Five States With No Sales Tax and What That Means for Your Purchases

Five states do not charge sales tax on retail purchases

Alaska, Delaware, Montana, New Hampshire, and Oregon do not have a statewide sales tax. This means when you buy something in one of these states, you pay only the price on the tag — no additional percentage is added at checkout. However, the absence of a statewide tax does not mean there is zero sales tax everywhere in that state. Alaska and Montana allow local governments to charge their own sales taxes, so some cities and counties within those states do collect tax even though the state does not.

The other three states — Delaware, New Hampshire, and Oregon — prohibit local sales taxes as well, so purchases are truly tax-free at both the state and local level. This matters if you live near a state border or buy something while traveling, because the tax you pay depends on where the sale physically happens, not where you live.

If you buy something online from a retailer in one of these five states and have it shipped to your home in another state, you typically owe sales tax in your home state, not in the state where the retailer is located. Most large online retailers now collect tax based on the buyer's address, regardless of where the company is based.

Key Takeaways

• Alaska, Delaware, Montana, New Hampshire, and Oregon have no statewide sales tax, but Alaska and Montana allow local sales taxes in some cities and counties.
• Delaware, New Hampshire, and Oregon prohibit both state and local sales taxes on retail purchases.
• The sales tax rate that applies to your purchase depends on where the transaction takes place, not where you live.
• Online retailers collect sales tax based on your delivery address in most cases, even if the company is located in a no-sales-tax state.
• Some purchases like groceries, medicine, or clothing may be taxed differently or exempted in other states, but these five states have no sales tax to begin with.

How local sales taxes work in Alaska and Montana

Although Alaska and Montana do not charge a statewide sales tax, they allow cities and boroughs to set their own local tax rates. In Alaska, Anchorage charges 3.5 percent sales tax, while Juneau charges 5 percent. Other Alaska communities charge different rates or no local tax at all. The same variation exists in Montana — some cities like Missoula charge local sales tax while others do not.

If you buy something in Anchorage, you pay Anchorage's local rate. If you buy the same item in a different Alaska city with no local tax, you pay nothing. This means two people in the same state can have completely different tax bills for identical purchases, depending on which city they shop in.

When you shop online and have something shipped to an address in Alaska or Montana, the retailer should charge the local sales tax rate for that specific city or zip code, if one exists. Some retailers may not collect local tax correctly, so it is worth checking your receipt to see what was charged.

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

These three states prohibit sales tax at every level — state, county, and city. There is no local option to add a tax, so a purchase in Wilmington, Delaware costs the same as a purchase in any other Delaware city. The same is true throughout New Hampshire and Oregon.

This does not mean these states collect no tax revenue. Delaware and New Hampshire both have income taxes. Oregon has an income tax but no sales tax. New Hampshire has no income tax but does tax interest and dividend income. Each state funds its government differently, and the absence of sales tax reflects a choice about which taxes to use, not an absence of taxation overall.

If you live in one of these states, you will not see sales tax added to any retail purchase, whether you shop in person or online. If you move to another state or travel and make a purchase there, you will owe that state's sales tax instead.

How sales tax applies to online and mail orders from these states

When you order something online from a retailer based in Alaska, Delaware, Montana, New Hampshire, or Oregon, the tax you pay depends on where you live, not where the company is located. If you live in a state with sales tax and order from a no-sales-tax state, you still owe tax — your home state's tax, not zero tax.

Large retailers like Amazon, Walmart, and Target now collect sales tax based on your delivery address in all states where they have a legal obligation to do so. This is true even if the retailer is headquartered in a no-sales-tax state. Smaller retailers may not collect tax correctly, which means you might owe tax to your state when you file your return, though most states do not actively pursue individual consumers for uncollected sales tax on small purchases.

The rule is: the tax rate that applies is the rate in the state where the item is being delivered, not the state where the seller is located. This applies whether you order online, by mail, or by phone.

What counts as a taxable purchase in these states

In the five no-sales-tax states, there is no sales tax on anything because there is no sales tax system at all. You do not need to worry about whether groceries, clothing, medicine, or services are taxed differently — they are not taxed at all.

This is different from states that have sales tax but exempt certain items. In many states, groceries are not taxed but clothing is, or medicine is exempt but restaurant meals are not. Those distinctions do not exist in Alaska, Delaware, Montana, New Hampshire, and Oregon because there is no sales tax to exempt anything from.

If you are comparing the true cost of living in these states to others, remember that the absence of sales tax is offset by other taxes. New Hampshire and Delaware have no income tax, which is a significant advantage for high earners. Alaska has no income tax and no sales tax, which is why it is sometimes called the most tax-friendly state, though it funds itself through oil revenue and other sources.

Frequently Asked Questions

If I buy something in a no-sales-tax state and move it to my home state, do I owe tax?

Not if you already paid tax when you bought it. If you bought something in a no-sales-tax state and paid no tax, you do not owe tax to your home state just because you brought it there. Sales tax is paid at the point of purchase, not based on where you live or where you take the item afterward.

Do these states charge tax on services like haircuts or car repairs?

No. Since these states have no sales tax at all, there is no sales tax on services. Some states tax services and some do not, but in the five no-sales-tax states, the question does not explore — nothing is subject to sales tax.

Can I order from a no-sales-tax state to avoid paying tax in my state?

No. You owe sales tax based on where the item is delivered, not where the seller is located. If you live in a state with sales tax and order something online from a retailer in Alaska or Delaware, the retailer should charge your state's sales tax. If they do not, you may owe it to your state, though enforcement on individual purchases is rare.

Do these states have any other taxes I should know about?

Yes. Alaska and Delaware have no income tax, but Delaware has a corporate tax and other business taxes. New Hampshire has no income tax or sales tax but taxes interest and dividend income. Oregon and Montana both have income taxes. Each state funds itself differently, so the absence of sales tax does not mean the absence of all taxes.