5 US States Without Sales Tax in 2025

Sales tax is one of the basic forms of collecting revenue in the United States. While most states have both a State tax and Local tax on goods and services, there are five states that do not charge a state level sales tax in 2025.

These states are Alaska, Oregon, Montana, New Hampshire, and Delaware. These states offer various benefits to businesses and consumers.

If you are a shopper hoping to save money or an Entrepreneur picking a state for incorporation, knowing these states will help a lot.

🏔️ 1. Alaska

• Statewide Sales Tax: ❌ None
• Local Sales Tax: ✅ Yes, up to 7.5% depending on the municipality
• Other Relevant Taxes: Excise taxes (fuel, alcohol, tobacco), hotel/lodging taxes

Overview

Alaska, similar to Wyoming, is often considered a tax haven. While there is no state level sales tax, there are many boroughs and municipalities that enforce local sales taxes.

Around 89 jurisdictions in Alaska do so, with 1% to 7.5% rates.

Why It Matters

For consumers, certain areas in Alaska can feel like a tax-free zone whereas other areas still resemble a sales-tax state. Tourists can also encounter taxes related to lodging and alcohol in places that cater to tourists.

From a business perspective, Alaska may be appealing because the state has no income or sales tax. However, businesses operating in multiple jurisdictions face the challenge of local tax tracking which is often complicated and riddled with more variety than standardization seen in other regions.

Key Consideration

Businesses must take into consideration economic nexus. Selling into other states as a tax-free Alaska based company comes at the cost of having to collect and remit sales taxes.

💼 2. Delaware

• Statewide Sales Tax: ❌ None
• Local Sales Tax: ❌ None
• Business Taxation: ✅ Gross Receipts Tax on business revenue

Overview

Delaware enjoys the perk of having no state or local sales tax which makes it a shopper’s dream and a preferred state for business incorporation.

However, instead of traditional sales tax, the state imposes gross receipts tax on businesses which is essentially a tax on total sales revenue of a company regardless of whether it turns a profit or not.

Why It Matters

Purchasing goods in Delaware offers consumers tax-free purchases which is a big advantage for high-ticket items like electronics, vehicles, or jewelry. Many individuals from bordering states travel to Delaware specifically for tax-free shopping.

Delaware’s legal environment for businesses, ease of formation, strong privacy protections, and over 60% of Fortune 500 companies being incorporated there makes it very attractive for businesses.

Key Consideration

The lack of sales tax could be beneficial, but gross receipts tax could be a concerning factor for high revenue, low margin businesses such as wholesalers or retailers. Before incorporating or expanding to Delaware, it is important to understand how this tax will influence business operations.

🏞️ 3. Montana

• Statewide Sales Tax: ❌ None
• Local Sales Tax: ✅ Only in designated resort areas capped at 3%
• Other Relevant Taxes: Income tax, property tax, fuel tax

Overview

Montana is one of the few states that do not have a general sales tax and does not plan on adopting one. However, certain resort towns that are frequented by tourists are allowed to charge a local option sales tax which ranges from 1% to 3% depending on the locality.

Why It Matters

For most residents and businesses, Montana has a retail environment that is truly tax-free. It is a great state for shoppers in the market for something big. Not having a sales tax minimizes the workload for local businesses as well.

However, tourists in areas like Whitefish or Big Sky may encounter resort taxes on lodging, prepared meals, or recreational activities.

Key Consideration

If you are a business located in or around a resort area, you will have to incorporate the resort sales tax into your pricing and reporting. For eCommerce businesses, selling from Montana does not exempt you from collecting taxes on out of state customers if economic nexus thresholds are reached in their states.

🗻 4. New Hampshire

• Statewide Sales Tax: ❌ None
• Local Sales Tax: ❌ None
• Other Relevant Taxes:
  • 8.5% Meals & Rentals Tax
  • 5% Interest & Dividends Tax (phasing out)
  • Excise taxes on gasoline, tobacco, etc.

Overview

New Hampshire takes pride in having no sales tax or income tax. This reputation has served as a lasting benefit for both shoppers and small business owners. However, the state does collect revenue through certain taxes like the Meals and Rentals Tax that applies to hotel and restaurant meals.

Why It Matters

Residents from Massachusetts and Maine frequently travel across the border to New Hampshire for tax-free shopping, making it an economic win for them. Retailers also have to pay lower total transaction costs.

New Hampshire is appealing to businesses because it has a straightforward tax system, although some service providers are burdened with collecting the Meals & Rentals Tax.

Key Consideration

New Hampshire’s no income and sales tax reputation is even bolstered by the fact that the 5% Interest & Dividends Tax is being phased out and will be eliminated by 2027. New Hampshire is still burdened with some industry specific taxes that can be quite high depending on the line of business.

