent. Many rural areas have no local tax. Like Alaska, the rate depends on your exact location.

Montana does tax lodging (hotel rooms) at 4 percent statewide, plus any local tax on top of that. If you are traveling or moving to Montana, check the specific county or city rate before budgeting for purchases. The state also taxes vehicle purchases and rentals differently than other goods.

New Hampshire: No sales tax, but meals and rooms are taxed

New Hampshire has no sales tax on retail goods, which is why it is popular for shopping. However, the state taxes prepared meals at restaurants at 8.5 percent and hotel rooms at 9 percent. Groceries and clothing are not taxed. This means your grocery bill is lower than in sales-tax states, but eating out costs more.

New Hampshire also taxes vehicle purchases and has a higher-than-average property tax to offset the lack of sales tax revenue. If you are comparing states based on overall tax burden, the lack of sales tax does not mean New Hampshire is cheaper—it straightforward shifts the tax to different categories.

Oregon: No sales tax, but services are taxed

Oregon has no sales tax on retail goods, making it attractive for shopping. However, Oregon taxes many services that other states do not. Haircuts, repairs, professional services, and labor are taxed at 9 percent. This means buying a shirt is tax-free, but having it altered is not.

Oregon also taxes lodging at 9 percent and has specific taxes on items like cigarettes and alcohol. The state relies more heavily on income tax than sales tax, so while your shopping is cheaper, your income tax rate is higher than in many other states.

How these states offset lost sales tax revenue

States without sales tax do not straightforward forgo that revenue. They make it up through other taxes. Alaska has no income tax but relies on oil revenue and property taxes. Delaware and Montana have no income tax but charge other business or property taxes. New Hampshire and Oregon both have income taxes that are higher than the national average.

When comparing the true cost of living in a no-sales-tax state, look at the full picture: income tax, property tax, vehicle tax, and any local taxes. A state with no sales tax may still be more expensive overall depending on your income level and where you own property.

Frequently Asked Questions

Do I have to pay sales tax if I buy something online from a no-sales-tax state?

No. If you order from a retailer in a no-sales-tax state and have it shipped to your home, you typically pay the sales tax of the state where you live, not the state where the retailer is based. The retailer collects tax based on the shipping address, not their location.

Can I move to a no-sales-tax state to save money on taxes?

Not necessarily. While you will save on sales tax, you will likely pay more in income tax, property tax, or both. The overall tax burden depends on your income, how much property you own, and how much you spend. For some people it is cheaper; for others it is not.

Are groceries taxed in no-sales-tax states?

In most of these states, no. Alaska, Delaware, Montana, New Hampshire, and Oregon all exempt groceries from tax. However, prepared foods and restaurant meals are often taxed, so the distinction between raw ingredients and ready-to-eat food matters.

What about taxes on cars and gas in these states?

All five states tax gasoline, though the rate varies. Most also tax vehicle purchases or registrations. These taxes exist alongside the lack of sales tax and are separate from it. Gas tax rates range from about 14 cents per gallon to over 30 cents per gallon depending on the state.

If I live in Alaska or Montana where local taxes exist, how do I know my rate?

Check your city or county government website, or ask a local retailer. The rate is based on your exact address, and it can vary by a few blocks. When you move or shop in a new area, confirm the local rate rather than assuming it is the same as nearby cities.