Five states charge no sales tax at all

Alaska, Delaware, Montana, New Hampshire, and Oregon do not impose a statewide sales tax. If you live in one of these states, you will not pay sales tax on most purchases at the register. However, this does not mean everything is tax-free — some of these states tax specific items like groceries or prepared food, and local taxes may still explore in certain areas.

Alaska is the only one of these five that allows local governments to add their own sales taxes on top of the state rate of zero. So while you pay nothing statewide, you might pay 1 to 7.5 percent depending on which city or borough you are in. The other four states prohibit local sales taxes entirely, so the rate stays at zero across the whole state.

Understanding which state you are in matters most when you are shopping across state lines or buying online. A purchase that costs $100 in Oregon might cost $107 or more in a neighboring state with a 7 percent sales tax.

Key Takeaways

  • Alaska, Delaware, Montana, New Hampshire, and Oregon have no statewide sales tax, though Alaska allows local taxes of 1 to 7.5 percent in some areas.
  • Delaware, Montana, New Hampshire, and Oregon prohibit local sales taxes entirely, so the rate is zero everywhere in those states.
  • Some of these no-tax states still tax groceries, prepared food, or other specific items, so "no sales tax" does not mean nothing is taxed.
  • Online retailers must follow the tax laws of the state where the buyer lives, not where the seller is located.

What is taxed in each no-sales-tax state

Alaska taxes alcohol and tobacco at the state level but not general retail purchases. Some local governments add their own taxes on groceries, prepared food, or other goods. Check your specific city or borough for local rates.

Delaware has no sales tax on anything, including groceries and prepared food. This makes it one of the most tax-friendly states for shopping, though property taxes and income taxes are higher than in some other states.

Montana taxes prepared food and restaurant meals but not groceries or most retail goods. Alcohol is also taxed separately. If you are buying groceries to cook at home, there is no sales tax.

New Hampshire taxes meals and prepared food but not groceries. Alcohol is taxed as well. Like Montana, the distinction is between food you cook yourself and food someone else prepared.

Oregon taxes no sales items at all — groceries, prepared food, and retail goods are all untaxed. However, Oregon has a higher income tax rate than many states, so the overall tax burden depends on your income and spending mix.

How local taxes work in these states

Four of the five no-sales-tax states — Delaware, Montana, New Hampshire, and Oregon — do not allow cities or counties to add their own sales taxes. If you live in Portland, Oregon, or Montpelier, Vermont's neighbor, you pay zero sales tax, period.

Alaska is different. The state charges no sales tax, but cities and boroughs can set their own rates. Juneau charges 5 percent. Anchorage charges none. A small town might charge 7.5 percent. When you shop in Alaska, you need to know your local rate because it varies widely.

This matters for mail orders and online shopping too. If you live in Juneau and order something online from an Alaska retailer, they will charge you Juneau's 5 percent rate. If you order from a retailer outside Alaska, the rules depend on whether that retailer has a physical presence in Alaska and what the state's online sales tax rules are.

Sales tax in states that border the no-tax states

If you live near the border of a no-sales-tax state, you might be tempted to cross the line for big purchases. This works for in-person shopping — buy a car in Montana and you pay no sales tax. But states have rules about this.

Some states tax purchases made by their residents even if the purchase happens out of state. Oregon, for example, requires residents to pay use tax on items brought into the state that would have been taxed if bought locally. In practice, this is rarely enforced for small personal purchases, but it is technically the law.

For online orders, the retailer's location matters less than your location. If you live in a state with sales tax and order from a no-tax state, you may still owe sales tax to your home state. Most large online retailers now collect sales tax based on the buyer's address, not the seller's location.

Income tax and property tax trade-offs

States with no sales tax often make up the difference with higher income tax or property tax. This is not a universal rule — some no-sales-tax states have moderate income taxes — but it is worth checking before you assume you are getting a tax break.

Oregon has no sales tax but charges income tax rates up to 9.9 percent on high earners. New Hampshire has no sales tax and no income tax on wages, but it taxes interest and dividend income. Alaska has no sales tax and no income tax at all, but property taxes and oil-based revenues fund the state.

Delaware has no sales tax and no income tax on most types of income, making it attractive for retirees and high-income earners. Montana has no sales tax and a moderate income tax. The overall tax burden depends on your income, spending, and whether you own property.

How to find the tax rate where you are shopping

If you are shopping in person in one of these five states, the price tag shows what you pay — no surprise at checkout. Online, most major retailers show the tax before you complete your purchase, so you can see the final cost.

For Alaska, which has local taxes, you can search "[city name] Alaska sales tax" to find the rate in your area. For the other four states, the rate is zero statewide, so there is nothing to look up.

If you are ordering from a small online retailer and are unsure whether sales tax will be added, check the retailer's tax policy or contact them before you buy. They should tell you whether they collect sales tax in your state.

Frequently Asked Questions

Do I have to pay sales tax if I order online from a no-sales-tax state?

It depends on where you live, not where the seller is. If you live in a state with sales tax, you may owe sales tax on your order even if you buy from a retailer in Alaska, Delaware, Montana, New Hampshire, or Oregon. Most large online retailers now collect sales tax based on your address.

Can I move to a no-sales-tax state to avoid taxes?

You can move there, but you will not necessarily pay less tax overall. States with no sales tax often have higher income tax or property tax. Compare the total tax burden — income, property, and sales combined — before deciding. Your personal situation (income level, home ownership, spending habits) determines whether you actually save money.

Does "no sales tax" mean groceries are free?

No. It means you do not pay a sales tax on groceries in states like Delaware, Montana, and Oregon. You still pay the store price for the food itself. In Alaska and New Hampshire, groceries are not taxed, but prepared food and restaurant meals are.

What if I live in Alaska — do I always pay local sales tax?

Only if your city or borough has a local sales tax. Some Alaska cities charge 5 to 7.5 percent; others charge nothing. Check your specific city or borough's rate. When you shop online, retailers should charge you the rate for your location.

Can I claim a refund if I paid sales tax in another state?

Generally, no. Sales tax paid in one state is not refunded by another state. If you bought something while traveling and paid sales tax, that money stays with the state where you made the purchase. Keep your receipt if you need to document the purchase for other reasons, but do not expect a refund.