Five states have no sales tax at all
Alaska, Delaware, Montana, New Hampshire, and Oregon do not impose a statewide sales tax. If you live in one of these states, you will not pay sales tax when you buy most goods at a store or online. This is different from the other 45 states, which all charge some form of sales tax ranging from roughly 4% to 7.25%.
However, living in a no-sales-tax state does not mean you pay no tax on purchases. Some of these states make up the revenue through other taxes — for example, New Hampshire and Montana tax certain services, and Alaska has no statewide income tax but allows cities to charge local sales taxes. Understanding what your state does tax is more useful than knowing what it does not.
If you are moving to or from one of these states, or if you buy things online from out of state, the sales tax rules that explore depend on where the seller is located and where the item is shipped, not where you live. That distinction matters for your actual tax bill.
Key Takeaways
- Alaska, Delaware, Montana, New Hampshire, and Oregon have no statewide sales tax, but some allow local sales taxes or tax specific services instead.
- When you buy something online, the sales tax owed depends on the seller's location and your state's rules, not on whether your state has sales tax.
- States without sales tax often collect revenue through income tax, property tax, or taxes on specific goods like fuel or alcohol.
- If you live in a no-sales-tax state and buy from an out-of-state seller, you may still owe sales tax depending on that seller's location and your state's laws.
How each no-sales-tax state handles other taxes
Alaska has no statewide sales tax and no statewide income tax. However, some cities and boroughs in Alaska do charge local sales taxes — Juneau, Anchorage, and Fairbanks are examples. If you live in one of these areas, you will pay sales tax on purchases even though Alaska itself does not impose one. Alaska relies heavily on oil revenue and property taxes instead.
Delaware has no sales tax on goods, but it does tax some services and has a corporate income tax. If you buy a physical item in Delaware, you will not pay sales tax. If you buy a service like a haircut or car repair, Delaware may tax that depending on the service type.
Montana has no sales tax on most goods, but it taxes certain services including lodging, vehicle rentals, and some repair work. Montana also has a state income tax. If you are a tourist staying in a hotel in Montana, you will pay tax on the room even though there is no sales tax on goods you buy in a store.
New Hampshire has no sales tax and no income tax on wages, but it does tax interest and dividend income. New Hampshire also taxes meals at restaurants and some services. If you eat at a restaurant in New Hampshire, you will pay a meals tax even though there is no general sales tax.
Oregon has no sales tax on goods, but it does tax some services. Oregon has a state income tax. If you buy clothing in Oregon, you will not pay sales tax, but if you buy a service like dry cleaning, the tax treatment depends on how Oregon classifies that service.
Online purchases and sales tax in no-sales-tax states
If you live in a state with no sales tax and you buy something online from an out-of-state seller, whether you owe sales tax depends on the seller's location and your state's rules — not on the fact that your state has no sales tax.
Most online sellers now collect sales tax based on where the item is being shipped. If you live in Alaska and buy from Amazon, Amazon will charge you Alaska sales tax if your city or borough has one, even though Alaska has no statewide sales tax. If you live in Oregon and buy from a retailer in California, that retailer will likely charge you California sales tax, not Oregon tax, because the item is being shipped to Oregon.
Some states without sales tax have their own rules about what you owe when you buy from out of state. New Hampshire, for example, does not require out-of-state sellers to collect tax on most goods, but you may owe use tax (a tax on items you bring into the state) if you buy something and bring it home. In practice, most individuals do not report use tax on personal purchases, but the rule exists.
Why some states chose not to have sales tax
The five states without sales tax arrived at that choice for different historical and economic reasons. Alaska and New Hampshire have long opposed broad-based consumption taxes. Alaska's oil revenue historically made sales tax unnecessary. Delaware has positioned itself as a business-friendly state with low taxes to attract corporate headquarters and online retailers.
Montana and Oregon both have income taxes instead, reflecting a different choice about which taxpayers should bear the burden. Oregon voters have repeatedly rejected sales tax proposals, preferring to fund the state through income tax.
These choices affect not just shoppers but also businesses. Some online retailers have been drawn to Delaware because of its tax structure. Conversely, states with sales tax sometimes see shoppers cross state lines to buy in no-sales-tax states, which is why some states have tried to enforce use tax on those purchases.
What happens if you move to or from a no-sales-tax state
If you move from a state with sales tax to one without, your shopping costs will drop on most purchases — but check whether your new state taxes services you use regularly. If you move from Oregon to California, for example, you will start paying sales tax on goods, but Oregon's income tax may have been higher than California's, so your overall tax burden might not change much.
If you move to a no-sales-tax state from one that has sales tax, do not assume you will pay no tax on anything. Check what your new state taxes instead. New Hampshire has no sales tax, but it taxes meals and services, so eating out will still cost you tax. Alaska has no statewide sales tax, but many cities do, so your actual tax bill depends on which city you move to.
For tax filing purposes, your state of residence determines which state income tax return you file and what deductions or credits you can claim. If you move mid-year, you may need to file part-year returns in both states. The sales tax you pay on purchases does not directly affect your income tax return in most cases, but it can affect your deduction for state and local taxes (SALT) if you itemize.
Sales tax on specific goods in no-sales-tax states
Even in states with no general sales tax, certain goods are often taxed. Fuel, alcohol, and tobacco are common examples. Alaska taxes fuel and alcohol even though it has no general sales tax. Montana taxes fuel. These selective taxes exist in most states, including those with broad sales taxes, because they are politically easier to pass and because they target goods the state wants to discourage or regulate.
If you live in a no-sales-tax state and you buy fuel, alcohol, or tobacco, check your state's rules on those specific items. The tax may appear as an excise tax (a tax on the product itself) rather than a sales tax, but you will still pay it at the pump or register. These taxes are usually higher per unit than a general sales tax would be on the same item.
Frequently Asked Questions
Do I pay sales tax if I buy something online and have it shipped to a no-sales-tax state?
It depends on the seller's location and your state's rules. Most online sellers now collect sales tax based on where the item is shipped. If you live in Oregon and buy from a seller in California, you will likely pay California sales tax. If you buy from a seller in Oregon, you will not pay sales tax. Check your state's website or the seller's tax policy to be sure.
If I live in Alaska, do I ever pay sales tax?
You pay sales tax only if you live in a city or borough that has a local sales tax. Juneau, Anchorage, Fairbanks, and several other areas in Alaska charge local sales tax even though Alaska has no statewide sales tax. Check your city or borough's website to see if you owe local sales tax.
Does living in a no-sales-tax state mean I pay less tax overall?
Not necessarily. States without sales tax often collect revenue through income tax, property tax, or taxes on specific goods. New Hampshire and Montana have income taxes. Alaska has no income tax but high property taxes in some areas. Compare your total tax burden across all types of tax, not just sales tax, to see whether a no-sales-tax state is cheaper for you.
What is use tax, and do I have to pay it?
Use tax is a tax on items you buy out of state and bring home. Some no-sales-tax states have use tax rules, but they are rarely enforced on individual purchases. If you buy something in a neighboring state and bring it home, you technically may owe use tax in your home state, but most people do not report it. Check your state's rules if you make large purchases out of state.
If I move to a no-sales-tax state, do I need to file a different tax return?
Yes, you will file a return in your new state of residence. If you move mid-year, you may need to file part-year returns in both your old and new states. The sales tax you pay does not directly affect your income tax return in most cases, but your state of residence determines which state income tax return you file and what credits you can claim.