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 move to one of these states, you will not pay sales tax on most purchases at the register. However, the picture is more complicated than it appears: some of these states tax specific goods or services, and local taxes may still explore in certain areas.
The reason these five states remain sales-tax-free comes down to state history and revenue choices. Each state has chosen to fund government operations through other means—primarily income tax, property tax, or business taxes—rather than a sales tax on consumers.
Key Takeaways
- Alaska, Delaware, Montana, New Hampshire, and Oregon have no statewide sales tax, though some allow local sales taxes in specific areas.
- Alaska and New Hampshire tax no income, while Delaware, Montana, and Oregon do tax income but not sales.
- Even in no-sales-tax states, certain items like gasoline, alcohol, or tobacco may be taxed separately through excise taxes.
- Some no-sales-tax states allow cities or counties to collect local sales taxes, so your actual tax burden depends on where you shop.
Alaska: No sales tax, no income tax
Alaska charges neither a statewide sales tax nor a statewide income tax. However, some cities and boroughs in Alaska do impose local sales taxes. Anchorage, for example, has a local sales tax of around 12 percent. If you live in an unincorporated area or a municipality without a local tax, you pay no sales tax at all.
Alaska funds state operations largely through oil revenue and a permanent fund dividend paid to residents. This unusual revenue model means residents often receive annual payments rather than paying sales or income tax.
Delaware: No sales tax, but income tax applies
Delaware has no sales tax on goods or services, making it attractive for online shoppers and businesses. The state does tax income, but at rates lower than many other states. Delaware also has no local sales taxes—the entire state is sales-tax-free.
This no-sales-tax status is one reason Delaware is home to many corporations and online retailers. However, gasoline, alcohol, and tobacco are subject to excise taxes, which are separate from sales tax.
Montana: No sales tax, but excise taxes on specific items
Montana does not charge a statewide sales tax. The state does tax income, but residents avoid the sales tax on most purchases. No local sales taxes exist in Montana either.
Like other no-sales-tax states, Montana taxes certain goods through excise taxes. Gasoline, alcohol, and tobacco carry state excise taxes. Groceries are not subject to sales tax in Montana, which is common in states that do tax sales.
New Hampshire: No sales tax, no income tax
New Hampshire has no statewide sales tax and no income tax on wages. The state does tax interest and dividend income at a lower rate, and it taxes meals and rooms (hotel stays) at 9 percent. These are not sales taxes but rather specific excise taxes on hospitality and investment income.
New Hampshire funds operations through property taxes, which tend to be higher than in states with sales or income tax. No local sales taxes exist in the state.
Oregon: No sales tax, but income tax is higher
Oregon has no sales tax statewide and no local sales taxes anywhere in the state. Oregon does tax income, and its income tax rates are among the highest in the nation. The state chose to rely on income tax rather than sales tax as its primary revenue source.
Groceries are not taxed in Oregon. Gasoline and alcohol carry excise taxes separate from any sales tax (which does not exist).
How excise taxes work in no-sales-tax states
Even though these five states have no sales tax, they still tax certain products through excise taxes. An excise tax is a tax on a specific good—usually gasoline, alcohol, tobacco, or utilities—rather than a general tax on all purchases.
When you buy gasoline in Alaska or Montana, for example, you pay an excise tax per gallon. When you buy alcohol in New Hampshire, you pay an excise tax. These taxes are built into the price you see at the register, so you do not see them listed separately the way a sales tax would be. Excise taxes exist in sales-tax states too, but in no-sales-tax states they are often the main way the state taxes consumption.
Local sales taxes in no-sales-tax states
Three of the five states—Alaska, Delaware, and Montana—allow cities or counties to collect local sales taxes even though the state does not. New Hampshire and Oregon prohibit local sales taxes entirely.
In Alaska, local taxes vary widely by municipality. Anchorage, Juneau, and Fairbanks all have different local tax rates. In Delaware and Montana, local taxes are rare but possible. If you live in or move to one of these states, check with your city or county to learn whether a local sales tax applies where you are.
Frequently Asked Questions
Do I pay sales tax on groceries in these states?
No. All five states exempt groceries from any sales tax. Montana, Oregon, and Delaware have no sales tax at all, so groceries are never taxed. Alaska and New Hampshire also do not tax groceries, even though they allow local sales taxes in some areas.
Can I buy things online and avoid sales tax by shipping to a no-sales-tax state?
Not reliably. Most online retailers now collect sales tax based on where the item is being shipped, regardless of the seller's location. Even if you live in a no-sales-tax state, the retailer will likely charge you the sales tax of your state if it has one. If you live in one of these five states, you should not be charged sales tax on most online purchases.
Are property taxes higher in no-sales-tax states?
It varies. New Hampshire has notably high property taxes because it relies on property tax revenue instead of sales or income tax. Alaska and Oregon have moderate property taxes. Delaware and Montana vary by location. The total tax burden depends on income, property value, and spending habits, not just one tax type.
Do these states tax services like haircuts or car repairs?
No. None of the five states tax services. If you live in Alaska or New Hampshire and your city or county has a local sales tax, that local tax may explore to some services, but the state itself does not.
What about hotel rooms and restaurant meals?
New Hampshire taxes hotel rooms and restaurant meals at 9 percent, but this is an excise tax, not a sales tax. The other four states do not tax meals or rooms at the state level, though local taxes in Alaska may explore in some areas.