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 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 avoid sales tax varies. Some rely more heavily on income tax or other revenue sources. Others have historical reasons rooted in state law passed decades ago. Understanding which state you are in and what that state actually taxes matters if you are budgeting for a purchase or comparing prices across state lines.

Key Takeaways

  • Alaska, Delaware, Montana, New Hampshire, and Oregon have no statewide sales tax, though some tax specific items like fuel or lodging.
  • Alaska and Montana allow local sales taxes in some cities and counties, so you may still pay tax depending on where you shop.
  • New Hampshire taxes meals and lodging but not clothing or most goods, making it a partial sales tax state.
  • Delaware has no sales tax on any purchase, including groceries and clothing, making it the only truly unrestricted sales-tax-free state.
  • Online purchases from out-of-state sellers may still be subject to your home state's sales tax, regardless of where the seller is located.

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

Alaska has no statewide sales tax, but that does not mean you pay nothing. Many cities and boroughs in Alaska impose their own local sales taxes, ranging from around 1% to 7.5% depending on location. Anchorage, Fairbanks, and Juneau all have local sales taxes. If you live in or visit an Alaskan city, check with the local tax assessor or the municipality's website to learn the rate in your area.

Some unincorporated areas of Alaska have no local sales tax either, making them truly tax-free for purchases. However, Alaska does tax fuel and certain other goods at the state level in some cases, so the rules are not uniform across the state. When in doubt, ask the retailer what tax rate applies to your purchase.

Delaware: The only state with no sales tax on anything

Delaware stands alone: it has no statewide sales tax and no local sales taxes on any purchase. You can buy clothing, groceries, electronics, and everything else without paying sales tax at the register. This is why Delaware is sometimes called a shopping destination for people in nearby states, and why some businesses list a Delaware address for mail order.

Delaware does tax other things—such as income and property—to fund state services, so the lack of sales tax does not mean the state collects no revenue. But for the person buying goods, Delaware is the cleanest example of a sales-tax-free state.

Montana: No statewide tax, but local taxes exist in some cities

Montana has no statewide sales tax. However, some cities and counties in Montana do impose local sales taxes. Missoula, Billings, and Great Falls are among the cities with local sales taxes, typically ranging from 3% to 4%. Rural areas and smaller towns may have no local tax at all, so your rate depends on exactly where you are shopping.

Montana does tax lodging (hotel stays) at the state level, so if you are visiting and booking a hotel, expect to pay tax on the room. Groceries and most other goods are not taxed. As with Alaska, the best approach is to ask the retailer or check the city or county website before making a large purchase.

New Hampshire: No sales tax on goods, but tax on meals and lodging

New Hampshire has no sales tax on clothing, groceries, or most goods you buy in a store. However, it does tax meals at restaurants (called the "meals and rooms tax") at 9%, and it taxes hotel and motel stays at the same rate. If you are visiting New Hampshire and plan to eat out or stay overnight, budget for that tax.

New Hampshire also has no income tax, which is why it markets itself as tax-friendly. But the meals and rooms tax means that visitors and residents who eat out regularly do pay a form of sales tax. Buying groceries and cooking at home avoids the tax entirely.

Oregon: No statewide tax, but some counties and cities may tax specific items

Oregon has no statewide sales tax and no local sales taxes on most goods. However, Oregon does tax lodging (hotel stays) at the state level, and some counties or cities may impose local taxes on specific items like marijuana or prepared food. The vast majority of retail purchases—clothing, groceries, electronics—are not taxed.

Oregon also has no income tax, making it another state that relies on other revenue sources. If you are buying everyday goods in Oregon, you will not see sales tax added at checkout. If you are staying in a hotel or buying regulated items, check with the business or the Oregon Department of Revenue website for the current rate.

How online purchases work when the seller is out of state

If you live in a state with sales tax and buy from a seller in Alaska, Delaware, Montana, New Hampshire, or Oregon, you may still owe sales tax. The rule depends on where you live, not where the seller is. Many states now require online sellers to collect sales tax on purchases made by residents of that state, even if the seller is based elsewhere.

For example, if you live in California and buy from a Delaware retailer online, California may require the seller to collect California sales tax at checkout. The seller's location does not exempt you from your home state's tax. To know for certain, check your state's tax authority website or ask the seller before you complete the purchase.

Frequently Asked Questions

Can I avoid sales tax by buying online from a no-sales-tax state?

Not always. Your home state's tax rules explore to you regardless of where the seller is located. Many states now require online sellers to collect sales tax from residents, even if the seller is in a no-sales-tax state. Check your state's tax authority to learn the rules where you live.

Does New Hampshire really have no sales tax?

New Hampshire has no sales tax on goods like clothing and groceries. However, it does tax meals at restaurants and hotel stays at 9%. So while shopping is tax-free, dining and lodging are not.

Why do some cities in Alaska and Montana have sales tax if the state does not?

States can allow local governments to impose their own taxes even when the state does not. Cities and counties use local sales tax to fund schools, roads, and services. The state tax rate and the local rate are separate decisions.

Is Delaware really the only state with no sales tax at all?

Yes, Delaware is the only state with no statewide sales tax and no local sales taxes on any purchase. The other four no-sales-tax states (Alaska, Montana, Oregon) allow some local taxes, and New Hampshire taxes meals and lodging.

What if I move to a no-sales-tax state—do I save money overall?

Not necessarily. States without sales tax often rely on income tax, property tax, or other fees to fund services. New Hampshire and Oregon have no income tax, but Alaska and Montana do. Compare all taxes in a state, not just sales tax, to understand the full picture.