Oregon, Montana, New Hampshire, and Delaware Have No Sales Tax
Five states have no statewide sales tax at all: Oregon, Montana, New Hampshire, and Delaware. (Alaska also has no statewide sales tax, but some cities and boroughs charge local sales tax, so it is not entirely tax-free.) If you live in or are shopping in one of these four states, you will not pay sales tax on most purchases at the register.
However, "no sales tax" does not mean "no tax on purchases." New Hampshire and Delaware tax certain services or specific goods. New Hampshire taxes prepared food and restaurant meals. Delaware taxes rental cars and hotel rooms. Oregon and Montana come closest to having no consumption tax, though both have other taxes that affect what you pay overall.
If you are comparing states purely on sales tax rate, these four are your answer. If you are trying to understand your actual tax burden as a resident or visitor, the full picture is more complex, because states make up revenue in different ways.
Key Takeaways
- Oregon, Montana, New Hampshire, and Delaware charge no statewide sales tax on retail purchases.
- New Hampshire taxes restaurant meals and prepared food; Delaware taxes hotel rooms and rental cars.
- Alaska has no statewide sales tax, but individual cities and boroughs may charge local sales tax ranging from 1% to 7.5%.
- States with low or no sales tax often have higher income tax, property tax, or other fees to fund services.
- Local sales tax rates vary widely even within states that have no statewide tax, so your actual rate depends on your city or county.
How Sales Tax Rates Compare Across All States
Among the 45 states that do charge sales tax, the statewide rate ranges from 2.89% (Colorado) to 7.25% (California, Tennessee, and Louisiana). Most states fall between 5% and 7%. However, the statewide rate is only part of what you pay—local sales tax on top of it can push your total rate much higher.
For example, California's statewide rate is 7.25%, but some counties add local tax, bringing the total to 8.625% or higher. In contrast, Wyoming has a statewide rate of 4%, but some cities add local tax to reach 6% or more. The lowest combined rates (statewide plus local) are typically found in states like Colorado, Georgia, and Louisiana, where the total often stays under 8%.
If you are shopping online or comparing costs across states, remember that the rate you see depends on the specific city or county where the purchase is made or delivered, not just the state.
Why Some States Have No Sales Tax
States without sales tax fund their budgets differently. New Hampshire relies heavily on a "meals and rooms" tax (taxing restaurants and hotels) plus business taxes and other revenue sources. Delaware has no sales tax partly because it has historically attracted corporate registrations and business activity, which generates tax revenue through other channels.
Oregon and Montana also use income tax, property tax, and other sources to fund schools, roads, and services. Oregon's income tax is relatively high compared to other states. Montana's property taxes and resource extraction taxes (on timber and minerals) help fill the gap.
The trade-off is real: states with low or no sales tax often have higher income tax or property tax. If you are a resident, your total tax burden depends on how much you earn, what property you own, and how much you spend—not just the sales tax rate.
Local Sales Tax in States Without Statewide Tax
Even in states with no statewide sales tax, your city or county may charge local sales tax. This is especially true in Alaska, where the statewide rate is zero but local rates range from 1% to 7.5% depending on where you are.
Oregon and Montana allow some local jurisdictions to charge local sales tax, though it is not widespread. New Hampshire and Delaware do not allow local sales tax on top of their statewide rate (which is zero), so if you shop in those states, you truly pay no sales tax on most goods.
If you live in or are moving to one of these states, check your specific city or county to find out what local rate, if any, applies to you.
What Items Are Taxed or Exempt
Sales tax rules vary by state and sometimes by item. Most states exempt groceries (unprepared food you cook at home) but tax prepared food, restaurant meals, and candy. Clothing is taxed in most states, though a few exempt it.
In New Hampshire, the main exception is that prepared food and restaurant meals are taxed at 8.5%, even though other retail purchases are not. In Delaware, most retail purchases are tax-free, but hotel rooms and rental cars are taxed at 8%.
If you are buying something specific and want to know whether sales tax applies, your best source is the state revenue or tax department website, which lists exemptions by category.
How to Find Your Local Sales Tax Rate
To find the exact sales tax rate where you live or are shopping, start with your state's department of revenue or taxation website. Most states have a sales tax lookup tool where you enter your zip code or address and get the combined statewide and local rate.
You can also call your local tax assessor's office or city hall and ask what the current rate is. Rates can change, so checking directly is more reliable than relying on a rate you found months ago.
If you are shopping online, the retailer will calculate the correct rate for your delivery address at checkout, so you will see the actual tax before you complete the purchase.
Frequently Asked Questions
Do I pay sales tax on groceries in states with no sales tax?
No. In Oregon, Montana, New Hampshire, and Delaware, groceries (unprepared food you cook at home) are not taxed. However, prepared food, restaurant meals, and some specialty items may be taxed depending on the state. New Hampshire taxes prepared food; the others generally do not.
If I buy something online and have it shipped to Oregon, do I pay sales tax?
No, not Oregon's sales tax. However, the retailer may charge sales tax based on where the item is shipped to. If it is shipped to Oregon, Oregon's zero rate applies. If it is shipped to another state, that state's rate applies.
Does Alaska really have no sales tax?
Alaska has no statewide sales tax, but many cities and boroughs charge local sales tax ranging from 1% to 7.5%. Anchorage charges no local sales tax, but Juneau charges 5%. Check your specific city to find out what you pay.
Which state has the lowest sales tax if I include local taxes?
Oregon, Montana, New Hampshire, and Delaware have the lowest combined rates because they have no statewide tax and limited or no local tax. Among states that do charge sales tax, Colorado and Georgia typically have the lowest combined rates, usually under 8%.
Can I avoid sales tax by shopping in a no-sales-tax state online?
Not always. Most large online retailers now collect sales tax based on your delivery address, regardless of where the company is located. The tax rate that applies is the rate where the item is being shipped to, not where the retailer is based.