Which State Has the Lowest Sales Tax Rate

Oregon, Montana, New Hampshire, and Delaware have no state sales tax

Four states do not charge a state sales tax at all: Oregon, Montana, New Hampshire, and Delaware. If you live in or are shopping in one of these states, you will not pay a state-level sales tax on most purchases. However, some of these states tax other things instead — Oregon and Montana tax certain services, and New Hampshire taxes meals and lodging — so the total tax burden is not always lower than states with a sales tax.

If you are looking for the lowest combined state and local sales tax rate (rather than zero), that varies by location. The state with the lowest state sales tax rate that does charge one is Colorado, at 2.9 percent. However, local jurisdictions in Colorado add their own tax on top, so the final rate depends on where you shop.

Key Takeaways

• Oregon, Montana, New Hampshire, and Delaware charge no state sales tax, though some of these states tax services or specific purchases instead.
• Even in states with no sales tax, local cities or counties may charge a local sales tax in some cases.
• Colorado has the lowest state sales tax rate among states that charge one, at 2.9 percent, but local taxes add to that amount.
• The total tax you pay depends on both the state rate and the local rate where you make the purchase.

How state sales tax rates compare across the country

Sales tax rates vary widely. The highest state sales tax rates are in California, Tennessee, and Louisiana, each at 7.25 percent. Most states fall between 4 and 7 percent. The lowest rates among states that charge sales tax are Colorado (2.9 percent), Georgia (4 percent), Hawaii (4 percent), and Louisiana (4 percent).

These are state rates only. Local taxes — charged by cities, counties, or special districts — stack on top of the state rate. A state with a low state rate can end up with a high combined rate if local taxes are high. For example, Louisiana's state rate is 4 percent, but combined state and local rates in some cities reach 10 percent or higher.

Local sales tax in states with no state sales tax

Even though Oregon, Montana, New Hampshire, and Delaware do not charge state sales tax, some cities and counties within those states do charge local sales tax. This is less common in these states than in others, but it does happen.

In Montana, for example, most purchases are not taxed, but some cities charge a local tax on certain items. In Oregon, most goods and services are not taxed at the state or local level, making it one of the most tax-friendly states for shopping. New Hampshire does not allow local sales tax on goods, though it does tax meals and lodging statewide. Delaware does not charge sales tax at any level.

What gets taxed in states with no sales tax

States without a sales tax often tax other things to make up the revenue. Oregon does not tax most goods, but it taxes many services — including labor, repairs, and professional services. Montana does not tax most purchases, but it taxes certain services and has a lodging tax. New Hampshire does not tax goods or services, but it taxes meals at restaurants and lodging at hotels and motels. Delaware taxes neither goods nor services.

If you are moving to or shopping in one of these states, check what specific items or services are taxed. A state with no sales tax on goods might still charge tax on the services you use.

Combined state and local tax rates by state

The combined rate — state plus local — is what you actually pay at checkout. This varies by city and county, so two purchases in the same state can have different tax rates depending on location.

States with the lowest combined average rates include Colorado, Georgia, Hawaii, Louisiana, and Wyoming. States with the highest combined average rates include Tennessee, Arkansas, Alabama, and Louisiana (which has high local rates in some areas despite a moderate state rate). To find the exact rate for a specific address, you can search your city and state on the state revenue department website or a sales tax lookup tool.

How to find the sales tax rate for your location

Each state revenue or taxation department publishes sales tax rates by location. You can visit your state's official website and search by city or ZIP code. The rate shown will include both state and local taxes.

If you are shopping online, the retailer will calculate the tax based on the shipping address you provide. If you are shopping in a store, the receipt will show the tax rate applied. If you are moving or planning a purchase in a different state, look up the rate before you go — it can affect the total cost significantly.

Frequently Asked Questions

Do I pay sales tax on groceries in states with no sales tax?

In most cases, no. Oregon, Montana, New Hampshire, and Delaware do not tax groceries or most food items. However, prepared foods and meals at restaurants are often taxed differently — check your specific state's rules, as they vary.

Can I avoid sales tax by shopping in a no-sales-tax state online?

Not always. Many online retailers charge sales tax based on where the item is being shipped, not where the retailer is located. Even if you order from a company in Oregon, you may still owe tax in your home state. Some states require you to report and pay tax on out-of-state purchases yourself.

Which state has the lowest total tax burden?

That depends on what you buy and where you live. Delaware has no sales tax and no local sales tax, making it the lowest for shopping. However, states also charge income tax, property tax, and other taxes. The lowest overall tax burden depends on your income, property value, and spending habits.

Do all cities in Oregon and Montana have no sales tax?

Mostly, but not entirely. Oregon has no state or local sales tax on most goods. Montana has no state sales tax, but a few cities charge local sales tax on certain items. Check your specific city to be sure.