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 or buy from one of these states, you will not pay sales tax on most purchases at checkout. However, the absence of a statewide tax does not mean zero tax in all cases — some of these states allow cities or counties to add their own local sales taxes, and a few have other taxes that function similarly.
The reason these five states avoid sales tax varies. Some chose not to adopt it when other states did in the 1930s and have kept that policy. Others, like Alaska, rely heavily on oil revenue and other income sources instead. New Hampshire and Montana have historically resisted broad consumption taxes. Delaware has built its economy partly on corporate-friendly policies that include low or no sales tax.
If you are shopping online from outside these states, the seller's location and your state's rules determine whether you pay tax — not the absence of tax in the seller's state. Mail-order and internet purchases follow different rules than in-store buying, and those rules change based on where you live and where the seller is based.
Key Takeaways
- Alaska, Delaware, Montana, New Hampshire, and Oregon have no statewide sales tax, though some allow local taxes in specific cities or counties.
- Living in a no-sales-tax state saves money on everyday purchases, but you may still owe tax on online orders depending on where the seller is located and your state's rules.
- Some states without sales tax use other taxes — like income tax or excise taxes — to fund government services instead.
- If you move to or from a no-sales-tax state, your total tax burden may change even if sales tax disappears, because other taxes might be higher.
How local taxes work in states with no statewide sales tax
Even though these five states have no statewide sales tax, local governments in some of them can still collect sales tax. Alaska and Montana allow cities and counties to impose local sales taxes on top of the statewide zero rate. In Alaska, some cities charge 0 to 7.5 percent local sales tax depending on where you shop. Montana allows local taxes up to 3 percent in certain areas.
Delaware, New Hampshire, and Oregon do not allow any local sales tax, so if you buy something in those states, you truly pay no sales tax at all. This makes them the only three states with a complete absence of sales tax everywhere within their borders.
The practical effect is that your actual tax bill depends on your exact location. Someone buying groceries in Anchorage, Alaska pays local tax, while someone in a different Alaska city might not. Before assuming you pay nothing, check your city or county's rules.
What taxes replace sales tax in these states
States without sales tax still need to fund schools, roads, and government services. They do this through other taxes. New Hampshire and Tennessee are the only states that tax income from interest and dividends but not wages — New Hampshire calls this the "interest and dividends tax." Alaska has no income tax at all and instead relies on oil taxes and corporate taxes. Montana taxes income but not sales. Oregon taxes income but not sales. Delaware has corporate taxes and other business taxes.
This means living in a no-sales-tax state does not necessarily mean paying less tax overall. A state with no sales tax might have higher income tax, property tax, or excise taxes on specific items like gasoline or alcohol. Your total tax burden depends on your income, what you own, and what you buy — not just whether sales tax exists.
If you are considering moving to one of these states for tax reasons, compare your full tax picture in your current state against the full picture in the new state. A retiree with investment income might benefit from New Hampshire's lack of wage tax. A high earner might pay more in Oregon's income tax than they would have paid in sales tax elsewhere.
How online purchases are taxed if you live in a no-sales-tax state
Buying online from a no-sales-tax state does not automatically mean you avoid sales tax. What matters is where you live and where the seller is located. If you live in Oregon and buy from an Oregon seller, you pay no tax. If you live in Oregon and buy from a seller in California, you may owe California sales tax or Oregon tax depending on the seller's obligations and your state's rules.
Most large online retailers now collect sales tax based on the buyer's address, not the seller's location. Amazon, for example, collects tax according to where you live, regardless of where the warehouse is. Smaller sellers and marketplaces have different rules. Some collect tax in every state; others collect only in states where they have a physical presence.
The safest assumption is that you will owe tax on online purchases based on your home state's rules, even if you live in a no-sales-tax state. Some sellers may not collect it, but that does not mean you do not owe it — you may be responsible for reporting it yourself on your state tax return.
Comparing the five no-sales-tax states
| State | Statewide Sales Tax | Local Sales Tax Allowed | Income Tax | Other Major Taxes |
|---|---|---|---|---|
| Alaska | None | Yes, up to 7.5% | None | Oil taxes, corporate taxes |
| Delaware | None | No | Yes | Corporate taxes, business taxes |
| Montana | None | Yes, up to 3% | Yes | Excise taxes on fuel, alcohol |
| New Hampshire | None | No | Interest and dividends only | Property tax, excise taxes |
| Oregon | None | No | Yes | Excise taxes on fuel, alcohol |
Which items are exempt from sales tax in these states
Even in states with sales tax, certain items are often exempt — groceries, prescription medications, and medical equipment are common examples. In the five no-sales-tax states, this distinction matters less for statewide purposes, but local taxes (where they exist) may have their own exemptions. Some local taxes in Alaska and Montana exempt groceries or prescription drugs, while others do not.
If you live in one of these states and pay local sales tax, check your city or county's rules about what is taxed and what is not. The rules vary widely. A grocery item taxed in one Alaska city might be exempt in another.
Frequently Asked Questions
If I move to Alaska or Montana, will I really pay no sales tax?
You will pay no statewide sales tax, but you may pay local sales tax depending on which city or county you move to. In Alaska, local rates range from 0 to 7.5 percent. In Montana, they go up to 3 percent. Check your specific location before assuming you pay nothing.
Does New Hampshire tax groceries?
No. New Hampshire does not tax groceries, clothing, or most everyday items. It only taxes interest and dividend income, not wages. This makes it attractive to retirees with investment income but not to wage earners.
Can I avoid sales tax by ordering from Oregon online?
Not if you live in a state that has sales tax. Your home state's tax rules explore to what you owe, not the seller's location. Most large retailers collect tax based on your address. Smaller sellers vary, but you may owe tax even if they do not collect it.
Is there any state with no income tax and no sales tax?
Alaska comes closest. It has no statewide sales tax and no income tax, though some cities charge local sales tax. However, Alaska funds government through oil taxes and corporate taxes, so residents are not tax-free overall.
Do these states have higher property taxes to make up for no sales tax?
It varies. New Hampshire has high property taxes. Montana and Oregon have moderate property taxes. Alaska's property taxes are generally low. Compare your full tax picture — income, property, and any local sales tax — before deciding based on the absence of statewide sales tax alone.