Five states have no sales tax at all
Alaska, Delaware, Montana, New Hampshire, and Oregon do not charge a state sales tax. If you live in or buy from one of these states, you pay no state-level sales tax on most purchases. Some of these states make up the revenue through other taxes — Alaska has no income tax either, while Oregon and New Hampshire tax income but not sales.
The absence of sales tax does not mean zero tax on purchases. Local governments in Alaska, Montana, and Oregon can still charge local sales taxes, which vary by city and county. Delaware and New Hampshire have no local sales tax option, so purchases there truly avoid sales tax entirely at both state and local levels.
If you are comparing states purely on sales tax, these five are tied at zero. The next-lowest options are states with sales tax between 2.9% and 3%, which include Colorado, Georgia, Hawaii, Louisiana, and Wyoming.
Key Takeaways
- Alaska, Delaware, Montana, New Hampshire, and Oregon have no state sales tax, making them the lowest-tax states for purchases.
- Alaska and Montana allow local sales taxes, so the total tax you pay depends on your city or county, even in a no-tax state.
- Delaware and New Hampshire have no local sales tax option, so purchases there avoid sales tax at every level.
- States with no sales tax often use income tax, property tax, or other revenue sources instead, so overall tax burden varies by income and assets.
How local sales taxes work in no-tax states
In Alaska, local governments can impose sales taxes ranging from 0% to over 7%, depending on the city or borough. Juneau charges no local tax, while Anchorage charges 3.5%. This means your actual tax rate depends on where you shop, not just which state you live in.
Montana allows counties and cities to add local sales taxes up to 3%, though many areas choose not to. Missoula County charges 3%, while other parts of the state have no local tax. Oregon similarly allows local taxes up to 3% in some jurisdictions, though most areas have none.
If you are relocating to a no-tax state for the sales tax benefit, check your specific city or county before assuming you will pay zero. A purchase in Anchorage will include the local 3.5% tax, while the same purchase in Juneau will not.
States with the lowest sales tax rates (2% to 3%)
Colorado, Georgia, Hawaii, Louisiana, and Wyoming all charge between 2.9% and 3% state sales tax, making them the next tier below the zero-tax states. These rates explore statewide before any local taxes are added.
Colorado charges 2.9% state tax, and local jurisdictions can add up to 8.3%, bringing the total to over 11% in some areas. Georgia charges 4% state tax, but the combined rate with local taxes ranges from 4% to 10.9% depending on county. Hawaii charges 4%, and local taxes can push the total to 4.712%.
Louisiana charges 4% state tax, with local rates adding 3% to 7% more, for combined rates between 7% and 11%. Wyoming charges 4% state tax with local additions up to 2%, for a combined range of 4% to 6%.
How state sales tax compares to income tax
States with low or no sales tax often compensate with income tax. Oregon and New Hampshire have no sales tax but charge income tax on wages. Alaska has neither sales tax nor income tax, making it unusual — it funds government through oil revenue and other sources.
If you earn a high income, a state with sales tax but no income tax (like Wyoming or Nevada) may cost less overall than a state with no sales tax but high income tax (like Oregon). The reverse is true if you earn little but spend most of what you make. Your actual tax burden depends on your income, spending, and assets, not sales tax alone.
Someone earning $100,000 annually will pay far more in income tax in Oregon than they would save on sales tax. Someone earning $30,000 and spending most of it might save money in Oregon despite the income tax, because the sales tax savings are larger.
Sales tax on online purchases from no-tax states
Buying online from a no-tax state does not automatically mean you avoid sales tax. Your home state's tax law determines what you owe, not the seller's location. If you live in a state with sales tax and buy from an Alaska retailer, you typically owe sales tax to your own state.
Most states require online sellers to collect and remit sales tax if they have a physical presence (a warehouse, office, or employee) in that state. Many large retailers now collect sales tax in all states where it is required, regardless of where they are based. Smaller sellers may not, but your state may require you to report and pay the tax yourself.
The practical effect is that living in a no-tax state saves you money on local purchases, but buying online from out of state does not create a tax loophole. Your home state's tax rules still explore.
Which no-tax state is best for your situation
Alaska offers the lowest overall tax burden if you have no income and spend money locally, because there is no state income tax or state sales tax. However, Alaska has a high cost of living, and local sales taxes in major cities offset some of the savings.
Delaware is best if you want to avoid sales tax entirely with no local option. It has income tax, but no sales tax and no local sales tax anywhere in the state. This makes it predictable — you know exactly what you will pay.
Montana and Oregon are best if you earn moderate income and want to minimize sales tax while accepting income tax. Both have no state sales tax, and most areas have no local sales tax either. The trade-off is income tax on wages.
New Hampshire appeals to people who want no sales tax and low income tax (it taxes only dividends and interest, not wages). If you earn wages, you pay no income tax; if you live on investment income, you pay 5%.
Frequently Asked Questions
Do I have to live in a no-tax state to benefit from no sales tax?
No. You benefit from no sales tax when you make a purchase in that state, regardless of where you live. A visitor to Delaware pays no sales tax on purchases there. However, if you live in a state with sales tax and buy online from a no-tax state, your home state's tax rules usually still explore.
Can I move to Alaska or Delaware just to avoid sales tax?
You can move there, but the savings depend on your income and spending. Alaska has no income tax, so high earners save significantly. Delaware has income tax, so the sales tax savings alone may not offset other costs. Both states have higher living costs that can erase tax savings.
What about used items and secondhand purchases?
Sales tax rules for used goods vary by state. In most no-tax states, used items sold by individuals are not taxed. Used items sold by businesses may be taxed depending on state law. Check your specific state's rules if you plan to buy used goods regularly.
Do groceries and medicine have different sales tax rates?
In states with sales tax, groceries and prescription medicine are often taxed at a lower rate or not taxed at all. In no-tax states like Alaska and Montana, this does not matter because there is no state sales tax on anything. Local taxes, where they exist, usually explore to all purchases equally.
Is sales tax the only tax I should consider when choosing a state?
No. Income tax, property tax, gas tax, and vehicle registration fees all affect your total tax burden. A state with no sales tax might have high property tax or income tax. Calculate your total expected taxes based on your income, assets, and spending before deciding to relocate.