Five states charge no state sales tax at all: Alaska, Delaware, Montana, New Hampshire, and Oregon. That does not mean shopping there is free of extra costs, though. Local governments in some of these states still add excise taxes, resort fees, or lodging charges that can catch visitors and residents off guard.
How State Sales Tax Actually Works
Sales tax in the United States is not a federal matter. Each state sets its own base rate, and cities or counties often layer additional taxes on top. New York offers a clear example: the statewide rate sits at 4%, but New York City tacks on enough local tax to push the combined rate to 8.875%. California, by contrast, has the highest statewide sales tax rate in the country at 7.25%. For comparison, Puerto Rico, which is a territory rather than a state, charges an 11.5% sales tax.
The Five States Without a Sales Tax
Alaska does not levy a state sales tax, but local governments can. Juneau charges 5%, while Anchorage and Fairbanks charge nothing. Averaged across municipalities statewide, the rate works out to about 1.82%.
Delaware skips sales tax entirely and instead taxes businesses through a gross receipts tax. It leans heavily on flat, per gallon excise taxes on things like motor fuel and alcohol, along with relatively high corporate income taxes. That combination lets Delaware keep both its property tax and sales tax near zero.
Montana's statewide sales tax rate is 0%, but small tourist towns are allowed to charge up to 3% through what is called a resort and local option tax, used to fund infrastructure that tourism wears down. Only towns with a permanent population under 5,500 qualify, which is why places like Whitefish, Red Lodge, Big Sky, and West Yellowstone can charge it.
New Hampshire has no general sales tax, but it does apply an 8.5% tax on prepared meals, short term room rentals, and car rentals. Cut timber gets taxed too, at 10% of its value, unless it is cut for personal use. Because the state constitution keeps the general sales tax at zero, local governments cannot introduce their own, so New Hampshire instead taxes things like tobacco and electricity.
Oregon has no statewide sales tax either, though some cities have found workarounds. Ashland, for instance, charges a 5% tax on prepared food. The state also taxes tobacco and prepackaged alcoholic beverages. To make up revenue elsewhere, Oregon's personal income tax rate runs higher than in most states, though it does not tax intangible assets like stocks and bonds.
States With Low, Not Zero, Sales Tax
Beyond the five states with no sales tax, eleven others keep their statewide rates fairly low, generally between 2% and 5%.
| State | State Sales Tax Rate |
|---|---|
| Colorado | 2.9% |
| Alabama | 4% |
| Georgia | 4% |
| Hawaii | 4% |
| New York | 4% |
| Wyoming | 4% |
| South Dakota | 4.2% |
| Missouri | 4.23% |
| Louisiana | 4.45% |
| Oklahoma | 4.5% |
| North Carolina | 4.75% |
California sits at the top end of the scale at 7.25%, with Indiana, Mississippi, Rhode Island, and Tennessee close behind at 7% each. Once local taxes get added in, the picture shifts again. Louisiana's combined state and local rate reaches 9.57%, followed closely by Tennessee at 9.56%, Washington at 9.45%, Arkansas at 9.47%, Alabama at 9.29%, and Oklahoma at 9.00%.
Weighing States With No Sales Tax Against the Alternatives
None of these states are simply cheaper across the board. Delaware pairs its lack of sales tax with a low median property tax, ranked seventh lowest nationally, which helps explain its reputation as tax friendly. Alaska has no statewide income tax either, even though Juneau's 5% local sales tax applies. Wyoming stacks a low sales tax on top of low property tax and no income tax, arguably making it the most tax friendly state overall.
States with higher sales tax rates are not necessarily worse deals. California and New York charge more at checkout, but that revenue tends to fund broader public services. The real comparison has to include property taxes, income taxes, and local excise charges, not just what shows up on a receipt.
What Does This Mean for Where You Live or Shop
Sales tax is one piece of a larger financial picture, not the whole story. A state that skips sales tax may recover that money through income tax, property tax, or targeted excise fees on things like fuel, alcohol, or lodging. Anyone weighing a move, a big purchase, or even a vacation budget should look at the combined tax burden in a given location rather than assume that a lack of sales tax means lower costs overall.