Sales tax is a big part of the American economy.
In fact, it is estimated that sales tax brings in over $434 billion dollars per year!
However, there are some states that don’t have sales tax. This can be a big advantage for businesses and consumers living in those states. In this blog post, we will discuss 5 states without sales tax and what you need to know about them!
States Without Sales Tax
There are 5 states without sales tax:
- New Hampshire
Let’s take a closer look at each one.
Alaska is the first state on our list. Alaska is known for its beautiful scenery and its abundance of natural resources.
The state does not have a sales tax, but it does have an alcohol excise tax. This tax is imposed on the sale of alcoholic beverages. Alcoholic beverage distributors and wholesalers are responsible for collecting state sales taxes, which are calculated at a flat rate.
Local governments in Alaska have the authority to impose taxes on specific items and services, despite the fact that there is no sales tax in the state.
In Juneau, there is a 5% sales tax, although Anchorage and Fairbanks do not charge it. The gas tax in Alaska is 8.95 cents per gallon, which makes it the lowest in the USA.
Also, there is a $34.50 excise tax for passengers on commercial vessels with overnight stays, and there are several taxes on motor gasoline for which customers may apply for refunds.
- No sales tax
- Alcohol excise tax – at a flat rate.
- Local towns may exercise a sales tax – for example Juneau (has 5% sales tax)
- Excise tax for passengers on commercial vessels with overnight stays
Delaware is the next state on our list. The state of Delaware does not have a sales tax, but it does have a gross receipts tax.
This tax is imposed on businesses that sell goods and services in the state of Delaware. The rate of this tax can go from .0945% to .7468% depending on the business activity.
The gross receipts tax is levied in the form of a flat rate per gallon on commodities like motor fuel, alcohol, and cigarettes. The gross receipts tax is not imposed on the sale of food, prescription drugs, or medical devices.
Also, Delaware has high corporate taxes and adds extra taxation on certain merchants and providers, giving it the ability to have a 0% property tax and sales tax.
Delaware’s 0% sales tax has made it a desirable location for companies who want to avoid heavy sales tax charges on products, services, and related goods.
Delaware – bottom line:
- No sales tax
- Has a gross receipts tax that ranges between .0945% to .7468% (flat-rate)
- Delaware has a high corporate tax instead
Montana is the third state without a sales tax. The state does, however, have some taxes that are unique to Montana.
For example, there is a property tax in Montana that goes to support public education. This tax is imposed on all real and personal property within the state.
The rate of this tax varies depending on the county in which the property is located.
In addition, Montana has a coal severance tax, which is imposed on the mining of coal within the state. The rate of this tax is also variable, depending on the type and quality of coal being mined.
Finally, there are some local taxes that are imposed in certain areas of Montana like Whitefish. These taxes can include local option tax which could go up to %3 for tourism and house resorts, lodging taxes for car companies and lodging facilities, prepared food taxes, and vehicle registration fees.
Montana – bottom line:
- No sales tax
- Property tax goes to support public education
- Coal severance tax – rate varies
- Local taxes in some areas – lodging, tourism, prepared food, vehicle registration fees
The fourth state without a sales tax is New Hampshire. New Hampshire does, however, have a few taxes that are specific to the state.
For example, there is a 9% room rentals and prepared meals tax, which is imposed on hotels and restaurants. The rate of this tax is variable, depending on the municipality in which the hotel or restaurant is located.
In addition, there is a business profits tax, which is imposed on businesses that earn income from doing business in New Hampshire. The rate of this tax ranges from 7.7% and up, depending on the amount of income earned.
New Hampshire also has a few local taxes, which can include a property tax (average effective rate of 2.05%), a vehicle registration fee, a 7% tax on phone services, and a $.75 per $100 tax on real estate sales.
New Hampshire – bottom line:
- No sales tax
- Room rentals and prepared meals tax – rate varies by municipality (up to %15)
- Business profits tax – rate ranges from %0 to %15, depending on income
- Local taxes can include a property tax, vehicle registration fee, phone services tax, and real estate sales tax.
