Five states do not charge sales tax on purchases
Alaska, Delaware, Montana, New Hampshire, and Oregon do not have a statewide sales tax. This means when you buy something in these states, you pay only the price on the tag — no additional tax is added at checkout. Some of these states do allow cities or counties to add their own local sales taxes, so the full picture depends on where in the state you are shopping.
If you live in one of these states, you will notice your receipt looks different from what friends in other states see. There is no line item for sales tax, and the total you pay matches the advertised price. This affects everything from groceries to clothing to electronics.
Key Takeaways
- Alaska, Delaware, Montana, New Hampshire, and Oregon have no statewide sales tax, though some allow local taxes.
- Alaska permits cities and boroughs to charge local sales taxes ranging from 0% to over 7%, so the tax rate varies by location.
- Delaware, Montana, New Hampshire, and Oregon do not allow any local sales taxes, so you pay zero sales tax statewide.
- Online purchases from out-of-state sellers may still be subject to sales tax depending on where the seller is located and your state's rules.
- States without sales tax often fund government services through other taxes, such as income tax or property tax.
How local taxes work in Alaska
Alaska has no statewide sales tax, but it allows individual cities and boroughs to set their own local sales taxes. This means the tax rate you pay depends on which city or town you are in. Some areas have no local tax at all, while others charge up to 7.5% or higher.
If you are shopping in Anchorage, you will pay a local sales tax. If you are shopping in Juneau, the rate is different. Before making a large purchase in Alaska, it is worth checking what the local rate is in your specific city, because it can add noticeably to the cost.
States with zero sales tax everywhere
Delaware, Montana, New Hampshire, and Oregon do not allow any local sales taxes. This means there is no sales tax at any level — state or local — no matter where you shop within these states.
New Hampshire is notable because it also has no income tax, making it one of the few states with neither sales tax nor income tax. Montana and Oregon both have income taxes to fund state services. Delaware has an income tax as well. These states fund schools, roads, and other services through income tax, property tax, and other revenue sources rather than sales tax.
Why some states have no sales tax
States choose their tax structure based on how they want to fund government services. A state without sales tax must raise money another way — typically through income tax, property tax, or business taxes.
New Hampshire, for example, relies heavily on property tax and income tax to fund schools and infrastructure. Oregon uses income tax. Alaska, which has significant oil revenue, uses that income to fund state operations and does not charge an income tax. Each state's choice reflects its own priorities and revenue sources.
How online purchases are taxed
If you live in a no-sales-tax state and buy something online from a seller in another state, you may still owe sales tax. The rule depends on where the seller is located and whether they have a physical presence in your state.
Generally, if an online seller has a warehouse, office, or other location in your state, they must charge you sales tax even if your state has no sales tax. If the seller has no presence in your state, they typically do not charge tax. However, some states require residents to report and pay tax on out-of-state purchases themselves, though this is rarely enforced for individual shoppers.
When in doubt, check the seller's tax policy at checkout. The rules around online sales tax are complex and change frequently, so the safest approach is to see what the website tells you before you complete your purchase.
How no-sales-tax states affect your budget
Living in or shopping in a no-sales-tax state means you keep more of your money at the register. A $100 purchase costs $100, not $107 or $108 as it would in a state with a 7% or 8% sales tax. Over a year, this adds up — especially on large purchases like furniture, appliances, or vehicles.
However, these states often charge higher income tax or property tax to make up the difference. If you earn income in one of these states, you may pay more in income tax than you would in a state with sales tax. The overall tax burden depends on your personal situation — how much you earn, how much property you own, and how much you spend.
What to know when moving to or from a no-sales-tax state
If you are moving from a state with sales tax to one without, your grocery and shopping costs will drop noticeably. If you are moving the other direction, expect your receipts to be higher. This is one reason people sometimes factor state taxes into decisions about where to live or retire.
Keep in mind that the total tax picture includes income tax, property tax, and other fees, not just sales tax. A state with no sales tax might have high income tax or property tax that offsets the savings. Before moving, it is worth looking at the full tax picture for your situation, not just the sales tax rate.
Frequently Asked Questions
Do I have to pay sales tax if I buy something online from a no-sales-tax state?
Not necessarily. If the online seller has no physical location in your state, they typically do not charge you sales tax. If they do have a warehouse or office in your state, they must charge tax even if your state has no sales tax. Check the seller's website or contact them to find out.
Can I avoid sales tax by shopping in a no-sales-tax state if I live somewhere else?
You can shop there and pay no sales tax in the store, but many states require you to report and pay tax on out-of-state purchases yourself. This is called use tax. In practice, it is rarely enforced for individual shoppers, but technically the obligation exists in many states.
Do no-sales-tax states charge tax on groceries?
No. Since these states have no sales tax at all, groceries are not taxed. In states that do have sales tax, many exempt groceries or tax them at a lower rate, but in no-sales-tax states, there is no tax on food or anything else.
Is New Hampshire really a no-tax state?
New Hampshire has no sales tax and no income tax, making it unusual. However, it does charge property tax, which tends to be higher than in many other states. It also taxes business income and has other fees, so while it has no sales or income tax, it is not tax-free overall.
What happens to sales tax if I buy a car in a no-sales-tax state?
You pay no sales tax on the car in that state. However, when you register the car in your home state, your home state may charge a sales tax or use tax on the purchase. Check with your state's motor vehicle department to see what you owe when you register an out-of-state purchase.