States with no sales tax are Alaska, Delaware, Montana, New Hampshire and Oregon, but a zero statewide rate does not mean every purchase is tax free. Local governments and special taxes can add costs, so shoppers should check the rules for their destination and the type of goods or services they plan to buy.
What a state sales tax rate tells you
Sales taxes apply to retail purchases and certain services. The federal government does not set a national sales tax rate; each state sets its own statewide rules. A state rate is only one part of the bill, since cities and counties can impose local taxes, and some goods face separate excise taxes.
That distinction matters when comparing places to shop or live. A state with a zero rate may tax particular items locally, while a state with a statewide sales tax may have a much higher total rate in some communities. The item matters, too: prepared food, alcohol, tobacco, meals, lodging and car rentals can have rules that differ from ordinary retail purchases.
Use the state rate as a starting point, not as a forecast of the final checkout total. Before a large purchase, check the local rate where the sale occurs and whether the product is subject to a separate tax. For a household budget, also consider income and property taxes, which can change the overall comparison.
States with no statewide sales tax
The five states below set their general statewide sales tax rate at zero. Their local exceptions differ, from municipal sales taxes to charges on specific goods or services.
| State | State rate | Local or special tax details |
|---|---|---|
| Alaska | 0% | Municipalities average 1.82%. Juneau charges 5%, while Anchorage and Fairbanks have no sales tax. |
| Delaware | 0% | Some businesses pay a gross receipts tax. Excise taxes apply to goods including motor fuel and alcohol. |
| Montana | 0% | Eligible tourist communities can impose resort and local option taxes of up to 3%. |
| New Hampshire | 0% | An 8.5% meals and rentals tax applies to restaurant meals, short term room rentals and car rentals. |
| Oregon | 0% | Local taxes cover some goods. Ashland, for example, charges 5% on prepared foods. |
Local charges and tax exceptions to check
Alaska shows how sharply local rates can vary within one state. Juneau’s 5% rate contrasts with the absence of sales taxes in Anchorage and Fairbanks. The statewide average rate for municipalities is 1.82%, but that average will not tell a shopper the charge at a particular store. Check the city rate for the place where the purchase is made.
Montana’s resort and local option taxes are limited to certain tourist locations. A city must have a permanent population below 5,500 to qualify, and the rate can reach 3%. Whitefish, Red Lodge, Big Sky and West Yellowstone are among the places where such taxes apply. They help support infrastructure used by visitors, so a trip to a resort town can involve a tax that is absent elsewhere in the state.
New Hampshire’s 8.5% meals and rentals tax covers restaurant prepared meals, short term lodging and car rentals. The state also imposes a timber tax equal to 10% of the wood’s value when it is cut, except when the cutting is for personal use. Local governments cannot introduce general sales taxes there. Excise taxes instead apply to tobacco and electricity sales.
Delaware uses business and product taxes in place of a general sales tax. Its gross receipts tax applies to certain businesses, while motor fuel and alcohol are among the products subject to flat rate excise taxes per gallon. The state also has relatively high corporate income taxes and additional taxes on some distributors. Its property tax is near 0%, but that figure alone does not describe the full tax picture.
Oregon allows some local taxes on goods such as tobacco and prepackaged alcoholic beverages. Its income tax rate is higher than in other states, while intangible property such as stock accounts and bonds is not taxed. A shopper looking only at the register can miss these broader differences.
How low tax states compare with higher rate states
Eleven other states have relatively low statewide sales tax rates, between 2% and 5%. These figures do not include every possible local charge. The list is useful for a first comparison, but the local rate and the taxes on a particular purchase still need checking.
| State | State sales tax rate | State | State sales tax rate |
|---|---|---|---|
| Alabama | 4% | Colorado | 2.9% |
| Georgia | 4% | Hawaii | 4% |
| Louisiana | 4.45% | Missouri | 4.23% |
| New York | 4% | North Carolina | 4.75% |
| Oklahoma | 4.5% | South Dakota | 4.2% |
| Wyoming | 4% |
At the other end of the state rate scale, California has the highest rate, 7.25%. Indiana, Mississippi, Rhode Island and Tennessee each have a 7% state rate. Puerto Rico, which is a territory rather than a state, charges 11.5%.
Combined state and local rates can tell a different story from state rates alone. The reported highest combined rates include Louisiana at 9.57%, Tennessee at 9.56%, Arkansas at 9.47%, Washington at 9.45%, Alabama at 9.29% and Oklahoma at 9.00%. A state’s position in a comparison can therefore change when local taxes are included.
Does a zero sales tax mean a lower total tax bill?
Not by itself. Delaware has no general sales tax and has the country’s seventh lowest median property tax rate, while Alaska has no state sales tax or state income tax. Wyoming combines a low sales tax rate and low property tax with no income tax. Those examples suggest why a broader comparison can be more useful than a checkout rate alone, but they do not establish which state is cheapest for every household.
For a practical estimate, write down the taxes relevant to your own spending: the local sales rate, any tax on the specific goods or services, and the state’s income and property taxes. If you are comparing a move, include the taxes you would actually pay rather than relying on a state label. Sales tax is one part of the cost of living, not a complete measure of it.
The open question is whether a lower checkout rate outweighs other taxes for a particular household. The answer depends on where you live, what you buy and which other taxes apply. Checking those details before setting a budget gives a more realistic comparison than the statewide sales tax figure alone.