States Without Sales Tax

Sales tax is a fact of life for most Americans, adding extra costs at the register every time you make a purchase. But did you know that not every state imposes a statewide sales tax? In fact, only five U.S. states have managed to avoid it altogether. For businesses, travelers, and residents, this makes a significant difference in the overall cost of living and operating.

1. Alaska

Alaska, a state that doesn’t impose a statewide sales tax, offers a unique tax landscape. While local jurisdictions like cities and boroughs have the option to levy their own sales taxes, many areas remain tax-free, adding to the intrigue of Alaska’s tax system.

2. Delaware

Delaware is often called a “tax-free shopping haven.” With no state or local sales tax, many neighboring residents from states like Maryland, Pennsylvania, and New Jersey make trips across the border for big purchases. While the state generates revenue through other taxes, Delaware’s absence of sales tax is a significant draw for consumers and businesses alike.

3. Montana

Montana also has no general statewide sales tax, although some resort areas impose a small “resort tax” on lodging, restaurants, and luxury items. This makes Montana particularly attractive for large purchases, as customers can avoid the added expense of sales tax.

4. New Hampshire

New Hampshire, a state that takes pride in its tax-free shopping environment, is a popular spot for shoppers from nearby states with higher tax rates, like Massachusetts. While the state does levy taxes on specific goods, there’s no general sales tax, which adds to the excitement of shopping in New Hampshire.

5. Oregon

Oregon, a completely sales-tax-free state with no local add-ons, offers one of the simplest tax structures in the nation for businesses and consumers. This simplicity can be reassuring for those navigating Oregon’s tax system, which relies more heavily on income and corporate taxes to balance its budget.

Why It Matters

For consumers, living in or near a state with no sales tax can mean significant savings, especially on big-ticket items. For businesses, these states can present opportunities to attract out-of-state customers looking for tax-free purchases.

While avoiding sales tax may seem appealing, it’s worth remembering that these states often make up revenue through other forms of taxation—such as property or income taxes.

Davis Davis & Harmon LLC is a national sales tax advisory firm headquartered in Dallas, Texas, with a mission to deliver world-class sales and use tax solutions to complex organizations. The firm specializes in audit defense, refund recovery, and compliance strategy, serving Fortune 1000 clients across industries. With more than 30 years of expertise, Davis Davis & Harmon is the go-to partner for navigating the complexities of sales tax. Learn more at www.ddhtax.com.