Five states have no sales tax at all
Alaska, Delaware, Montana, New Hampshire, and Oregon do not charge a statewide sales tax on purchases. If you live in or buy something from one of these states, you will not pay a sales tax at checkout — though that does not mean the purchase is completely tax-free, because some of these states tax specific goods differently, and local taxes may still explore in certain areas.
The reason these five states chose not to adopt sales tax varies by history and state policy. Some rely more heavily on income tax or other revenue sources. Others, like Alaska, use oil revenues. Understanding which state has no sales tax matters if you live near a border, buy online from out of state, or are considering a move.
Key Takeaways
- Alaska, Delaware, Montana, New Hampshire, and Oregon have no statewide sales tax, though some allow local sales taxes in specific areas.
- No sales tax does not mean no tax at all — these states may tax groceries, gasoline, or other specific items differently than states with sales tax.
- Online purchases from a no-sales-tax state may still be taxed by your home state if you live elsewhere.
- Some of these states tax income instead, so the overall tax burden on residents may not be lower than in states with sales tax.
Alaska has no sales tax but allows local taxes
Alaska does not charge a statewide sales tax. However, some cities and boroughs in Alaska do impose local sales taxes, so the tax you pay depends on where in Alaska you make the purchase. Juneau, Anchorage, and Fairbanks all have local sales taxes that range from about 5 percent to 7.5 percent.
Alaska funds its state budget partly through oil revenues and a state income tax on certain types of income, not through a broad sales tax. If you are buying something in Anchorage, you will pay the local tax; if you are buying in a borough with no local tax, you will not.
Delaware has no sales tax on most goods
Delaware does not charge sales tax on clothing, groceries, or most other purchases. This is one reason Delaware is known as a tax-friendly state for shoppers. However, Delaware does tax certain services and specific items like gasoline and diesel fuel at the pump.
Delaware also has no local sales taxes. If you buy an item in Delaware that is not specifically taxed, you pay nothing at the register. Delaware residents pay income tax instead, which is how the state funds services.
Montana exempts most purchases from sales tax
Montana has no statewide sales tax on most goods and services. Like Delaware, Montana does not tax groceries or clothing. However, Montana does tax certain services, lodging, and specific items like fuel.
Some Montana cities and counties do allow local sales taxes, though they are not common. If you are buying in a Montana town, check whether that specific area has a local tax, because it will vary by location.
New Hampshire has no sales tax but taxes meals and rooms
New Hampshire does not charge sales tax on most purchases, including clothing and groceries. However, New Hampshire does tax restaurant meals and hotel rooms at 9 percent. This is why New Hampshire is popular for shopping but not for dining out.
New Hampshire also has no income tax on wages, which is unusual among states. Instead, it taxes interest and dividends, and relies on other revenue sources. There are no local sales taxes in New Hampshire.
Oregon has no sales tax on any purchases
Oregon does not charge sales tax on anything — not groceries, not clothing, not services. This makes Oregon one of the most sales-tax-free states in the country. Oregon also does not allow local sales taxes, so you will never pay sales tax on a purchase made in Oregon, regardless of what you buy or where in the state you buy it.
Oregon funds its state budget through income tax, which is higher than in many other states. Residents pay income tax on wages, but visitors and shoppers pay no sales tax.
Online purchases and tax on items shipped to you
If you live in a state with sales tax and you buy something online from Alaska, Delaware, Montana, New Hampshire, or Oregon, you may still owe sales tax. Most states require you to pay sales tax on online purchases based on where you live, not where the seller is located. This is called "use tax," and it applies even if the seller did not charge you sales tax at checkout.
In practice, many people do not pay use tax on small online purchases, but the law requires it. If you are buying a large item or for business purposes, check your state's rules on use tax. The seller is responsible for collecting sales tax only if they have a physical presence in your state.
How no sales tax compares to other states
Forty-five states and the District of Columbia charge sales tax. The rates vary widely — from 4 percent in some states to over 7 percent in others. States without sales tax often make up the difference with income tax, property tax, or other fees.
Living in a no-sales-tax state does not automatically mean you pay less tax overall. New Hampshire and Oregon have higher income taxes than many states with sales tax. Alaska has no income tax but charges local sales taxes in many areas. The total tax burden depends on your income, what you buy, and where you live within the state.
Frequently Asked Questions
Can I avoid sales tax by ordering online from a no-sales-tax state?
Not if you live in a state with sales tax. Your home state usually requires you to pay sales tax or use tax on online purchases, even if the seller is in a no-sales-tax state. The seller is responsible for collecting it only if they have a physical location in your state.
Do any of these states tax groceries?
No. Alaska, Delaware, Montana, New Hampshire, and Oregon all exempt groceries from sales tax. However, prepared foods and restaurant meals may be taxed differently — New Hampshire taxes restaurant meals, for example.
Is there a sales tax on gasoline in these states?
Yes, in most of them. Alaska, Delaware, Montana, and New Hampshire all tax gasoline and diesel fuel at the pump. Oregon does not tax gasoline. These fuel taxes are separate from sales tax and appear as an excise tax.
Do these states have income tax instead?
Most do. Alaska has no income tax on wages. New Hampshire has no income tax on wages but taxes interest and dividends. Delaware, Montana, and Oregon all charge income tax on wages. The rates vary, so the overall tax burden depends on your income and spending.
Can I move to one of these states to pay less tax?
That depends on your income and what you spend money on. Moving to Oregon or New Hampshire may lower your sales tax but raise your income tax. Alaska has no income tax but local sales taxes in many areas. Compare the total tax burden in your current state to the one you are considering.