Five states have no sales tax at all
Alaska, Delaware, Montana, New Hampshire, and Oregon do not charge a statewide sales tax. This means when you buy most items in these states, you pay only the price on the tag—no additional percentage added at checkout.
However, "no state sales tax" does not mean zero sales tax everywhere in those states. Alaska allows cities and boroughs to charge local sales taxes, so some areas within the state do collect sales tax even though the state itself does not. The other four states—Delaware, Montana, New Hampshire, and Oregon—prohibit both state and local sales taxes on most purchases.
A few other states come close but are not completely tax-free. New Jersey and Pennsylvania have no sales tax on clothing and groceries, but they do tax other items. For the purposes of this guide, only the five states listed above have truly eliminated sales tax across the board.
Key Takeaways
- Alaska, Delaware, Montana, New Hampshire, and Oregon do not charge a statewide sales tax on purchases.
- Alaska permits local jurisdictions to collect sales tax, so some cities and boroughs within the state do charge it despite no state tax.
- Delaware, Montana, New Hampshire, and Oregon prohibit both state and local sales taxes on most goods.
- Some states like New Jersey and Pennsylvania exempt specific items like groceries or clothing but still tax other purchases.
How Alaska's local sales tax works differently
Alaska stands apart because the state constitution forbids a statewide sales tax, but it allows individual cities, boroughs, and census-designated places to impose their own local sales taxes. This means your tax bill depends entirely on where you shop within the state.
Anchorage, the largest city in Alaska, charges a 12% local sales tax. Juneau charges 5%. Some smaller towns and rural areas have no local sales tax at all. If you live in or visit Alaska, you need to know the tax rate for your specific city or borough, because it varies widely. The Alaska Department of Revenue maintains a list of which areas charge sales tax and at what rate.
This patchwork system means two people buying the same item in Alaska might pay very different amounts depending on their location. Someone in Anchorage pays significantly more in sales tax than someone in a no-tax borough, even though both live in a state with no statewide sales tax.
Why these states chose not to tax sales
Each of these five states arrived at no sales tax through different historical and economic reasons. Delaware, for example, has long positioned itself as a business-friendly state and uses corporate taxes and other revenue sources instead of sales tax. Montana and Oregon both have strong political traditions favoring lower consumption taxes. New Hampshire, which also has no income tax, relies on other revenue streams like property taxes and business taxes.
Alaska's situation is unique because the state has significant oil revenue from the Alaska Permanent Fund, which reduces the need for sales tax. However, as oil prices fluctuate, some Alaskan communities have turned to local sales taxes to fund schools and services.
These choices mean residents and visitors in these states experience lower costs at the register, but the states fund their operations through other mechanisms—typically higher income taxes, property taxes, business taxes, or in Alaska's case, natural resource revenue.
What items are taxed in no-sales-tax states
Even in states with no sales tax, certain items may still be subject to special taxes. For example, gasoline, alcohol, and tobacco are often taxed separately in these states, even when general sales tax does not explore. These excise taxes are collected at the point of sale or manufacture rather than as a percentage added to the final price.
In Alaska, local sales taxes (where they exist) typically explore to most goods and services, including groceries, clothing, and restaurant meals. The exceptions vary by municipality. In Delaware, Montana, New Hampshire, and Oregon, groceries are generally not taxed, and some services may be exempt as well, but the rules differ slightly by state.
If you are moving to or doing business in one of these states, check the specific rules for the items you buy most often. State revenue department websites list what is and is not subject to tax in each jurisdiction.
How no-sales-tax states compare to the rest of the country
The other 45 states all charge some form of sales tax, though the rates vary widely. State sales tax ranges from about 2.9% in Colorado to over 7% in several states. Many states also allow local jurisdictions to add their own sales tax on top of the state rate, which can push the total to 10% or higher in some cities.
This means a $100 purchase in a no-sales-tax state costs $100 at checkout, while the same purchase in a high-tax state might cost $110 or more. Over time, this difference adds up, especially for large purchases like appliances, furniture, or vehicles. Some people in border areas near no-sales-tax states travel across state lines specifically to make big purchases and avoid sales tax.
However, states without sales tax typically make up the revenue through other taxes. New Hampshire and Alaska have no income tax, but they may charge higher property taxes or business taxes. Delaware has no sales tax but does charge corporate income tax. Understanding the full tax picture—not just sales tax—gives a more complete view of the cost of living in each state.
Online shopping and sales tax in no-sales-tax states
Online retailers are required to collect sales tax in states that have it, but the rules for no-sales-tax states are simpler. If you order something online and have it shipped to Alaska, Delaware, Montana, New Hampshire, or Oregon, you generally do not pay sales tax on that order (with the exception of local taxes in Alaska).
This has made these states attractive for online shoppers, though the advantage has diminished in recent years as more states have passed laws requiring online retailers to collect tax. Still, for purchases shipped to a no-sales-tax state, the checkout total is typically lower than for the same item shipped to a state with sales tax.
If you are a business owner shipping products to customers in these states, you do not need to collect sales tax on those orders. However, if you are shipping to other states, you must follow their sales tax rules, which vary by state and sometimes by local jurisdiction.
Frequently Asked Questions
Do I have to pay sales tax if I live in Alaska but my city has a local sales tax?
Yes. Even though Alaska has no statewide sales tax, many cities and boroughs within Alaska do charge local sales tax. The rate depends on where you live. Check with your city or borough government or the Alaska Department of Revenue to find out the rate in your area.
Can I avoid sales tax by shopping in a no-sales-tax state if I live in another state?
Not reliably. Most online retailers now collect sales tax based on where the item is being shipped, regardless of where you live. If you travel to a no-sales-tax state and buy items in person, you pay no sales tax. But ordering online to a no-sales-tax address only works if you actually have a valid reason to use that address, such as living there or having it shipped to a business location.
Do no-sales-tax states charge tax on groceries?
In Delaware, Montana, New Hampshire, and Oregon, groceries are generally not taxed. In Alaska, local sales taxes (where they exist) usually do explore to groceries, though some municipalities may have exemptions. Check your specific city or borough rules.
Why do some states have no sales tax if they need money to run schools and roads?
States without sales tax fund their operations through other sources, such as income tax, property tax, business tax, or in Alaska's case, oil revenue. These alternative revenue sources allow the state to operate without relying on sales tax.
If I move to a no-sales-tax state, will my overall taxes be lower?
Not necessarily. While you will save on sales tax, you may pay more in other areas. For example, New Hampshire has no income tax and no sales tax, but property taxes can be higher. Delaware has no sales tax but does charge income tax. Compare the full tax picture—income, property, and sales taxes combined—before deciding based on sales tax alone.