Five states have no sales tax at all
Alaska, Delaware, Montana, New Hampshire, and Oregon do not charge a statewide sales tax. If you live in or buy something from one of these states, you will not pay sales tax on most purchases at checkout. This is different from the other 45 states, which all have some form of sales tax, though the rates and what they tax vary widely.
The reason these five states have no sales tax is historical and political — each state chose a different way to fund government services instead. Alaska uses oil revenue. Delaware and Montana have structured their tax systems around other sources. New Hampshire and Oregon have made it a matter of state policy. The result is the same for you: no sales tax line item on your receipt.
However, "no statewide sales tax" does not mean zero tax on purchases. Some of these states allow cities or counties to add their own local sales taxes, and some tax specific goods like groceries or alcohol differently than other states do. The details matter depending on where you are buying and what you are buying.
Key Takeaways
- Alaska, Delaware, Montana, New Hampshire, and Oregon have no statewide sales tax, though some allow local taxes in certain areas.
- Alaska taxes alcohol and marijuana at the state level even though it has no general sales tax.
- New Hampshire taxes restaurant meals and prepared foods but not groceries.
- Montana allows some cities to charge local sales tax despite having no state sales tax.
- If you order something online from a no-sales-tax state to a state that has sales tax, you typically owe tax in your home state, not the seller's state.
How each no-sales-tax state handles specific purchases
Alaska has no sales tax but taxes alcohol at 12 percent and marijuana at 50 percent. Some municipalities add their own sales tax on top of the state rate, so a purchase in Anchorage or Juneau may include local tax even though there is no state sales tax. Groceries are not taxed.
Delaware has no sales tax on anything, including groceries, clothing, and prepared food. This is one of the broadest no-sales-tax policies in the country. Some people from neighboring states shop in Delaware specifically to avoid sales tax, though you still owe tax in your home state if you bring taxable items back across the border.
Montana has no state sales tax, but about 60 cities and towns charge local sales tax ranging from 3 to 7 percent. Groceries are not taxed. If you buy something in a Montana town with local sales tax, you will see that tax on your receipt even though Montana itself has no state sales tax.
New Hampshire has no sales tax on most items, including clothing and groceries. However, it taxes restaurant meals, prepared foods, and alcohol. Alcohol tax is 18 percent on spirits and 7 percent on beer and wine. If you eat at a restaurant in New Hampshire, you will pay tax on that meal.
Oregon has no sales tax on any purchase, including groceries and prepared food. Like Delaware, this is a broad exemption. Oregon does tax marijuana at the state level, but regular retail purchases have no sales tax.
What happens when you buy online from a no-sales-tax state
If you order something online from a retailer in Alaska, Delaware, Montana, New Hampshire, or Oregon and have it shipped to your home state, you do not automatically avoid sales tax. Most states require you to pay sales tax based on where the item is being delivered, not where the seller is located. This is called destination-based sales tax.
Large online retailers like Amazon and Walmart collect sales tax for your home state at checkout, even if they are shipping from a warehouse in a no-sales-tax state. Smaller retailers may not collect it, but you may owe it anyway when you file your state tax return — though most people do not report this. The rule exists, but enforcement is inconsistent.
If you are buying from a small business in one of these states and shipping to another state, check the retailer's tax policy before checkout. Some will add your home state's sales tax. Others will not, leaving the tax obligation to you.
States that are close to having no sales tax
A few states have very low statewide sales tax rates that are worth knowing about if you are comparing costs. Colorado, Georgia, Hawaii, Louisiana, and Wyoming all have statewide sales tax rates of 4 percent or lower. These are not the same as having no sales tax, but they are significantly lower than the national average of around 7 percent.
However, local taxes in these states can push the total rate much higher. A purchase in Denver, Colorado, for example, may include both the state rate and local taxes that bring the total to 8 percent or more. Always check the final tax rate at checkout rather than assuming a low state rate means a low total rate.
Why some states choose not to have sales tax
States without sales tax fund government services through other means. Alaska relies heavily on oil revenue and a state dividend fund. Delaware has a large financial services industry and corporate tax base. Montana and Oregon have chosen income tax and other revenue sources instead. New Hampshire has no income tax and no sales tax, relying on property taxes, business taxes, and other fees.
These choices reflect different political philosophies about how to fund government. They are not accidents or loopholes — they are deliberate state policy. As a result, the cost of living and the tax burden can be quite different depending on what state you live in and what you buy.
How to know what tax you will pay in each state
The easiest way to find the exact tax rate for a specific purchase is to check the retailer's website or ask at checkout. Most stores display the tax rate clearly, and online retailers show it before you confirm your order.
If you are buying in person, the receipt will show the tax rate and the amount charged. If you are buying online, the tax will appear in the order summary before you pay. If you are unsure whether something is taxed in a particular state, the state's Department of Revenue website will have a list of what is and is not taxed — though these pages can be dense and technical.
For major purchases or if you are relocating, it is worth spending a few minutes on your state's tax authority website to understand what is taxed and at what rate. The difference can add up, especially on groceries and prepared food.
Frequently Asked Questions
If I live in a no-sales-tax state, do I pay tax on everything?
No. If you live in Alaska, Delaware, Montana, New Hampshire, or Oregon, most purchases have no sales tax. However, some states in this group tax specific items like alcohol, restaurant meals, or marijuana. Check your state's rules for those categories, but everyday purchases like groceries and clothing are typically not taxed.
Can I move to a no-sales-tax state to avoid paying sales tax?
You can move there, but you will still owe sales tax on purchases made in other states and shipped to you. Your tax obligation is based on where you live, not where the seller is. Moving to avoid sales tax only works if you do all your shopping in that state.
Do no-sales-tax states have higher income tax instead?
Not always. Alaska and New Hampshire have no income tax. Delaware, Montana, and Oregon do have income tax, but they chose that method of funding government instead of sales tax. The total tax burden depends on your income, spending, and property value, not just one tax type.
Is there a sales tax on groceries in these states?
In Alaska, Delaware, Montana, and Oregon, groceries are not taxed. In New Hampshire, groceries are not taxed, but prepared foods and restaurant meals are. If you are buying raw ingredients to cook at home, you will not pay sales tax in any of these five states.
What if a local city in a no-sales-tax state charges sales tax?
Some cities in Alaska and Montana do charge local sales tax even though their states do not. When you buy something in one of these cities, you will see the local tax on your receipt. The state does not charge sales tax, but the city does. Check your specific city's rules if you live in or are visiting one of these areas.