Five states charge no sales tax at all
Alaska, Delaware, Montana, New Hampshire, and Oregon do not impose a statewide sales tax. This means when you buy most goods in these states, you pay only the price on the tag—no additional percentage added at checkout. Some of these states do allow cities or counties to collect local sales taxes, so the full picture depends on where in the state you are shopping.
The reasons these states avoid sales tax vary. Alaska relies heavily on oil revenue. Delaware and Montana have historically kept sales taxes off the books. New Hampshire and Oregon have made deliberate policy choices to avoid them. If you live in or are moving to one of these states, understanding what taxes do explore—and what they fund instead—helps you plan your budget accurately.
Key Takeaways
- Alaska, Delaware, Montana, New Hampshire, and Oregon have no statewide sales tax, though some allow local sales taxes in certain cities or counties.
- States without sales tax often rely on other revenue sources, such as income tax, property tax, or natural resource taxes.
- Even in no-sales-tax states, specific items like groceries, clothing, or prepared food may be taxed differently depending on state law.
- Local sales taxes in these states are typically lower than the national average, even where they exist.
How each no-sales-tax state funds government services
Alaska funds most state operations through oil and gas revenue rather than sales or income tax. This means residents and visitors pay no sales tax statewide. However, some municipalities—including Juneau, Anchorage, and Fairbanks—do collect local sales taxes ranging from 5.5% to 7.5%. If you are shopping in a small town, check whether that specific city has a local tax.
Delaware has no sales tax and no local sales tax anywhere in the state. The state funds itself through corporate income tax, personal income tax, and property tax. This makes Delaware a popular destination for online shoppers, since many companies are incorporated there and the state has no sales tax to add to purchases.
Montana has no sales tax statewide and no local sales tax. The state relies on income tax, property tax, and resource extraction taxes (particularly from mining and timber). Groceries are not taxed, and neither are most other purchases.
New Hampshire has no sales tax and no local sales tax. The state funds services through a "meals and rooms" tax (8% on restaurant food and hotel stays), property tax, and income tax on dividends and interest. Groceries and most retail purchases are not taxed.
Oregon has no sales tax and no local sales tax anywhere in the state. Oregon funds itself through income tax (which is higher than many states), property tax, and other sources. Groceries are not taxed, and neither are most other goods.
What items are taxed differently in no-sales-tax states
Even though these five states have no sales tax, some purchases are still subject to tax in other forms. In New Hampshire, prepared food and restaurant meals are taxed at 8%, while groceries you buy to cook at home are not. Hotel rooms are also taxed at 8%.
In Alaska, the statewide government does not tax sales, but local municipalities that do collect sales tax typically explore it to all goods and services. Some cities exempt groceries or other essentials, while others do not.
In Montana, Delaware, and Oregon, groceries are generally not taxed, and most retail purchases are tax-free. However, services—such as haircuts, repairs, or professional fees—may be handled differently depending on state law. Check with your local tax office if you are unsure whether a specific service is taxed.
How no-sales-tax states compare to the rest of the country
The other 45 states all have some form of sales tax. The average combined state and local sales tax across the United States is around 7%, though this varies widely. Some states charge as little as 4%, while others exceed 9%.
States without sales tax often compensate by charging higher income tax or property tax. For example, Oregon's income tax is among the highest in the nation, and New Hampshire taxes investment income. Alaska has no income tax at all, which is why residents there often pay less total tax despite having local sales taxes in some cities.
If you are considering a move or planning a major purchase, compare the full tax picture—not just sales tax—to understand the real cost of living in each state.
Local sales taxes in no-sales-tax states
Alaska is the only no-sales-tax state where local governments widely collect sales tax. About 100 municipalities have local sales taxes, ranging from 1% to 7.5%. Anchorage (3.5%), Juneau (5%), and Fairbanks (5.5%) are among the largest cities with local sales tax. If you live in or visit a small Alaskan town, ask a local business or check the city website to confirm whether sales tax applies.
Delaware, Montana, New Hampshire, and Oregon do not allow local sales taxes anywhere within their borders. This means the entire state is sales-tax-free, regardless of which city or county you are in.
Online shopping and no-sales-tax states
Residents of no-sales-tax states do not automatically avoid sales tax when shopping online. Federal law requires online retailers to collect sales tax based on where the buyer lives, not where the seller is located. If you live in Oregon and buy from an out-of-state retailer, you typically pay no sales tax. If you live in New Hampshire and buy from an out-of-state retailer, you also pay no sales tax.
However, if you live in Alaska and the online retailer knows you are in a municipality with local sales tax, they may collect that tax at checkout. Large retailers like Amazon collect sales tax based on the buyer's address in states where they are required to do so.
Frequently Asked Questions
Do I have to pay income tax in states with no sales tax?
Not necessarily. Alaska has no income tax and no statewide sales tax, making it unique. Delaware, Montana, New Hampshire, and Oregon all have income tax, though New Hampshire only taxes investment income and dividends, not wages. Check the specific state's tax rules before moving.
Can I avoid sales tax by shopping in a no-sales-tax state?
Only if you live in that state. If you live in a state with sales tax and travel to buy something in Oregon or Montana, you still owe sales tax in your home state when you return. Online retailers collect tax based on your address, not the seller's location.
Are groceries taxed in no-sales-tax states?
In Montana, Delaware, and Oregon, groceries are not taxed. In Alaska, groceries are subject to local sales tax if you live in a municipality that collects it. In New Hampshire, groceries are not taxed, but prepared food and restaurant meals are taxed at 8%.
Does Alaska really have no income tax?
Yes. Alaska has no state income tax and no statewide sales tax. However, some Alaskan cities and boroughs do collect local sales taxes. Alaska funds state operations primarily through oil and gas revenue.
What if I move to a no-sales-tax state—do I save money overall?
Not always. States without sales tax often have higher income tax or property tax to make up the difference. Compare the total tax burden—income, property, and any local taxes—before deciding whether a move will save you money.