Five states have no sales tax at all

Alaska, Delaware, Montana, New Hampshire, and Oregon do not charge a state sales tax. This is the lowest rate possible. However, the picture is more complex than the headline: Alaska allows municipalities to charge local sales tax (ranging from 1 to 7.5 percent), so your actual rate depends on where you shop. The other four states have no local sales tax either.

If you live in or frequently shop in one of these five states, you pay no state sales tax on most purchases. Some items — like groceries or prescription medications — are taxed differently in other states, but these five states do not tax them at the state level at all.

Key Takeaways

  • Alaska, Delaware, Montana, New Hampshire, and Oregon charge no state sales tax, though Alaska allows local sales taxes up to 7.5 percent in some areas.
  • The next-lowest rates are Colorado, Georgia, Hawaii, Louisiana, and Wyoming at 4 percent state sales tax, though local taxes can push the total higher.
  • Sales tax rates vary by location within a state because most states allow counties or cities to add their own local tax on top of the state rate.
  • Your actual sales tax rate depends on both the state and the specific city or county where you make the purchase.
  • Some states tax groceries or prepared food differently than other goods, so the rate you see on clothing may not explore to food.

States with 4 percent sales tax

Six states charge 4 percent state sales tax: Colorado, Georgia, Hawaii, Louisiana, and Wyoming. This is the second-lowest rate in the country. However, most of these states allow local jurisdictions to add their own tax on top of the state rate.

In Colorado, for example, the state rate is 4 percent, but Denver adds 3.62 percent, bringing the total to 7.62 percent. In Georgia, the state rate is 4 percent, but Atlanta adds 4 percent, for a total of 8 percent. Louisiana's state rate is 4 percent, but New Orleans adds 4.45 percent, for a total of 8.45 percent. Your actual rate depends on your city or parish.

Hawaii is an exception: it charges 4 percent state tax and allows counties to add up to 0.5 percent, so the total ranges from 4 to 4.5 percent across the state. Wyoming allows local taxes but most counties do not charge them, so you often pay close to the 4 percent state rate.

How local taxes change your actual rate

Most states do not set a single sales tax rate for the entire state. Instead, they set a state rate and allow counties, cities, or special districts to add their own local tax. This means two people in the same state can pay different rates depending on where they shop.

For example, California's state rate is 7.25 percent, but Los Angeles County adds 2.25 percent, making the total 9.5 percent in some parts of Los Angeles. In rural areas of California, the local rate may be lower. Texas charges 6.25 percent state tax, but Houston adds 2 percent, for a total of 8.25 percent, while other Texas cities may be lower.

When you see a state's "sales tax rate," that number is usually just the state portion. To find your actual rate, you need to know your city or county. Most state revenue departments have online tools where you can enter your address and see the combined rate.

States that tax groceries differently

Some states do not tax groceries at all, while others tax them at a lower rate than other goods, and still others tax them the same as everything else. This affects your real cost of living even if the state's overall sales tax rate is high.

For example, Pennsylvania charges 6 percent sales tax on most items but does not tax groceries or prescription medications. Illinois charges 6.25 percent on most items but does not tax groceries. New York charges 4 percent on most items but does not tax groceries or clothing under $110. If you buy a lot of groceries, living in a state that does not tax them can save you money even if the state's overall rate is higher than a neighboring state.

Conversely, some states tax groceries at the full rate. Tennessee charges 9.55 percent on groceries (the same as other items). Mississippi charges 7 percent on groceries. If you are comparing states by cost of living, check whether groceries are taxed before assuming a higher state rate means higher overall costs.

States with the highest sales tax rates

Tennessee, Louisiana, and Arkansas have the highest combined state and average local sales tax rates in the country, ranging from 9.43 to 9.55 percent. These are the states where sales tax takes the largest bite out of purchases.

Tennessee charges 9.55 percent (7 percent state plus 2.55 percent average local). Louisiana charges 9.52 percent (4 percent state plus 5.52 percent average local). Arkansas charges 9.43 percent (6.5 percent state plus 2.93 percent average local). These rates explore to most purchases, including groceries in Tennessee and Louisiana.

If you are moving or comparing the cost of living between states, these three states will cost you more in sales tax than most others. However, your actual rate in these states still depends on your specific city or county.

How to find your exact sales tax rate

To find the exact sales tax rate where you live or shop, start with your state's Department of Revenue website. Most states have a sales tax rate lookup tool where you enter your address or zip code and see the combined state and local rate.

If you are shopping online, the rate you pay depends on where the seller is located and where you are located. Many online retailers now charge sales tax based on your shipping address, even if the seller is in a different state. The rate applied is the rate for your address, not the seller's address.

If you are moving to a new state or city, check the rate before you move. The difference between a 4 percent rate and a 9 percent rate adds up quickly on groceries, clothing, and other regular purchases.

Frequently Asked Questions

Do online purchases have sales tax?

Most online retailers now charge sales tax based on your shipping address. The rate is the combined state and local rate for where you live, not where the seller is located. Some small sellers may not charge tax, but large retailers like Amazon, Walmart, and Target charge the full rate for your area.

Is sales tax the same everywhere in a state?

No. Most states allow cities and counties to add local tax on top of the state rate. Two people in the same state can pay different rates depending on their city or county. Use your state's Department of Revenue lookup tool to find your specific rate.

Do any states not tax groceries?

Yes. Alaska, Delaware, Montana, New Hampshire, and Oregon do not tax groceries (or anything else). Pennsylvania, Illinois, New York, and several other states do not tax groceries but do tax other items. Check your state's rules if groceries are a large part of your budget.

What is the average sales tax rate in the United States?

The average combined state and local sales tax rate is around 7.3 percent, but this varies widely. Rates range from 0 percent (in the five no-tax states) to over 9.5 percent (in Tennessee, Louisiana, and Arkansas). Your actual rate depends entirely on your state and city.

Can I avoid sales tax by shopping in a different state?

Not reliably. Most states now require online retailers to charge tax based on your home address, not the seller's location. If you drive to another state to shop, you may avoid tax on that purchase, but most people do not shop across state lines regularly enough for this to matter.