Five states do not charge sales tax on retail purchases

Alaska, Delaware, Montana, New Hampshire, and Oregon do not impose a statewide sales tax. This means when you buy something in these states, you pay only the price on the tag — no additional percentage is added at checkout. However, the absence of statewide sales tax does not mean these states are tax-free across the board. Some charge other taxes instead, and local rules vary.

If you live in one of these states or are planning to make a large purchase there, understanding how the tax structure works matters for your budget. The savings can be real, but they come with tradeoffs that differ by state.

Key Takeaways

  • Alaska, Delaware, Montana, New Hampshire, and Oregon have no statewide sales tax on retail goods.
  • Alaska and Montana allow some cities and boroughs to charge local sales taxes, so you may still pay tax depending on where you shop.
  • Delaware, New Hampshire, and Oregon have no sales tax anywhere in the state, but some charge higher income tax or other taxes to offset the lost revenue.
  • No-sales-tax states do not necessarily cost less overall — income tax, property tax, and other levies may be higher than in states with sales tax.

Alaska: No statewide tax, but local taxes explore in some areas

Alaska has no statewide sales tax, but approximately 100 municipalities and boroughs impose their own local sales taxes. The rate varies widely — some areas charge 0 percent (meaning no local tax), while others charge up to 7.5 percent. Anchorage, the largest city, charges 0 percent sales tax. Juneau charges 5 percent. Fairbanks charges 0 percent.

Before making a major purchase in Alaska, check the local tax rate for the specific city or borough where you plan to shop. The Alaska Department of Revenue maintains a list of local tax rates by municipality. If you are buying online from an Alaska retailer, the tax depends on where the seller is located and where the item ships.

Delaware: No sales tax anywhere in the state

Delaware has no statewide or local sales tax on any retail purchase. This applies to clothing, electronics, groceries, and all other goods. Delaware residents and visitors pay no sales tax regardless of where in the state they shop.

Delaware does charge a 6 percent corporate income tax and a 5.75 percent individual income tax, which are higher than average. The state also charges property tax and a gross receipts tax on certain businesses. The lack of sales tax is offset by these other revenue sources, so Delaware is not necessarily cheaper overall than a state with sales tax.

Montana: No statewide tax, but some cities charge local tax

Montana has no statewide sales tax. However, a small number of cities and towns impose local sales taxes. Most of Montana is tax-free, but you should verify the local rate before shopping in larger towns. Missoula, for example, charges 3 percent local sales tax. Billings charges 3 percent. Many smaller towns charge 0 percent.

Montana does charge a 6.84 percent individual income tax and property tax. Like Alaska, the tax burden shifts away from sales and toward income and property. If you are relocating to Montana or making a large purchase, factor in both the local sales tax rate and the state income tax.

New Hampshire: No sales tax on most purchases

New Hampshire has no statewide sales tax and no local sales tax. However, the state does tax meals and lodging at 9 percent. Restaurant food, hotel stays, and short-term rentals are taxed; groceries and most retail goods are not.

New Hampshire has no income tax on wages or salaries, which is a significant advantage for workers. The state does tax interest and dividend income at 5 percent. Property tax in New Hampshire is relatively high compared to other states. The overall tax picture depends on your income source and whether you own property.

Oregon: No sales tax on any retail purchase

Oregon has no statewide or local sales tax on retail goods, groceries, or clothing. This applies everywhere in the state. Oregon residents and visitors pay no sales tax on purchases.

Oregon compensates with a 9.9 percent individual income tax, which is among the highest in the nation. The state also charges property tax. Oregon has no sales tax, but the income tax burden is steeper than in many other states. If you earn income in Oregon, the lack of sales tax may be offset by higher income tax.

How no-sales-tax states compare to states with sales tax

The five no-sales-tax states do not necessarily cost less to live in or shop in. Each state replaces sales tax revenue with other taxes — income tax, property tax, corporate tax, or local taxes. The total tax burden depends on your personal situation: how much you earn, whether you own property, where you shop, and how much you spend.

A person earning $50,000 per year in Oregon pays income tax on that income. The same person in a state with 8 percent sales tax but no income tax might pay less overall if they spend most of their money on taxable goods. Conversely, someone who earns little but owns property might pay more property tax in a no-sales-tax state.

If you are considering a move or planning a large purchase, compare the total tax burden in your current state and your destination state. Sales tax is only one piece of the picture.

Frequently Asked Questions

Do I pay sales tax if I buy online from a no-sales-tax state?

It depends on the seller's location and your state's rules. If you live in a state with sales tax and buy from an Oregon retailer, you typically owe sales tax in your home state, not Oregon. The retailer may collect it at checkout, or you may owe it when you file taxes. Check your state's rules on remote purchases.

Can I save money by shopping in a no-sales-tax state?

You save on the sales tax itself, but the state may charge higher income tax or property tax. The overall savings depend on what you buy and how much you earn. For a single large purchase, the sales tax savings can be real. For ongoing living expenses, compare the total tax burden.

Do no-sales-tax states tax groceries?

No. All five no-sales-tax states exempt groceries from any sales tax. Some states with sales tax also exempt groceries, while others tax them. This is separate from the statewide sales tax question.

What about taxes on services in no-sales-tax states?

Services like haircuts, repairs, and consulting are generally not taxed in no-sales-tax states, though rules vary. New Hampshire taxes meals and lodging. Check the specific state's rules if you are purchasing a service.

If I move to a no-sales-tax state, will I pay less in taxes overall?

Not necessarily. You will pay no sales tax, but you may pay higher income tax, property tax, or both. Calculate your total tax burden in both states based on your income, property ownership, and spending habits before deciding.