List of U.S. States with No Sales Tax

US States with No Sales Tax: When you buy something in most U.S. states, whether it’s a cup of coffee, a new phone, or a pair of shoes, you will notice a few extra cents or dollars added at checkout, which is the sales tax. It is a percentage charged by the state or local government on goods and services. Sales tax is one of the main ways states earn money to fund schools, roads, and public services. 

But here is the interesting part: not all states charge it. A handful of U.S. states have chosen not to collect sales tax at all. This means if you live or shop in these states, you can save a bit more money every time you make a purchase. These states make up for it in other ways, like higher property or income taxes, but the absence of sales tax is still a big deal for both residents and shoppers.

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List of U.S States with No Sales Tax

Here is the  list of U.S. states with no state sales tax:

1. Alaska

Alaska stands out because it is one of the few states with no statewide sales tax, which is a huge benefit for consumers in many parts of the state. However, the rule is not universal across Alaska; instead, individual local governments like boroughs and cities have the power to impose their own local sales taxes, which is why you might still see a small tax (often between 1% and 7%) added to your purchase depending on the exact town you're in. This means shopping in places like Anchorage or Fairbanks is often completely sales tax-free, while a purchase in Juneau, for instance, will include a local tax. Overall, this unique system makes Alaska one of the most tax-friendly places in the U.S. when it comes to everyday purchases.

2. Delaware

Delaware is famously a tax-free shopping haven because it has chosen not to charge any sales tax, neither at the state nor the local level, meaning the price tag is generally the final price you pay. The state compensates for this lost revenue by focusing on other forms of taxation, most notably a high Corporate Franchise Tax on the countless businesses that legally incorporate there, and a Gross Receipts Tax which is a fee paid by the business on their total sales revenue, regardless of profit, rather than a tax collected from the customer at checkout. This strategy effectively shifts the primary tax burden from the consumer to the business sector, attracting shoppers from neighboring states while keeping the state budget funded.

3. Montana

Montana has a highly attractive tax structure for shoppers because it does not have a statewide general sales tax, meaning the price you see on most retail items is the price you pay, and the state government collects nothing on that purchase. The one exception to this is the Resort Tax, which is a special, small local sales tax (capped at 3% or 4%) that some popular tourist destinations like Whitefish or West Yellowstone have voted to impose only within their town boundaries. This resort tax is usually applied to specific tourist-related items, such as lodging, prepared food, alcohol, and "luxuries", and the money collected helps fund the extra infrastructure and services needed to handle the large influx of visitors without burdening the local residents.

4. New Hampshire

New Hampshire is widely known for its "Live Free or Die" philosophy on taxation, as it imposes zero state or local sales tax on goods. This makes virtually all retail shopping, from clothes to electronics, truly tax-free for both residents and visitors, which is why it attracts huge numbers of shoppers from neighboring, high-sales-tax states. The one major exception is a specific 8.5% Meals and Rooms (Rentals) Tax that you pay as the consumer on prepared restaurant food, hotel stays (for under 185 days), and car rentals, which serves as a targeted way to collect revenue, largely from tourists, to fund state services.

5. Oregon

Oregon provides the ultimate relief for shoppers by maintaining a 0% sales tax at both the state and local levels, meaning no one pays extra at checkout for groceries, clothes, electronics, or other goods. To generate the necessary funds for its public services, Oregon relies heavily on a high Personal Income Tax on its residents' earnings. Additionally, the state recently implemented the Corporate Activity Tax (CAT), which is a tax that businesses with high in-state commercial sales must pay on their gross receipts, effectively shifting the revenue burden onto businesses rather than consumers at the point of sale.

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