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 will not pay sales tax when you buy most goods at a store or online. This is the clearest difference between these five and the other 45 states, which all have some form of sales tax.

However, "no sales tax" does not mean zero tax on purchases. Some of these states make up the revenue through other taxes — property tax, income tax, or both. And even within a no-sales-tax state, individual cities or counties may charge a local tax on certain items. Understanding what applies where you live matters if you are budgeting for a large purchase or comparing the true cost of living between states.

Key Takeaways

  • Alaska, Delaware, Montana, New Hampshire, and Oregon have no statewide sales tax, but some allow local taxes on specific goods.
  • No sales tax does not mean lower overall taxes — these states often rely on income tax, property tax, or both to fund services.
  • Alaska has no state income tax or sales tax, making it the lowest-tax option for most purchases and wages.
  • Online purchases from out-of-state sellers may still owe sales tax in your home state, regardless of where the seller is located.
  • Local taxes in no-sales-tax states vary by county and city, so the actual cost of a purchase depends on your exact location.

How each no-sales-tax state handles other taxes

Alaska has no state sales tax and no state income tax. It funds government through oil revenue, property taxes, and local taxes. Some cities and boroughs in Alaska do charge a local sales tax — Anchorage, for example, has a 12% tax on most goods — so living in Alaska does not automatically mean tax-free shopping.

Delaware has no sales tax but does charge a 5.75% state income tax and property taxes. It is known as a business-friendly state partly because of the sales tax exemption, which makes it popular for online retailers and mail-order companies.

Montana has no sales tax but charges a 6.9% state income tax and property taxes. It exempts groceries and prescription drugs from any local tax, though some counties do tax other goods.

New Hampshire has no sales tax and no income tax on wages. It does tax investment income and has property taxes. Like Alaska, it relies on property tax and other revenue sources rather than a broad sales tax.

Oregon has no sales tax but charges a 5.75% to 9.9% state income tax (depending on income level) and property taxes. Oregon also exempts groceries from sales tax in the few counties that do charge local taxes.

Local taxes in no-sales-tax states can still explore

Even though these five states have no statewide sales tax, some cities and counties within them charge their own local sales taxes. This is most common in Alaska, where many municipalities have local taxes ranging from 1% to 12%. You need to know your specific city or county to find your actual tax rate.

Montana, Oregon, and New Hampshire generally do not allow local sales taxes, though they may have other local taxes. Delaware does not permit local sales taxes either. Before assuming you pay zero tax on a purchase, check with your city or county government or look up the tax rate for your zip code.

Online purchases and sales tax in no-sales-tax states

If you live in a no-sales-tax state and buy from an online retailer, you may still owe sales tax. The rule depends on where you live, not where the seller is based. If your state has no sales tax, most online purchases will not be taxed. However, if you buy from a seller in a state that has sales tax and that seller ships to you, the seller is not required to collect tax on your behalf — but you may owe "use tax" to your own state.

Use tax is a self-reported tax that applies to goods you buy out of state and bring into your home state. In practice, most people do not report use tax, and enforcement is rare. But the legal obligation exists in some states. If you live in Alaska, Delaware, Montana, New Hampshire, or Oregon, use tax is typically not an issue because your state has no sales tax to begin with.

Cost of living: sales tax versus income tax

A state with no sales tax may not be cheaper overall. Alaska and New Hampshire have no income tax, which can make them attractive for high earners. But Oregon and Montana have significant income taxes that offset the lack of sales tax. Delaware has no sales tax but does tax income.

If you are comparing the true cost of living between states, look at the combination of income tax, property tax, and sales tax together. A state with no sales tax might have higher property taxes or income taxes that cost you more in the long run. The savings depend on your income level, how much you spend, and what you own.

Why some states chose not to have sales tax

These five states made different historical choices about how to fund government. Alaska and New Hampshire chose to avoid both sales and income taxes, relying instead on other revenue sources. Delaware has no sales tax partly because it wanted to attract businesses and shoppers. Montana and Oregon chose income tax over sales tax, a decision that reflects different views about which tax is fairer.

These choices were made decades ago and are now deeply embedded in each state's budget and economy. Changing them would require major shifts in how the state funds schools, roads, and services — which is why these five states have kept their no-sales-tax status even as other states have added or raised sales taxes.

Frequently Asked Questions

If I move to Alaska or New Hampshire, do I pay no taxes at all?

No. Both states have no income tax and no statewide sales tax, but you will still pay property taxes and possibly local taxes. Alaska residents in some cities also pay local sales tax. New Hampshire has property taxes and taxes on investment income. The overall tax burden depends on what you own and earn.

Can I order online from a no-sales-tax state to avoid paying tax?

Not reliably. The tax owed depends on where you live, not where you order from. If you live in a state with sales tax, you may owe tax even if you buy from a seller in Alaska or Oregon. Some sellers collect tax based on the buyer's location; others do not. Check the seller's policy before checkout.

Do no-sales-tax states have higher prices in other ways?

Not necessarily. Prices depend on local competition, rent, and labor costs — not just taxes. Some no-sales-tax states have high property taxes or income taxes that offset the sales tax savings. Others, like Alaska, have high shipping costs because of distance. Compare the full cost of living, not just sales tax.

What about groceries and medicine in these states?

Groceries and prescription drugs are not taxed at the state level in any of these five states. Some have local taxes that may explore to other goods, but food and medicine are generally exempt. Check your local rules if you live in a city or county with local sales tax.

If I buy something in person in a no-sales-tax state while visiting, do I pay tax?

No. If you buy something in Alaska, Delaware, Montana, New Hampshire, or Oregon while you are there, you will not pay that state's sales tax. However, you may owe use tax to your home state when you bring the item back — though this is rarely enforced for personal purchases.