Most Americans pay sales tax on nearly every retail purchase. But residents in five states enjoy a major advantage: no statewide sales tax at the register. Whether you are planning a major purchase, considering a business relocation, or just curious about how the US tax landscape works, this guide gives you the full picture. If you are new to the topic, our guide explaining what sales tax is and how it works provides helpful context first.
The 5 No-Sales-Tax States
1. Alaska
Alaska levies no statewide sales tax, but local municipalities — boroughs and cities — can and do impose their own rates. Some Alaskan cities charge up to 7%. So while Alaska has no state rate, your actual tax experience varies significantly depending on where you shop. This mirrors the local-only structure that makes calculating the combined rate essential even in states with low or no state base rates.
2. Delaware
Delaware is arguably the cleanest no-sales-tax state for retail shoppers. Neither the state nor local governments charge any general sales tax on goods. This is a major reason so many corporations incorporate in Delaware. Shoppers from neighboring high-tax states like New Jersey and Pennsylvania (where combined rates can approach 7-8%) regularly cross into Delaware for major purchases.
3. Montana
Montana has no statewide sales tax and — unlike Alaska — local governments are generally prohibited from imposing general sales taxes. Certain resort areas may charge a limited resort tax on specific goods. For most retail shopping, Montana is completely tax-free at the register. Compare this to California, where combined rates in some cities exceed 10.25%, and the savings on a major purchase become substantial.
4. New Hampshire
New Hampshire charges no general sales tax on retail goods. However, the state does tax restaurant meals and hotel stays at 9%. For general retail shopping, there is no tax. New Hampshire funds its government primarily through property taxes and selective excise taxes rather than a broad-based income or sales tax.
5. Oregon
Oregon has no statewide sales tax and no local sales taxes — making it the simplest no-sales-tax state for shopping purposes. However, Oregon funds its government through one of the higher state income tax rates in the country. This is a common pattern: states that forgo sales tax tend to rely more heavily on other revenue sources, which is worth considering when evaluating the total tax burden and what you can deduct.
Do You Really Save Money in No-Sales-Tax States?
On big-ticket purchases, yes — significantly. Buying a $50,000 car in Delaware vs. a state with a 10% combined rate saves you $5,000 in sales tax alone. For everyday purchases, the savings are smaller but still real. The caveat is that these states offset the lost revenue through other taxes — which is why understanding the full deductibility picture matters for residents.
For Business Owners
Running a retail business in a no-sales-tax state eliminates an enormous compliance burden. There is no need to register for a sales tax permit, collect from customers, file returns, or worry about local rate variations. However, if your business sells online to customers in other states, you still need to understand economic nexus thresholds — the Wayfair ruling means your location in a no-sales-tax state does not exempt you from collecting for other states where you exceed their thresholds. Once those obligations kick in, you will need to know how to file returns in those states and avoid the most common compliance mistakes.