Understanding America's No-Sales-Tax States: A Complete Guide to Where You Can Skip the Checkout Surprise

For most Americans, the price tag on a store shelf is merely a starting point. Between state and local levies, your final bill often climbs an additional 5-10% by the time you reach the register. But a small handful of states have eliminated this headache entirely—no sales taxes whatsoever. Let’s explore where these tax-free shopping zones exist and what trade-offs come with living there.

The Sales Tax Myth: What Shoppers Don’t Realize

Many people assume that moving to a no-sales-tax state means lower overall tax burden. The reality is far more nuanced. States that forgo sales revenue typically compensate through alternative taxation methods: steeper income taxes, elevated property taxes, or specialized levies on specific goods. Understanding this balance is crucial before making financial or residential decisions.

Delaware: The Business-Friendly State Without Sales Taxes

Is there sales tax in Delaware? No—and that’s just the beginning. Delaware stands out as one of the most tax-efficient states for both businesses and residents. The state imposes no sales tax and prohibits local jurisdictions from collecting one either. Property taxes remain competitive, among the lowest nationally.

However, Delaware residents aren’t entirely tax-free. The state collects gross receipts taxes from certain enterprises and excise taxes on products like gasoline and alcohol. Additionally, residents face comparatively high income tax rates, which offsets the sales tax advantage.

Alaska: Tax Havens With Geographic Trade-Offs

Alaska offers perhaps the most dramatic tax advantage: neither state sales tax nor state income tax. Living at the nation’s frontier comes with real financial benefits—at least on paper.

The catch? While major cities like Anchorage and Fairbanks don’t charge sales taxes, smaller municipalities do their own thing. The Borough of Juneau, home to Alaska’s capital, imposes a 5% sales tax. Property taxes are moderate but vary significantly by location.

Montana: Minimal Sales Taxes, Maximum Income Taxes

Montana residents enjoy the absence of both state and most local sales taxes—a significant shopping advantage. However, visitors should expect resort taxes applied to hotels and restaurant meals.

For full-time residents, the trade-off becomes apparent: Montana compensates with steep income taxes and less-competitive property tax rates. Additionally, seasonal luxury taxes can apply in certain circumstances.

New Hampshire: The “Live Free or Die” Tax Philosophy

True to its motto, New Hampshire eliminates both state and local sales taxes while also forgoing state income taxes. This creates a genuinely appealing tax climate for residents.

Still, the state maintains “luxury taxes,” particularly on dining and prepared foods. Homeowners face the reality of some of America’s highest property tax bills. Investment income also carries additional state-level taxation in certain categories.

Oregon: No Sales Taxes Despite Living Next to California

Perched directly above California—one of the nation’s highest-sales-tax states—Oregon has chosen a different path. Zero sales taxes at both state and local levels.

But Oregon’s revenue stream comes from alternative sources: tobacco and alcohol excise taxes, plus taxes on prepared foods in specific areas. The state maintains one of the highest income tax rates in the country, though property taxes remain moderate.

The Real Picture: Total Tax Burden Matters

The fundamental lesson: comparing states based on a single tax category is misleading. A state without sales taxes often compensates through income taxes, property taxes, or excise taxes. When evaluating where to live or do business, examine your complete tax obligation across all categories—not just one.

Sales taxes, while frustrating at checkout, fund essential public services including schools, libraries, and infrastructure. States that eliminate them simply redirect revenue collection through other mechanisms. Strategic financial planning requires understanding your total tax exposure, not just the absence of one particular tax type.