Five states have no sales tax at all
Alaska, Delaware, Montana, New Hampshire, and Oregon do not charge a statewide sales tax. That 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 use other taxes to replace that revenue, so the overall tax burden is not necessarily lower, but the sales tax itself does not exist.
The reason each state chose this path varies. Alaska and Montana have relied on oil and natural resource taxes. Delaware and New Hampshire have historically kept sales taxes low to attract shoppers and businesses. Oregon has used income tax instead. Understanding which state has which system matters if you live near a border or do business across state lines.
Key Takeaways
- Alaska, Delaware, Montana, New Hampshire, and Oregon charge no statewide sales tax on purchases.
- Some of these states—Alaska and Montana—allow individual cities or counties to charge local sales taxes even though the state does not.
- Delaware and New Hampshire have no sales tax but do charge other taxes, such as income tax or business taxes.
- If you live in a state with sales tax and buy from a seller in a no-sales-tax state, you may still owe use tax to your own state.
Alaska: No state sales tax, but local taxes vary
Alaska has no statewide sales tax, but that does not mean you pay nothing. Many cities and boroughs in Alaska charge their own local sales taxes, ranging from 0 to 7.5 percent depending on where you shop. Anchorage, for example, charges 3.5 percent. Juneau charges 5 percent. Some remote areas have no local tax at all.
Alaska funds state government largely through oil revenue and taxes on oil companies, which is why it has never needed a broad sales tax. If you are shopping in Alaska, check the specific city or borough to know what you will actually pay.
Delaware: No sales tax, but income tax applies
Delaware has no sales tax on anything—not clothing, not groceries, not cars. This is one reason Delaware has historically attracted shoppers from neighboring Pennsylvania and Maryland. However, Delaware does charge income tax on wages and other income, and it has corporate taxes and property taxes like other states.
Delaware also does not tax most services, which is another reason some people and businesses incorporate there. If you live outside Delaware and buy something from a Delaware seller online, your own state may require you to pay use tax on that purchase.
Montana: No state sales tax, but local taxes exist
Montana has no statewide sales tax, but like Alaska, it allows counties and cities to charge local sales taxes. These range from 0 to 3 percent depending on location. Missoula County charges 3 percent. Some rural areas charge nothing. Montana funds state operations through income tax, property tax, and taxes on natural resources.
Montana also does not tax groceries or prescription drugs at the state level, even in areas with local sales tax. If you are buying in Montana, the final tax depends on which county or city you are in.
New Hampshire: No sales tax or income tax
New Hampshire has no sales tax and no income tax on wages. This combination makes it unusual among U.S. states. New Hampshire funds government through property taxes, which tend to be higher than in states with sales or income tax, and through taxes on business profits and dividends.
New Hampshire does not tax groceries or clothing, and it does not tax most services either. The state has historically marketed itself as a low-tax destination, which is why you see "Live Free or Die" on license plates. If you buy something in New Hampshire and live in a state with sales tax, your state may still require you to report and pay use tax on that purchase.
Oregon: No sales tax, but income tax is higher
Oregon has no sales tax on anything, including groceries and clothing. Instead, Oregon relies on income tax, which is higher than in many other states. Oregon's top income tax rate is 9.9 percent, and the state also charges corporate income tax.
Oregon's no-sales-tax policy has made it popular with shoppers from Washington and California, both of which have sales taxes. However, if you live in Oregon and buy something from an out-of-state seller, you may owe use tax to Oregon on that purchase.
What is use tax and when do you owe it
Use tax is a tax your own state charges on items you buy from out-of-state sellers and bring home. It exists to prevent people from avoiding sales tax by shopping in neighboring states. If you live in a state with sales tax and buy something in Alaska, Delaware, Montana, New Hampshire, or Oregon, your state may require you to pay use tax on that purchase at the same rate as the local sales tax would have been.
In practice, use tax is rarely enforced for individual shoppers buying small items, but it is legally owed. Online sellers are increasingly required to collect it automatically. If you run a business and buy inventory from a no-sales-tax state, you should understand your state's use tax rules, as they are more likely to be audited.
Frequently Asked Questions
If I buy something online from a no-sales-tax state, do I have to pay sales tax?
Not to that state—it has no sales tax to collect. However, your own state may require you to pay use tax on the purchase. Most states have use tax laws on the books, though enforcement for individual consumers is uncommon. Online sellers are increasingly required to collect and remit sales or use tax automatically based on where you live.
Are groceries taxed in these five states?
No. None of these five states tax groceries. Some states that do have sales tax exempt groceries, but these five states do not tax them at all since they have no sales tax.
Do these states have any sales-like taxes?
Not on retail purchases. However, all five states have other taxes—income tax, property tax, business taxes, or resource taxes—to fund government. Alaska and Montana allow local jurisdictions to charge sales taxes even though the state does not, so you may pay a local sales tax in some cities.
Can I move to one of these states to avoid sales tax?
You can move there, but the overall tax burden depends on your income and property value. New Hampshire and Oregon have high income taxes. Alaska and Montana have high property taxes in some areas. Delaware has corporate taxes and other business taxes. The lack of sales tax does not automatically mean lower total taxes.
What about online shopping—do I pay sales tax to the seller or my state?
The seller collects sales or use tax based on where you live, not where they are located. If you live in a state with sales tax and buy from an Alaska seller, the Alaska seller may still be required to collect your state's sales tax. The rules changed significantly after 2018, so most major online retailers now collect tax based on the buyer's address.