In this world, only death and taxes are guaranteed. And in some cases, not even that: While a majority of states charge income tax and property tax, a handful don't levy sales tax.
In some cases, local jurisdictions are allowed to implement their own sales tax. In others, the difference is made up by higher duties and tariffs in other areas.
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The states with no sales tax
Forty-five states and the District of Columbia collect statewide sales taxes, wth a local sales tax imposed in 38 states.
In fiscal year 2022, state retail sales taxes yielded $444.5 billion in revenue and accounted for a little more than 31% of state tax collections, according to the Tax Foundation, averaging $1,334 per person
While the states below do not charge sales tax, some counties within them charge a local sales tax. In addition, some states will have sales tax "holidays" to spur retail business.
1. Alaska
Alaska is the most tax-friendly state in the country, with no sales or income tax. More than 100 local jurisdictions levy local sales tax, however, and more than half of them also require remote sellers to collect local sales taxes if they have economic nexus with the state.
2. Delaware
The First State doesn't charge state sales tax, although there is a gross sellers tax that applies to businesses based on the amount of total sales from goods and services sold.
3. Montana
Montana does not have a state sales tax, although municipalities that attract tourists, like Big Sky, have the right to implement local sales taxes. .
4. New Hampshire
The Granite State has also opted out of collecting sales taxes and has a very limited income tax that only applies to interest (like from a high-yield savings account) and dividend income (like from stock purchases). In exchange, it has one of the highest property tax rates in the country.
5. Oregon
There is no sales tax in Oregon unless you purchase a new car outside of the state. In that instance, you must pay an excise tax to register the vehicle.
Who collects sales tax?
Typically, retailers are responsible for collecting sales tax at the point of sales and then sending it to their state's department of revenue. This is true whether it's a big chain store or a mom-and-pop operation.
Many online vendors have designed their websites to charge sales tax according to the state the buyer lives in.
How do you calculate sales tax?
The formula for sales tax involves converting the percentage into a decimal and then using that as a multiplier on the price of the item or items.
A 10% sales tax, for example, means multiplying the ticket price by .010: On a $100 pair of sneakers, a 10% sales tax would come to $10.
Sales tax FAQs
What states don't charge sales tax?
Alaska, Delaware, Montana, New Hampshire and Oregon are the five U.S. states that do not levy a statewide sales tax. Individual municipalities may charge local sales tax in some areas, and property and income taxes may be higher in these states to offset the revenue loss.
Which state has the highest sales tax?
At 10.116%, Louisiana has the highest average combined state and local sales tax in the U.S. The statewide sales tax is 5%, coupled with an average local sales tax of 5.116% — although some parishes pay a hefty 12%. Strictly looking at statewide sales tax, however, California takes the crown with a 7.25% tax on sales of most products except for prescriptions, diapers, feminine hygiene products and most groceries.
Are there states with no income tax?
There are eight states without income tax: Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington and Wyoming. New Hampshire only taxes income generated from interest and dividends.
Are there states that don't charge property tax?
No, all 50 U.S. states levy property taxes, which are critical for funding schools, libraries, police departments and other services.
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