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 one of these states, you pay no sales tax on most purchases at the register. Some of these states make up the difference with other taxes — Alaska has no income tax either, while Oregon and New Hampshire tax income but not sales.

Even in these five states, local governments may still charge sales tax in some cities or counties. Alaska allows municipalities to add their own sales tax, which ranges from 0% to 7.5% depending on where you shop. Delaware, Montana, New Hampshire, and Oregon do not allow local sales taxes, so their zero rate applies everywhere in the state.

Key Takeaways

  • Alaska, Delaware, Montana, New Hampshire, and Oregon have no statewide sales tax, though Alaska allows local sales taxes in some areas.
  • Colorado, Georgia, Hawaii, Louisiana, and Wyoming have the lowest statewide sales tax rates at 4%, though local taxes can raise the total.
  • Your actual sales tax rate depends on both the state rate and any local taxes your city or county adds on top.
  • Some states exempt groceries, medicine, or clothing from sales tax, which can lower your effective tax rate even if the statewide rate is higher.

States with the lowest statewide rates below 5%

If your state does charge sales tax, Colorado, Georgia, Hawaii, Louisiana, and Wyoming have the lowest statewide rates at 4%. These five states are the next tier down from the zero-tax states. However, the total tax you pay at checkout also includes any local sales tax your city or county adds, so your final rate will be higher than 4% in most places.

For example, Colorado's statewide rate is 4%, but Denver adds 3.62% local tax, bringing the total to 7.62%. Louisiana's statewide rate is 4%, but New Orleans adds 4.5% local tax, for a total of 8.5%. The statewide number alone does not tell you what you will actually pay.

How local taxes change your real rate

Every state except Alaska, Delaware, Montana, New Hampshire, and Oregon allows cities and counties to add their own sales tax on top of the state rate. This local tax varies widely even within the same state. Two towns 20 miles apart can have very different total rates.

In California, the statewide rate is 7.25%, but local taxes can push the total to 10.75% in some areas. In Texas, the statewide rate is 6.25%, but some cities add up to 2% more. If you are comparing states, you need to know the rate in your specific city, not just the state average. Your city or county tax assessor's office or your state's revenue department can tell you the exact rate where you live.

States that exempt groceries or medicine

Some states lower your effective tax burden by not charging sales tax on certain items. Groceries are exempt from sales tax in 32 states, including New York, Texas, Florida, and Pennsylvania. Prescription medicine is exempt in most states. Some states also exempt clothing or medical equipment.

These exemptions matter more if you spend a large share of your budget on groceries or medicine. A state with a 7% sales tax but no tax on groceries may feel lower than a state with a 5% rate that taxes everything. The real difference depends on your own spending pattern, not just the headline rate.

How to find the exact rate where you live

Your state's Department of Revenue or equivalent agency publishes the current sales tax rate for every city and county. You can also search online for "[your city] sales tax rate" and find the answer in seconds. The rate you see at checkout is the combination of state plus local, so that is the number that matters for your budget.

If you are moving or planning a large purchase, knowing your local rate is worth a quick search. Rates change occasionally when local governments adjust their budgets, so a rate you knew two years ago may no longer be current.

Why some states have no sales tax

States without sales tax fund government services through other means. Alaska relies on oil revenue and has no income tax. New Hampshire and Tennessee have no income tax but do tax other activities. Oregon and Montana use income tax and other sources instead of sales tax. There is no single reason — each state made different choices about how to raise revenue.

Moving to a no-sales-tax state does not automatically save you money, because you may pay more in income tax or property tax instead. The total tax burden depends on your income, where you live within the state, and what you buy.

Frequently Asked Questions

Do I pay sales tax on online purchases?

Most online retailers now charge sales tax based on where the item is being shipped, following a 2018 Supreme Court decision. The rate depends on your state and local area, just like in-store purchases. A few small sellers may not charge it, but major retailers do.

Is sales tax the same everywhere in my state?

No. Even in states with no local sales tax option, the statewide rate applies everywhere. But in states that allow local taxes, the total rate varies by city and county. You can have a 6% rate in one town and 8% in the next.

Can I avoid sales tax by buying in a different state?

Not legally. You owe sales tax based on where you live and where the item is delivered, not where you buy it. Buying something in a low-tax state and bringing it home does not change the tax you owe.

What items are never taxed?

Most states do not tax groceries, prescription medicine, or medical equipment. Some states also exempt clothing. The list varies by state, so check your state's revenue department for the full list of what is and is not taxed where you live.