Five states charge no sales tax on retail purchases

Alaska, Delaware, Montana, New Hampshire, and Oregon do not impose 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 statewide sales tax does not mean zero sales tax everywhere in these states. Alaska allows municipalities to charge local sales taxes, and some cities and boroughs do. Delaware, Montana, New Hampshire, and Oregon have no local sales taxes either, making them the only four states with truly zero sales tax at every level of government.

The other 45 states and Washington, D.C. all charge some form of sales tax. State rates range from 2.89% in Colorado to 7.25% in California, and many states allow counties or cities to add additional local taxes on top of the state rate.

Key Takeaways

  • Alaska, Delaware, Montana, New Hampshire, and Oregon have no statewide sales tax, though Alaska permits local taxes in some cities.
  • Delaware, Montana, New Hampshire, and Oregon have no sales tax at any level — state or local.
  • Sales tax rates in other states vary widely, from under 3% to over 9% when state and local taxes combine.
  • Some states exempt certain items like groceries or clothing from sales tax even though they charge tax on other purchases.

How Alaska's local option sales tax works

Alaska has no statewide sales tax, but the state allows individual municipalities and boroughs to impose their own local sales taxes. About 100 of Alaska's cities and towns have chosen to do so, while others have not.

Local sales tax rates in Alaska range from 0% to 7.5%, depending on which city or borough you are in. Anchorage, the largest city, charges 3.5%. Juneau charges 5%. Some smaller communities charge nothing. If you are buying something in Alaska, you need to know which municipality you are in to determine the actual tax rate.

This makes Alaska different from the other four no-sales-tax states. If you live in or travel to Anchorage or Juneau, you will pay sales tax. If you are in a municipality that has not adopted a local tax, you will not.

States with no sales tax on groceries or clothing

Even though most states charge sales tax, many of them exempt certain everyday items. This is different from having no sales tax at all, but it reduces the tax burden on specific purchases.

Thirty-two states do not charge sales tax on groceries. These include California, Florida, Illinois, New York, Pennsylvania, and Texas. The definition of "groceries" varies by state — some include prepared foods, while others do not. Items like candy, soda, and hot takeout are often taxed even in states that exempt basic groceries.

Fourteen states do not charge sales tax on clothing and shoes. These include Maryland, Massachusetts, Minnesota, New Jersey, New York, Pennsylvania, and Rhode Island. Again, the definition matters: some states exempt only items below a certain price point, and accessories like belts or hats may be taxed differently than shirts and pants.

Why states choose different sales tax policies

States without sales tax often rely more heavily on other revenue sources. Alaska, for example, receives significant income from oil production and the Permanent Fund Dividend, which reduces the need for sales tax. New Hampshire relies on a "meals and rooms" tax on restaurants and hotels, plus property taxes and business taxes.

States with sales tax use that revenue to fund schools, roads, public services, and other government operations. The choice to have or not have sales tax reflects each state's approach to taxation and spending, not a universal rule.

Some states have attempted to introduce sales tax and failed due to voter opposition. Others have raised their rates over time as budget needs grew. The tax structure in any state can change through legislation or ballot measures.

How to find the sales tax rate where you live or travel

If you need to know the exact sales tax rate for a specific location, the state revenue or taxation department website will have current rates. You can also search "[city name] sales tax rate" to find the combined state and local rate for that area.

When you make an online purchase, the sales tax charged depends on where the seller is located and where you are having the item shipped, not where you live. Most online retailers now collect sales tax based on the destination address, so you may pay tax even if you live in a no-sales-tax state.

If you are planning a major purchase and live near a state border, it is worth checking the rates on both sides. The difference between a 0% rate and a 9% rate can add up on expensive items, though shipping costs and other factors may offset any savings.

Sales tax on online and mail orders

For many years, online retailers did not collect sales tax unless they had a physical location in the state where the buyer lived. This changed after the 2018 Supreme Court decision in South Dakota v. Wayfair, which allowed states to require online sellers to collect sales tax even without a physical presence.

Today, most large online retailers collect sales tax based on the shipping address. This applies whether you live in a state with sales tax or one without. If you order something online and have it shipped to an address in Alaska, Delaware, Montana, New Hampshire, or Oregon, you typically will not pay sales tax — but if you have it shipped to any other state, you will.

Small sellers and marketplaces have different rules depending on their size and the state's law. Some states set a sales threshold — for example, sellers who make less than $100,000 per year may not be required to collect tax. Check your state's revenue department website for specific rules about online purchases.

Frequently Asked Questions

Can I avoid sales tax by buying in a no-sales-tax state and bringing it home?

Not legally. Most states require you to pay sales tax on items you bring into the state, even if you bought them elsewhere. This is called "use tax" and is meant to level the playing field between local and out-of-state purchases. However, use tax is rarely enforced for individual consumers, and most people do not report it.

Do I have to pay sales tax on services in states that have no sales tax?

It depends on the service and the state. Most no-sales-tax states do not tax services like haircuts, repairs, or consulting. However, some services — such as hotel stays in New Hampshire — are taxed separately. Check the specific state's rules for the service you are interested in.

What is the highest sales tax rate in the United States?

When state and local taxes combine, the highest rates are in Tennessee, Louisiana, and Arkansas, where combined rates can exceed 9.5%. California's statewide rate is 7.25%, but some counties add local taxes that push the total above 8%. The exact rate depends on your city and county.

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

Not always. New Hampshire and Alaska have no income tax and no sales tax, relying on other revenue sources. Delaware has no sales tax but does charge income tax. Montana and Oregon have no sales tax but do tax income. Each state funds itself differently.

Are there any other states considering eliminating sales tax?

No state has recently eliminated sales tax, and most rely on it as a major revenue source. Some states periodically debate tax reform, but moving away from sales tax would require finding replacement revenue, which is politically difficult. The five no-sales-tax states have maintained this policy for decades.