Five states have no statewide sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon

If you live in or are moving to one of these five states, you will not pay a statewide sales tax on most purchases. Alaska, Delaware, Montana, New Hampshire, and Oregon do not impose a sales tax at the state level. This does not mean shopping is tax-free everywhere — Alaska allows municipalities to charge local sales tax, and some do. The other four states prohibit local sales taxes entirely, so residents pay no sales tax at checkout.

The absence of sales tax does not mean these states collect no tax revenue. Most make up the difference through income tax, property tax, or other levies. New Hampshire and Alaska have no state income tax, which is why they are sometimes grouped together, but they reach that outcome through different tax structures. Understanding what you will and will not pay in your state matters if you are budgeting for a move or comparing the true cost of living across regions.

Key Takeaways

  • Alaska, Delaware, Montana, New Hampshire, and Oregon charge no statewide sales tax, though Alaska permits local sales taxes in some municipalities.
  • States without sales tax typically rely on income tax, property tax, or other revenue sources, so the absence of sales tax does not mean lower overall tax burden.
  • Online purchases from out-of-state sellers may still owe sales tax in your state under current law, regardless of whether your state has a sales tax.
  • If you move to a no-sales-tax state, check whether your new state has income tax or higher property taxes that offset the savings at the register.

How each no-sales-tax state funds government services

Alaska has no state income tax and no statewide sales tax, but it funds services through oil revenue, property taxes, and the Permanent Fund Dividend (a payment to residents from oil investments). Some cities and boroughs impose local sales taxes ranging from 0% to 7.5%, so your actual tax burden depends on where in Alaska you live.

Delaware has no sales tax but does impose a corporate income tax and a personal income tax. The state is known for business-friendly corporate law, which is why many companies incorporate there. Residents pay income tax on wages and investment income.

Montana has no sales tax but charges a 6.84% personal income tax (as of 2024, though rates can change). Property taxes vary by county. The state also taxes certain services and has a lodging tax that applies to hotel stays.

New Hampshire has no state income tax and no sales tax. It funds services through property taxes (among the highest in the nation), a 5% tax on interest and dividends, and business taxes. The lack of income tax is the main draw for residents, but property tax bills often reflect the trade-off.

Oregon has no sales tax but charges a personal income tax that ranges from 4.75% to 9.9% depending on income level (as of 2024). The state also taxes capital gains at 9.9% for gains over $250,000. Oregon relies heavily on income tax revenue.

What happens when you buy from out-of-state sellers

Living in a no-sales-tax state does not exempt you from sales tax on all purchases. If you order from an online retailer or mail-order company based in another state, you may owe sales tax to your home state under the "use tax" rule. Use tax is a tax on goods you purchase outside your state and bring into it.

In practice, most online retailers now collect sales tax based on the buyer's address, even in no-sales-tax states. This happened after the 2018 Supreme Court decision in South Dakota v. Wayfair, which allowed states to require out-of-state sellers to collect tax. If you live in Oregon and buy from Amazon, Amazon will not charge Oregon sales tax because Oregon has no sales tax to collect. But if you live in Alaska and buy from an out-of-state seller, the seller may charge Alaska's local sales tax if you are in a municipality that has one.

You are responsible for paying use tax yourself if a seller does not collect it, though enforcement is minimal for individual purchases. This matters more for large or business purchases.

Moving to a no-sales-tax state: what to factor in

The absence of sales tax can make a real difference in your budget, especially if you spend heavily on taxable goods. A family that spends $50,000 per year on taxable purchases in a state with 7% sales tax pays $3,500 in sales tax annually. In Oregon or Montana, that same spending produces no sales tax bill.

However, you need to compare the full tax picture. New Hampshire residents pay no income tax and no sales tax, but property taxes average around 2.1% of home value annually — well above the national median. Alaska has no income tax and no statewide sales tax, but residents in Anchorage and Juneau pay local sales taxes. Oregon has no sales tax but a top income tax rate of 9.9%, so high earners may pay more in income tax than they would have in sales tax elsewhere.

Before moving, calculate your total state tax burden under your current state's rules and your new state's rules. Include income tax, property tax, sales tax, and any other levies. The state with no sales tax may not be the state with the lowest overall tax cost for your situation.

States that are close to no sales tax

A few states have very low sales tax rates that approach zero in practice. Colorado, Georgia, Hawaii, Louisiana, and Wyoming all have statewide sales tax rates of 4% or lower. If you are comparing states for tax burden, these may be worth considering alongside the five with no sales tax.

Some states also exempt certain categories of goods from sales tax. For example, many states do not tax groceries, prescription medications, or medical equipment. These exemptions can significantly reduce your effective sales tax rate even if the statewide rate is high. Check your state's rules on what is and is not taxed.

Frequently Asked Questions

Do I have to pay sales tax if I live in Alaska but visit another state?

Yes. Sales tax is based on where you make the purchase, not where you live. If you buy something in California, you pay California's sales tax at checkout. When you return to Alaska, you do not owe additional tax on those purchases.

Can I order online from a no-sales-tax state to avoid sales tax?

Not reliably. Most online retailers now collect sales tax based on your shipping address, regardless of where the seller is located. If you live in a state with sales tax and order from an Oregon-based seller, the seller will likely collect your state's sales tax. Ordering from a no-sales-tax state does not exempt you from your home state's tax.

Is New Hampshire really tax-free?

New Hampshire has no income tax and no sales tax, but it is not tax-free. Property taxes are high (averaging 2.1% of home value), and the state taxes interest and dividend income at 5%. Renters and those with little investment income may pay less total tax than in other states, but homeowners often pay more.

If I move to Oregon, will I save money on taxes?

That depends on your income and spending. Oregon has no sales tax, which saves money on purchases, but it has a personal income tax up to 9.9% and a 9.9% capital gains tax on gains over $250,000. If you earn a high income or have significant investments, Oregon's income tax may cost more than the sales tax you would pay elsewhere. Compare your full tax bill before and after the move.

Do these states tax groceries or medicine?

Since these five states have no sales tax, they do not tax groceries or medicine at the register. However, other states that do have sales tax often exempt groceries and prescription drugs. Check your specific state's rules on what is taxed if you are comparing states with low sales tax rates.