The fifth and final state without a sales tax is Oregon. Oregon does, however, have a few taxes that are specific to the state. For example, there is a gas tax of $0.38 per gallon, which is used to fund transportation projects in the state.
In addition, there is a cigarette tax with a rate of $3.33 per stamp for a pack of 20 cigarettes, which is used to fund health care programs in Oregon.
Finally, there are some local taxes that are imposed in certain areas of Oregon like Portland. These taxes can include a local option tax which could go up to %15, and a lodging tax which is imposed on hotels and motels.
Oregon – bottom line:
- No sales tax
- Gas tax – $0.38 per gallon (used for transportation projects)
- Cigarette tax – $33.30 per stamp (used for health care programs)
- Local taxes in some areas – local option tax (up to %15), lodging tax (hotels and motels)
Which U.S. States Have No Sales Tax?
The following five states have no sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon. These states have a 0% sales tax.
What State Is the Most Tax-Friendly?
The most tax-friendly state is Alaska, which has no sales tax and no personal income tax. The state does, however, have a few taxes that are specific to the state and the local governments.
What Should You Know About These States?
When considering which state is the most tax-friendly, it is important to consider all of the taxes that are imposed by the state and local governments. Each state has its own unique tax structure, so it is important to research the taxes that apply to you before making a decision.
Sales tax is just one of the many taxes that you may be subject to, and it is important to remember that even if a state does not have a sales tax, there may be other taxes that apply. For example, some states without sales tax still have property taxes or gas taxes.
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Which States Have the Highest Sales Tax?
The states with the highest sales tax rates are Indiana (at 7%), Mississippi (at 7%), Tennessee (at 7%), Nevada (at 6.85%), and New Jersey (at 6.625%).
What States Have Minimal Sales Tax Rates?
The states with the minimal sales tax rates are Alabama (2%), Colorado (2.9%), Hawaii (4%), Louisiana (4%), Missouri (4.23%), New Mexico (4%), New York (4%), North Carolina (3%), Oklahoma (3.25%), South Dakota (4%), and Virginia (4.15%).
Do All States Have a Sales Tax?
No, not all states have a sales tax. The five states that do not have a sales tax are Alaska, Delaware, Montana, New Hampshire, and Oregon.
Which States Have the Highest Combined State and Local Sales Tax?
The states with the highest combined state and local sales tax rates are Alabama (5.22%), Louisiana (5.07%), Colorado (4.75%), New York (4.52%), and Oklahoma (4.45%).
What Is the Average Sales Tax Rate in the United States?
The average sales tax rate in the United States is 5.09% percent. This rate is the combined state and local sales tax rate.
How Do States Without a Sales Tax Fund Themselves?
States without a sales tax generally fund themselves through other taxes, such as income taxes or gas taxes. These states often have higher tax rates in other areas to make up for the lack of sales tax revenue.
How Do I Find My State Sales Tax?
To find your state sales tax, visit the website of your state’s department of revenue. Once there, you should be able to find information on the current sales tax rate and how it is calculated. You can also usually find information on any exemptions that may apply to your purchase.
What Is The Difference Between Sales Taxes And Excise Taxes?
Sales taxes are imposed on the sale of goods and services, while excise taxes are imposed on specific items, such as gasoline or cigarettes. Excise taxes are often used to fund specific programs or projects, such as road construction.
While both sales taxes and excise taxes can be applied to purchases, they are different types of taxes. It is important to know the difference so that you can be sure you are paying the correct amount of tax on your purchase.
When it comes to taxes, there is no one-size-fits-all solution. Each state has its own unique tax laws, and it is important to research the taxes that apply to you before making a decision. However, if you are looking for a state with no sales tax, the five states mentioned above are worth considering.
Do you have any questions about the states without sales tax? Let us know in the comments below!
Elad Lev is the founder of Weshare.net – In love with words, videos and everything in between. His passion for helping people in starting a business online and teaching online is avid in every article he makes. In addition to his writing and content publishing.
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