Five states have no sales tax at all

Alaska, Delaware, Montana, New Hampshire, and Oregon do not charge a state sales tax on purchases. This means when you buy something in these states, you pay only the price on the tag—no additional percentage added at checkout. Some of these states do allow cities or counties to add their own local sales taxes, so the total tax you pay can still vary by location within the state.

The reason these five states skip sales tax differs. Alaska and Montana rely heavily on oil and natural resource taxes. Delaware and New Hampshire have historically avoided sales tax as part of their economic strategy. Oregon has had a constitutional ban on sales tax since 1930. Understanding which state you're buying in matters because the tax rate—or lack of one—changes what you actually pay.

Key Takeaways

  • Alaska, Delaware, Montana, New Hampshire, and Oregon have no state sales tax, though some allow local taxes within cities or counties.
  • Even in no-sales-tax states, you may still pay local taxes depending on which city or county you're in.
  • Online purchases from out-of-state sellers may be taxed based on where you live, not where the seller is located.
  • Some no-sales-tax states tax groceries, prepared food, or other specific items differently than other states do.

How local taxes work in no-sales-tax states

Just because a state has no sales tax does not mean you pay zero tax everywhere within it. Alaska allows cities and boroughs to charge local sales taxes ranging from 1% to 7.5%, depending on where you shop. Montana permits some cities to add local taxes as well. Delaware and Oregon do not allow any local sales taxes. New Hampshire also has no local sales tax option.

This means your actual cost depends on your specific city or county, not just the state. If you live in Anchorage, Alaska, you'll pay a local sales tax even though Alaska itself has no state tax. If you live in Portland, Oregon, you pay nothing. Before assuming you'll pay no tax, check your local government's website or ask a store clerk what rate applies in your area.

What these states tax instead of sales

States without sales tax still need revenue, so they tax other things. Alaska taxes oil and gas extraction heavily, which funds state services without a sales tax. Montana taxes natural resources and has a higher income tax than some neighboring states. New Hampshire taxes interest and dividends on investments rather than wages, and also taxes meals and rooms (hotel stays) at 9%. Delaware has no income tax but does tax business operations.

Oregon taxes income but not sales. This means your overall tax burden depends on what kind of spending and earning you do. If you earn investment income, New Hampshire's approach hits you harder. If you buy a lot of prepared food, New Hampshire's meals tax adds up. Understanding what each state taxes helps you see the real cost of living there, not just the checkout price.

How online purchases are taxed

Buying online complicates the picture. Federal law now requires most online sellers to charge sales tax based on where you live, not where they are located. This means if you live in a state with sales tax and order from a seller in Oregon, you'll likely still owe tax—the Oregon seller must collect it from you.

If you live in one of the five no-sales-tax states and order from an out-of-state seller, the seller usually will not charge you sales tax, because your state has none. However, some states have "use tax" laws that technically require you to pay tax on out-of-state purchases you bring in, though these are rarely enforced for individual shoppers. Check your state's tax authority website if you want to know the exact rule where you live.

Groceries and prepared food in no-sales-tax states

Even within states that have no sales tax, certain items may be taxed differently. New Hampshire taxes prepared food and restaurant meals at 9% but does not tax groceries you buy to cook at home. Alaska taxes groceries in some areas but not others, depending on local rules. Montana does not tax groceries. Delaware and Oregon do not tax groceries either.

This distinction matters if you eat out frequently or buy a lot of prepared items. A sandwich from a deli counter in New Hampshire is taxed; a loaf of bread is not. Understanding these category rules helps you predict what you'll actually pay. State tax authority websites list which items fall into each category, and stores can tell you whether a specific item is taxed.

Comparing your total tax burden across states

Sales tax is only one piece of your tax bill. A state with no sales tax might have higher income tax, property tax, or excise taxes on specific items like fuel or alcohol. New Hampshire has no income tax on wages but taxes meals and rooms. Oregon has no sales tax but taxes income. Alaska has no income tax and no sales tax but taxes oil heavily (which affects gas prices indirectly).

If you're considering moving or comparing costs, look at the whole picture: income tax rate, property tax rate, sales tax rate, and any special taxes on things you buy often. A state that seems cheap because it has no sales tax might be more expensive overall if it taxes income heavily. Use your state's tax authority website to find current rates, or contact the state revenue department directly for a comparison.

Frequently Asked Questions

Do I have to pay sales tax if I buy something in a no-sales-tax state while visiting?

Not on the purchase itself—you pay the price on the tag. However, if you live in a state with sales tax and bring the item home, your home state technically may have a "use tax" you owe, though this is rarely enforced for individual purchases. If you buy something in Alaska or Oregon and live there, you pay no tax at all.

Can I order online from an Oregon seller to avoid sales tax?

Not if you live in a state with sales tax. The seller must charge you the sales tax rate of your state, not Oregon's rate. If you live in Oregon, you will not be charged sales tax. Online sellers are required by law to collect tax based on the buyer's location, not the seller's.

Does New Hampshire really have no income tax?

New Hampshire has no tax on wages or salaries, but it does tax interest, dividends, and capital gains. It also taxes prepared food and hotel rooms at 9%. So while wage earners pay no income tax, investors and frequent restaurant diners face other taxes that higher-income states might not have.

If I move to Alaska, will I pay less in taxes overall?

That depends on your income and spending. Alaska has no state income tax and no sales tax, which is a major advantage for wage earners. However, some cities charge local sales tax, and property taxes and utility costs can be high. Compare your current total tax bill to Alaska's using your state's tax authority website and Alaska's Department of Revenue.

Are groceries taxed in any of these five states?

Montana, Delaware, and Oregon do not tax groceries. Alaska does not tax groceries statewide, but some local areas may. New Hampshire does not tax groceries either. All five states exempt unprepared food you buy to cook at home, though prepared meals and restaurant food may be taxed differently.