Five states have no sales tax at all

Alaska, Delaware, Montana, New Hampshire, and Oregon do not charge a statewide sales tax. If you live in or buy from one of these states, you will not pay sales tax on most purchases at checkout. This is the simplest tax situation in the country — no state levy, no local add-ons, no exceptions to track.

The absence of sales tax does not mean these states have no tax burden. Most fund their operations through income tax, property tax, fuel tax, or other revenue sources. Alaska has no state income tax either, which is unusual. New Hampshire taxes only interest and dividend income, not wages. The others rely on income tax like most states do.

If you are buying online from a retailer in one of these states, you may still owe sales tax to your own state, depending on where you live and the retailer's policies. The state where you live — not where the seller is — determines whether you owe tax on most purchases.

Key Takeaways

  • Alaska, Delaware, Montana, New Hampshire, and Oregon charge no statewide sales tax on retail purchases.
  • These states fund government through other taxes: most use income tax, while Alaska relies heavily on oil revenue and has no income tax.
  • Buying from a no-sales-tax state does not automatically mean you pay no tax; your home state may require you to pay sales tax on the purchase.
  • Some of these states (Alaska, Montana, New Hampshire) allow local areas to add their own sales taxes, so the total tax rate varies by city or county.

Local sales taxes in no-sales-tax states

Even though these five states have no statewide sales tax, some allow cities and counties to impose their own. Alaska and Montana permit local sales taxes, so you may pay tax depending on which city you shop in. New Hampshire allows local option taxes in some municipalities. Delaware and Oregon do not allow any local sales tax, so you truly pay nothing at checkout anywhere in those states.

If you live in Alaska, check your city's website or ask a retailer what the local rate is — it can range from zero to around 7.5 percent depending on the municipality. The same applies in Montana. In New Hampshire, most areas have no local tax, but a few towns have adopted it, so the rate is either zero or around 9 percent depending on location.

How sales tax works when you buy from another state

Your home state's tax rules explore to most purchases, not the seller's state. If you live in a state with sales tax and buy from a retailer in Oregon, you typically still owe sales tax — you just pay it to your state, not Oregon's. Large online retailers like Amazon collect sales tax based on your delivery address, so the tax appears on your receipt even if the seller is in a no-tax state.

Small retailers and out-of-state sellers are not always required to collect sales tax for your state, which is why some online purchases from smaller shops do not show tax. You are technically responsible for paying that tax yourself (called use tax), but enforcement is rare for individual purchases. The rules have shifted in recent years as states have pushed for broader tax collection, so the situation varies.

States with low sales tax as an alternative

If you cannot move to a no-sales-tax state but want to minimize sales tax, several states charge 4 percent or less. Colorado, Georgia, Hawaii, Louisiana, and Wyoming all have statewide rates at or below 4 percent. Alabama, New York, and South Carolina are close at around 4.5 percent. These are the lowest rates outside the five no-tax states, though local taxes can push the total higher.

The difference between a 4 percent state and a 7 percent state adds up over time. On a $100 purchase, you pay $4 versus $7 — a $3 difference per hundred dollars spent. Over a year of groceries, clothing, and household goods, the gap becomes noticeable, though it is smaller than the difference between a no-tax state and a high-tax state.

What you cannot buy without sales tax in these states

Even in states with no sales tax, certain items are often taxed or restricted. Gasoline and fuel are taxed in all states, including the five with no sales tax. Alcohol and tobacco carry excise taxes (special taxes on specific goods) in every state. Utilities like electricity and water may be taxed or have special fees.

Groceries are usually exempt from sales tax nationwide, including in these five states, so your food bill is lower than it would be if prepared meals were taxed. Services like haircuts, car repairs, and medical care are generally not subject to sales tax anywhere, so the absence of sales tax in these states does not change much for service purchases.

Why some states have no sales tax

The five no-sales-tax states arrived at this policy through different paths. Delaware has historically avoided sales tax to attract retail and corporate business. Montana and Oregon chose to rely on income tax instead. New Hampshire resisted sales tax for decades as a matter of state identity. Alaska has no income tax and no sales tax because oil revenue funds much of the state budget.

These choices reflect each state's history and resources, not a universal principle. Changing a tax system is politically difficult, so states rarely switch from one model to another. If you are considering a move based on taxes, remember that the total tax burden — income, property, fuel, and other levies combined — matters more than sales tax alone.

Frequently Asked Questions

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

Not to that state. Your home state's sales tax rules explore to your purchase. If you live in a state with sales tax and buy from Oregon, you owe tax to your state, not Oregon. Most large retailers collect it automatically based on your address.

Can I move to Alaska or Delaware just to avoid sales tax?

You can move there, but the total tax burden matters more than sales tax alone. Alaska has no income tax, which is a real advantage. Delaware has income tax. Both have property taxes and other costs. Compare the full picture before deciding.

Are groceries taxed in no-sales-tax states?

No. Groceries are exempt from sales tax in all five states. You pay nothing at the register for food. Prepared meals and restaurant food are usually taxed or not subject to sales tax depending on the state.

What is the highest sales tax rate in the country?

Combined state and local sales tax can reach 10 percent or higher in some cities. California, Tennessee, and Louisiana have high combined rates in certain areas. The five no-sales-tax states have zero statewide tax, though Alaska and Montana allow local taxes.

If I live in Montana, do I pay sales tax?

It depends on your city. Montana has no statewide sales tax, but many cities and counties impose local sales tax ranging from zero to around 7.5 percent. Check your municipality's website or ask a retailer what rate applies where you live.