Which States Have No Sales Tax and How That Affects Your Purchases

Five states have no sales tax at all

Alaska, Delaware, Montana, New Hampshire, and Oregon do not impose a statewide sales tax. This means when you buy something in these states, you pay only the price on the tag — no additional percentage is added at checkout.

However, the absence of a statewide sales tax does not mean zero sales tax everywhere in these states. Alaska and Montana allow local governments to collect their own sales taxes, so some cities and counties within those states do charge sales tax even though the state does not. Delaware, New Hampshire, and Oregon have no local sales tax either, so purchases in those states truly have no sales tax layer.

The reason these five states have no sales tax varies. Some states chose not to implement one when they were founded or during their early years. Others have made deliberate policy decisions to avoid it. The trade-off is that these states often rely more heavily on other forms of revenue, such as income tax, property tax, or business taxes.

Key Takeaways

• Alaska, Delaware, Montana, New Hampshire, and Oregon have no statewide sales tax, though Alaska and Montana allow local sales taxes in some cities and counties.
• Delaware, New Hampshire, and Oregon have neither statewide nor local sales taxes, making them the only truly sales-tax-free states.
• States without sales tax often collect revenue through income tax, property tax, or other business-related taxes instead.
• If you live in or travel to a no-sales-tax state, the final price you pay at checkout matches the advertised price.

How local sales taxes work in Alaska and Montana

Alaska has no statewide sales tax, but Anchorage, Juneau, and other municipalities can impose their own local sales tax. The rate varies by location — some cities charge 0%, while others charge up to 7.5% or higher. When you shop in Anchorage, for example, you will pay the local sales tax even though Alaska itself does not have a state tax.

Montana operates similarly. The state has no sales tax, but individual cities and counties can levy local sales taxes. Rates differ across the state, and some areas have no local tax at all. If you are shopping in Missoula or Billings, you may encounter a local sales tax, but in other Montana towns you will not.

This creates a patchwork: two states with no statewide sales tax, but varying local taxes depending on where you are. Before making a large purchase in Alaska or Montana, it is worth checking whether your specific city or county charges local sales tax.

Delaware, New Hampshire, and Oregon have no sales tax anywhere

These three states have neither statewide nor local sales tax. Every purchase you make in Delaware, New Hampshire, or Oregon is taxed at 0%, regardless of which city or county you are in. This makes them genuinely sales-tax-free states across the board.

Delaware is known for this policy and has historically attracted businesses and shoppers partly because of it. New Hampshire also emphasizes its lack of sales tax as part of its tax structure. Oregon similarly has no sales tax, though it does have an income tax.

If you live near the border of one of these states, you might notice people traveling there specifically to make large purchases. The savings can be significant on items like clothing, electronics, or furniture when there is no sales tax to add to the final bill.

Why some states chose not to have sales tax

The decision to avoid sales tax is often rooted in a state's history and philosophy. Some states never implemented a sales tax when they were first established or during the early 20th century when sales taxes became common. Others made deliberate choices to keep sales tax off the books as part of their economic or political approach.

New Hampshire, for instance, has long resisted sales tax and instead relies on a "meals and rooms" tax (a tax on restaurant food and hotel stays) and an income tax on dividends and interest. Oregon chose to fund its government through income tax rather than sales tax. Delaware's lack of sales tax has made it attractive to businesses and has shaped its economy for decades.

These choices reflect different philosophies about how to fund state services. A state without sales tax must raise revenue through other means — typically income tax, property tax, corporate tax, or specific taxes on certain goods or services.

How no-sales-tax states fund government services

States without sales tax do not straightforward go without revenue. They fund schools, roads, police, and other services through alternative taxes. The mix varies by state.

Alaska has no income tax and no statewide sales tax, but it funds government partly through oil revenue and corporate taxes. New Hampshire has no sales tax and no income tax on wages, but it taxes dividends, interest, and business income, and it collects the meals and rooms tax. Oregon has no sales tax but relies on income tax as a major revenue source. Delaware has no sales tax but collects corporate income tax and has a reputation as a business-friendly state partly because of its tax structure.

The point is that the absence of sales tax does not mean the absence of taxation. It straightforward means the state has chosen a different mix of revenue sources. When you compare the total tax burden across states, the picture becomes more complex than just looking at sales tax alone.

What happens when you buy online from a no-sales-tax state

If you order something online from a retailer based in a no-sales-tax state, you will not automatically avoid sales tax. The sales tax you owe depends on where you live, not where the retailer is located. This is called sales tax nexus — the connection between the buyer's location and the tax obligation.

Most online retailers now collect sales tax based on the buyer's address. If you live in a state that has sales tax and you order from a retailer in Delaware or Oregon, the retailer will likely still charge you the sales tax rate for your state. The retailer's location matters less than it used to.

There are exceptions and variations depending on the retailer and the type of item, but the general rule is: you owe sales tax based on where you live, not where you buy from. Shopping online from a no-sales-tax state does not typically save you money on sales tax if you live in a state that has it.

Frequently Asked Questions

Can I avoid sales tax by buying in Alaska or Montana?

Not entirely. While Alaska and Montana have no statewide sales tax, many cities and counties within those states do charge local sales tax. You would need to know which specific city or county you are shopping in to know whether you will pay tax. Delaware, New Hampshire, and Oregon have no sales tax anywhere in the state.

Do no-sales-tax states have higher income taxes?

Not always. New Hampshire and Alaska have no income tax on wages, though New Hampshire taxes investment income. Oregon has no sales tax but does have income tax. The relationship between sales tax and income tax varies by state and depends on how each state chooses to fund itself.

If I move to a no-sales-tax state, will I save money overall?

That depends on your situation. You will save on sales tax, but you may pay more in income tax, property tax, or other taxes depending on the state. Compare the full tax picture, not just sales tax, to understand the real difference.

Does ordering online from a no-sales-tax state save me sales tax?

Usually not. Most online retailers collect sales tax based on where you live, not where they are located. If you live in a state with sales tax, you will typically pay it even if you order from a retailer in Delaware or Oregon.