Taxes State Taxes 5 US States Without a Statewide Sales Tax By Tonya Moreno, CPA Updated on January 24, 2023 Reviewed by Michelle P Scott Fact checked by Hilarey Gould In This Article View All In This Article States With No State Sales Tax States With Low Sales Tax Rates Combined State and Local Taxes Exemptions From State Sales Taxes What State Sales Tax Means for You Frequently Asked Questions (FAQs) Photo: The Balance Key Takeaways There are five U.S. states without a statewide sales tax: Alaska, Oregon, Montana, Delaware, and New Hampshire.Most states allow local counties and cities to impose their own sales tax.Some states with no sales tax may impose other taxes to make up for it.States with a sales tax may not charge it on specific items like food or clothing. Almost every state in the country has a sales tax. There are 45 states plus Washington, D.C. that impose sales taxes. State sales tax rates range from a high of 7.25% in California to 2.9% in Colorado. The only five with no state sales tax are Alaska, Oregon, Montana, Delaware, and New Hampshire. 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 state sales taxes work, and which states do and don't impose them. States With No State Sales Tax Only five states don't impose any sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon. Sales taxes are actually "sales and use" taxes. If a sales tax isn't charged on a purchase, the buyer may be charged a 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. 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%. It's not technically charged to consumers, but its effect nonetheless can be felt in the sales prices of goods and services. States With Low Sales Tax Rates Among states that do have a sales tax, some are less significant than others. Thirteen states impose sales tax rates of 5% of the purchase price or less, including five states where the tax is 4%: Colorado: 2.9%Alabama: 4%Georgia: 4%Hawaii: 4%New York: 4%Wyoming: 4%Missouri: 4.225%Louisiana: 4.45%Oklahoma: 4.5%South Dakota: 4.5%North Carolina: 4.75%New Mexico: 5%North Dakota: 5%Wisconsin: 5% New Mexico dropped its sales tax (in the form of a gross receipt tax) to 5% on Jan. 1, 2023, and as of July 1, 2023, the state's gross receipt tax drops to 4.875%. The rest of the states impose a sales tax that ranges from 5.5% to California's 7.25%. Combined State and Local Taxes Thirty-eight states collect sales tax at both the state and local levels. Connecticut, Delaware, Indiana, Kentucky, Maine, Maryland, Massachusetts, Michigan, Montana, New Hampshire, Oregon, Rhode Island, and Washington, D.C. do not permit local sales taxes. Important 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%, 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 state have the highest rates when state and local taxes are added together. These combined rates range from 9.24% in Alabama to 9.55% in Louisiana and Tennessee. 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, including: Arkansas: 0.125%Missouri: 1.225%Tennessee: 4%Utah: 3%Virginia: 1% All states except Illinois exempt prescription drugs from state and local sales taxes. Prescription drugs are subject to a 1% sales tax in Illinois. Illinois also had a 1% tax on food, but it suspended it through June 1, 2023. A handful of states also exempt non-prescription drugs from sales taxes, including: FloridaMarylandMinnesotaNew JerseyNew YorkPennsylvaniaTexasVermontVirginiaWashington, D.C. What State Sales Tax Means for You Businesses, governments, and consumers adjust their tax rates when combined tax rates become prohibitive. For example, it's not uncommon for New Jersey residents to cross the border into Delaware to shop—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 is located at the state line—from collecting the entirety of its 6.625% sales tax. New Jersey doesn't waive the tax for Salem County residents entirely, however. It reduces it by half in an attempt to lure more consumers into doing their shopping at home. Tip Consider sales taxes in your state and area and learn how you can save money by buying items in other states. Frequently Asked Questions (FAQs) How do states without sales tax make money? States without a 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? You can find your state's sales tax rate on your state's department of taxation or revenue website. You may also be able to see what the sales tax rate is by looking at a receipt after making a purchase in your state. What is the difference between sales taxes and excise taxes? Sales taxes and excise taxes are both a type 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. Federation of Tax Administrators. "State Sales Tax Rates and Food and Drug Exemptions." Missouri Department of Revenue. "Sales/Use Tax." Delaware Division of Revenue. "Gross Receipts Tax FAQs." New Mexico Taxation and Revenue. "Gross Receipts Tax and Compensating Tax Rate Scheduling." Tax Foundation. "State and Local Sales Tax Rates, 2022." New Jersey Treasury Division of Taxation. "Salem County Sales Tax Reduced Rate Tax Filers." IRS. "Excise Tax."