Taxes State Taxes The 5 U.S. States Without a Statewide Sales Tax By Tonya Moreno, CPA Tonya Moreno, CPA Tonya Moreno is a licensed CPA with about 15 years of diversified accounting, tax, and management experience. She is an expert in the field who has worked as a tax accountant for many large, multi-state corporations. She not only has experience in preparing state and federal tax returns, but has also dealt with complex tax issues with large amounts of money at stake. Today, Tonya serves as the chief financial officer of Maslonka Powerline Services in Spokane, Washington. learn about our editorial policies Updated on May 18, 2022 Reviewed by Michelle P Scott Reviewed by Michelle P Scott Michelle P. Scott is a New York attorney with extensive experience in tax, corporate, financial, and nonprofit law, and public policy. As General Counsel, private practitioner, and Congressional counsel, she has advised financial institutions, businesses, charities, individuals, and public officials, and written and lectured extensively. learn about our financial review board Fact checked by Jess Feldman Fact checked by Jess Feldman Website Jess Feldman has been writing and editing for over five years, and currently focuses on financial topics. As an associate editor on the special projects team, she writes, edits, and develops tentpole brand projects across a variety of platforms. Since joining the financial space, she's developed an interest in finding ways to make the complex topic of finance relatable to younger generations, specifically via TikTok. Jess has a journalism degree from the University of Maryland Philip Merrill College of Journalism. learn about our editorial policies Share Tweet Pin Email In This Article View All In This Article States Without a Sales Tax States With Low Sales Taxes Combined State and Local Taxes Exemptions From State Sales Taxes What This Means for You Frequently Asked Questions Photo: The Balance Almost every state in the country has a sales tax—45 of them plus the District of Columbia. Rates range from a high of 7.25% in California to just 2.9% in Colorado as of 2022. Most states—38 in all—also allow local counties, cities, and municipalities to add their own separate sales and use taxes to the state rate, but there are a few consumer-friendly exceptions. Learn more about how sales taxes work, and which states do and don't impose them. States Without a Sales Tax Sales taxes are actually "sales and use" taxes. If sales tax isn't charged on a purchase, the buyer may be charged use tax, which is a tax on the use, storage, or consumption of an item. Sales tax is remitted by the seller, while use tax is remitted by the buyer. Only five states don't impose any sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon. Alaska is often added to this list, too; however, the state's rules are a bit complex. Delaware doesn't have a sales tax, but it does impose a gross receipts tax on businesses. Delaware's gross receipts tax is a percentage of total receipts from goods sold and services rendered within the state, and it ranges from 0.0945% to 0.7468%, as of February 2022. It's not technically charged to consumers, but its effect can nonetheless be felt in the sales prices of goods and services. States With Low Sales Taxes Among states that do have a sales tax, some are less significant than others. Thirteen states impose taxes of 5% of the purchase price or less, including five states where the tax is just 4%. The rest of the states all impose a sales tax that ranges from 5.5% to California's 7.25%. As of 2022, they include: Alabama: 4%Colorado: 2.9%Georgia: 4%Hawaii: 4%Louisiana: 4.45%Missouri: 4.225%New York: 4%North Carolina: 4.75%North Dakota: 5%Oklahoma: 4.5%South Dakota: 4.5%Wisconsin: 5%Wyoming: 4% New Mexico inches over the 5% line at 5.125%. Combined State and Local Taxes Thirty-eight states collect sales tax at both the state and local levels as of 2022. Only Connecticut, Delaware, Indiana, Kentucky, Maine, Maryland, Massachusetts, Michigan, Montana, New Hampshire, Oregon, Rhode Island, and the District of Columbia do not permit local sales taxes. Note Montana, New Hampshire, and Oregon are the only states that truly don't impose any sales taxes or extra taxes that can trickle down to the consumer. The local sales tax rate in some states is pretty negligible, however. Idaho's average is just 0.02% as of 2022, and Mississippi's average is 0.07%. And when all of New Jersey's local taxes are averaged out, it actually works out to a negative number: -0.03%. Among states that do allow for a combined sales tax, Alabama, Arkansas, Louisiana, Tennessee, and Washington have the highest rates when state and local taxes are added together. These combined rates range from 9.24% in Alabama up to 9.52% in Louisiana as of 2022. On the other end of the spectrum, Hawaii, Wisconsin, and Wyoming have the lowest combined rates: 4.44% in Hawaii, 5.22% in Wyoming, and 5.43% in Wisconsin. Exemptions From State Sales Taxes Many states have exemptions from specific tax items. Many states are sales-tax-exempt for food, for example, but some keep food as a tax entity. Some states charge a lesser sales tax on food items as of 2022, including: Arkansas: .125%Illinois: 1%Missouri: 1.225%Tennessee: 4%Utah: 3%Virginia: 2.5% All states except Illinois exempt prescription drugs from state and local sales taxes. Prescription drugs are subject to a 1% sales tax in Illinois. A handful of states also exempt non-prescription drugs from sales taxes, including: District of ColumbiaFloridaMarylandMinnesotaNew JerseyNew YorkPennsylvaniaTexasVermontVirginia What This Means for You Businesses, governments, and consumers adjust their tax rates when combined tax rates become prohibitive. It's not uncommon for New Jersey residents to cross over the border into Delaware to shop, for example—it's often cheaper there, even with that gross receipts tax at play. In fact, New Jersey has taken steps to address this, exempting Salem County—which abuts the state line—from collecting the entirety of its 6.625% sales tax. The state doesn't waive the tax for these residents entirely, however. It reduces it by half in an attempt to lure more consumers into doing their shopping at home. Frequently Asked Questions How do states without sales tax make money? States without sales tax still must generate revenue for government services, and they will offset the lack of sales tax revenue with other taxes. In sales tax-free states, you'll usually find that business, income, or excise taxes are higher than in states with sales tax. How do I find my state sales tax? The Tax Foundation provides a list of state and average local sales tax rates for reference. To make sure you have the most current info for your state and local taxes, be sure to check with your state and local tax agencies. What is the difference between sales taxes and excise taxes? Sales taxes and excise taxes are both types of consumption tax. Unlike sales taxes, which apply broadly to most goods, excise taxes only apply to specific products such as tobacco, alcohol, and gasoline. These are often known as "sin taxes" because they are typically levied on goods considered socially harmful. Was this page helpful? Thanks for your feedback! Tell us why! Other Submit Sources The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy. Colorado Department of Revenue. "Sales Tax Rate Changes." California Department of Tax and Fee Administration. "Detailed Description of the Sales & Use Tax Rate." Missouri Department of Revenue. "Sales/Use Tax." Delaware Division of Revenue. "Gross Receipts Tax FAQs." Tax Foundation. "State and Local Sales Tax Rates, 2022." Federation of Tax Administrators. "State Sales Tax Rates and Food & Drug Exemptions." New Jersey Treasury Division of Taxation. "Salem County Sales Tax Reduced Rate Tax Filers."