🌲 5. Oregon

• Statewide Sales Tax: ❌ None
• Local Sales Tax: ❌ None (with very rare exceptions)
• Other Relevant Taxes:
  • Corporate Activity Tax (CAT)
  • Excise taxes on fuel, alcohol, cannabis

Overview

Oregon stands out for having no state or local sales tax, and voters have rejected attempts to implement one nine times. Instead, the state has to rely on income taxes and the newly introduced Corporate Activity Tax (CAT) from 2020.

Why It Matters

For major purchases, Oregon is a true retail paradise and has positioned itself as a shopping hub for tourists from neighboring states like Washington, which is one of the highest sales tax states in the country.

Businesses in Oregon no longer have to deal with the complex issues of sales tax collection, which greatly eases operations, particularly for smaller retailers and service providers. However, the Corporate Activity Tax applies to businesses with over $1 million in Oregon-sourced revenue and is charged a flat plus marginal rate.

Key Consideration

While retail shopping may be easier, the corporate retail tax remains a burden, as does the high state income tax.

🧾 Understanding the Broader Impact

✅ For Consumers

Lower Total Costs: Notably on high-value items such as electronics, appliances, and vehicles.

Shopping Tourism: People frequently travel to these states for the specific purpose of shopping tax free.

Budget Tracking: No hidden fees or surcharges, what you see is what you pay.

✅ For Businesses

Easier Compliance: No need to deal with confusing state sales tax regulations.

Competitive Pricing: Businesses are able to pass savings to customers or keep better margins.

Delaware and New Hampshire are especially attractive for legal and tax strategies regarding incorporation.

🚨 Main Warning Remarks

No sales tax doesn’t mean no taxes, gross receipts, excise, income, and other targeted taxes may apply.

Due to the economic nexus laws after the Wayfair decision in 2018, even businesses in these tax-free states might have to collect sales tax from customers in other states.

📊 Quick Comparison Table (Expanded)

✏️ Final Thoughts

Living, shopping, or doing business in one of the five states without a sales tax in 2025 can be helpful, but there are pros and cons to consider.

Consumers will have an easier time saving money during purchases and businesses will be able to operate more efficiently. However, these states still pay for services with gross receipts, income, and excise taxes.

Be it an individual contemplating a large purchase or a business owner planning key initiatives, grasping the complete tax landscape is important.

❓ Frequently Asked Questions (FAQs)

1. Are these five states completely tax-free?

No, as these states do not have a sales tax, it doesn’t make them tax free. For instance:

• Delaware has a gross receipts tax on businesses.
• Alaska has local sales taxes and excise taxes.
• Montana has resort-area taxes in certain tourist towns.
• New Hampshire has meals and rental taxes.
• Oregon has a Corporate Activity Tax on businesses.

Each state has its unique tax system to provide public services.

2. Can I shop from these states and not pay sales tax?

Not really. Most states have what is called an economic nexus tax. This was put in place after the Supreme Court ruling of Wayfair vs. South Dakota in 2018. This means:

• For online sellers, it didn’t matter where the seller was located. They now have to collect taxes based on where the buyer lives.
• Even if the seller is located in a tax-free state, like Oregon or Montana, if the buyer lives in a state that charges sales tax, then taxes will be charged.

3. Which state is best for incorporating a business if I want to avoid sales tax?

This answer varies, depending on your business model.

• If you are looking for good legal protections along with flexible corporate laws, your best option will be Delaware.
• New Hampshire and Oregon are great options for retail or service based businesses that operate locally.
• Montana is great for people selling physical products or needing to register a vehicle.
• Remote or resource based businesses may do well in Alaska, although it is very remote.

However, you must consider other factors like where your customers are, nexus limits, and income taxes.

4. Do tourists get any perks in these states for no sales tax?

Yes, but with some exceptions.

In these five states, tourists can shop and save a lot of money. But:

• Some towns in Alaska and Montana have local or resort-area taxes.
• In New Hampshire, meals and lodging are taxed at an 8.5% rate.
• In Oregon, businesses might raise their prices due to the Corporate Activity Tax which means they could be using tax-free prices.

Tourists will still find these states very appealing when shopping for big items like electronics and jewelry.

5. What about these states in the future?

As of 2025, there is no serious legislative movement in any of these five states to implement a statewide sales tax. In fact:

• Oregon voters have rejected sales tax proposals nine times.
• New Hampshire’s political culture strongly opposes broad-based taxes.
• Montana and Delaware have also consistently resisted sales tax measures.

It is possible that Oregon’s voters might change their minds in the future, but as of now, these states are unlikely to adopt a sales tax anytime soon.