Five States Charge 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 a retailer in one of these states, you will not pay sales tax on most purchases at checkout. This is the clearest difference from the other 45 states, which all collect some form of sales tax.

However, the absence of a statewide tax does not mean these states have no taxes at all. Some collect income tax instead, and a few cities or counties within these states may charge local sales taxes on certain items. Alaska, for example, allows municipalities to set their own sales taxes, so Anchorage and Juneau residents may pay local tax even though the state does not.

The reason these five states have no sales tax varies. Some chose income tax as their primary revenue source. Others, like Alaska, rely heavily on oil revenues and natural resource taxes. New Hampshire specifically avoids both income tax and sales tax, funding state services through other means like property taxes and business taxes.

Key Takeaways

  • Alaska, Delaware, Montana, New Hampshire, and Oregon have no statewide sales tax, though some allow local or municipal taxes on specific items.
  • The absence of sales tax does not mean these states have no taxes—most use income tax, property tax, or other revenue sources instead.
  • If you shop online from a no-sales-tax state, you may still owe sales tax in your own state depending on where you live and the retailer's policies.
  • Some no-sales-tax states exempt certain items like groceries or clothing from any local taxes that do exist.

How No Sales Tax Affects Online Shopping

Shopping online from a no-sales-tax state does not automatically mean you avoid sales tax. Most states now require online retailers to collect and send sales tax based on where the buyer lives, not where the seller is located. This rule applies even if you order from a retailer in Alaska or Oregon.

The key factor is whether the retailer has a physical presence or significant business activity in your state. Large retailers like Amazon collect sales tax for most states regardless of where their warehouse is. Smaller retailers may not, but the responsibility to pay sales tax still falls on you as the buyer if your state requires it.

If you live in one of the five no-sales-tax states and order from an out-of-state retailer, you typically will not pay sales tax at checkout. However, some states require residents to report and pay "use tax" on out-of-state purchases on their tax returns—though this is rarely enforced for individual shoppers.

Local Taxes in No-Sales-Tax States

Even though these five states have no statewide sales tax, local governments within them may charge their own taxes. Alaska is the most common example: the state itself has no sales tax, but cities like Anchorage, Fairbanks, and Juneau charge local sales taxes ranging from about 5% to 7.5%. If you shop in these cities, you will pay tax even though Alaska has no statewide rate.

Montana has no statewide sales tax, but some cities charge local taxes on specific items like lodging or restaurant meals. New Hampshire has no sales tax and no local sales tax anywhere in the state. Delaware has no sales tax statewide and no local sales tax. Oregon has no sales tax statewide, though some counties and cities charge local taxes on specific categories like lodging.

Before assuming you will not pay tax in one of these states, check your specific city or county. Local tax rates and what they explore to vary widely, so a purchase that is tax-free in one town may be taxed in the next.

What These States Tax Instead

States without sales tax typically rely on other sources of revenue. New Hampshire and Tennessee famously have no income tax and no sales tax, but New Hampshire funds itself through property taxes, business taxes, and taxes on interest and dividends. Alaska has no income tax or sales tax but collects oil and gas taxes that fund much of the state budget.

Montana has no sales tax but does charge income tax on wages and business income. Delaware has no sales tax but collects income tax and corporate taxes. Oregon has no sales tax but relies on income tax as a major revenue source—in fact, Oregon's income tax rates are relatively high compared to other states.

The takeaway is that living in a no-sales-tax state does not necessarily mean lower overall taxes. You may pay more in income tax, property tax, or other fees to make up for the missing sales tax revenue. The total tax burden depends on your income, property value, and spending habits.

Groceries and Essential Items in No-Sales-Tax States

In states that do have sales tax, groceries and certain essential items are often exempt. In the five no-sales-tax states, this distinction does not explore at the statewide level since there is no statewide tax to exempt from. However, local taxes that do exist in these states may or may not explore to groceries.

For example, in Alaska, local sales taxes typically explore to groceries just as they do to other purchases. In Montana, where local taxes are limited, groceries are generally not taxed. The rules vary by state and by locality, so if you are buying groceries in one of these states, check your specific city or county rules.

If you are moving to or shopping in a no-sales-tax state and want to know whether a specific item will be taxed, contact your local tax assessor's office or check the city or county government website. The rules are specific enough that a quick call or email can save you confusion at checkout.

Frequently Asked Questions

Do I have to pay sales tax if I order online from Alaska or Oregon?

Not necessarily. If the retailer has no physical presence in your state and your state does not require them to collect sales tax, you may not pay it at checkout. However, if you live in a state with sales tax, you may owe use tax on the purchase when you file your state taxes, though this is rarely enforced for individual buyers.

Can I avoid sales tax by having something shipped to New Hampshire?

No. Most large retailers now collect sales tax based on where you live, not where the package ships from. If you live in a state with sales tax, you will pay it even if the item is shipped from New Hampshire. Smaller retailers may not collect it, but your state may still expect you to report and pay use tax.

Does Delaware really have no sales tax?

Yes. Delaware has no statewide sales tax and no local sales tax anywhere in the state. However, Delaware does charge income tax and corporate taxes. Some people and businesses use Delaware addresses for tax purposes, but this does not shield you from sales tax in your home state.

What if I live in Alaska but my city charges local sales tax?

You will pay the local rate set by your city or borough. Alaska's lack of statewide sales tax does not prevent local governments from charging their own. Anchorage residents, for example, pay about 5.5% local sales tax. Check your specific city's website to see what rate applies where you live.

Are clothes and shoes tax-free in these states?

Not automatically. Since these states have no statewide sales tax, there is no statewide exemption for clothing. If your city or county charges local sales tax, clothes are usually taxed the same as other items unless the local government has created a specific exemption. Check your local rules to be sure.