Five states have no statewide sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon. They’re sometimes remembered by the acronym NOMAD. Each one funds its government through a different mix of income taxes, property taxes, business taxes, or targeted levies on things like lodging and restaurant meals, so a zero at the register doesn’t mean a lower overall tax burden.
How Each of the Five States Makes Up the Revenue
The absence of a sales tax says nothing about what you’ll pay in total. What each state charges instead is the part that matters if you’re comparing places to shop, retire, or run a business.
Alaska collects no state-level sales tax, but it gives cities and boroughs broad authority to impose their own. That local layer is significant enough to deserve its own section below.
Delaware uses a gross receipts tax paid by businesses on their total revenue rather than a tax collected from shoppers at checkout. Rates vary by business category.1Delaware Division of Revenue. Gross Receipts Tax FAQs For consumers, the shelf price is the final price.
Montana runs on a graduated individual income tax. For tax year 2026, the top rate is 5.65% after recent legislative changes reduced rates from earlier years.2Montana Department of Revenue. HB337: 2026-2027 Montana Individual Income Tax Changes
New Hampshire has neither a broad-based income tax nor a sales tax. It leans heavily on property taxes and an 8.5% Meals and Rooms tax that applies to restaurant meals, hotel stays, and motor vehicle rentals.3New Hampshire Department of Revenue Administration. Meals and Rooms (Rentals) Tax Retail shopping is tax-free; property tax bills tend to run well above the national average.
Oregon relies on personal income taxes for roughly 86% of its general fund revenue in the current biennium.4State of Oregon. Blue Book – Government Finance: Taxes There’s no state or local sales tax of any kind, but the income tax rates are among the highest in the country.
No state is truly tax-free. The revenue comes from somewhere, and the somewhere shapes who bears the load. Oregon shifts it heavily onto earners. New Hampshire pushes it onto property owners and travelers. Delaware puts it on businesses at the top of the funnel. Understanding the swap is the point.
Local Sales Taxes Can Still Apply
A zero percent state rate doesn’t guarantee a zero on your receipt. Alaska is the clearest case. The state collects nothing, but municipalities have authority to impose their own sales taxes, and some do so at rates as high as 7.85%.5Department of Commerce, Community, and Economic Development. Alaska Sales Tax Information Shop in Anchorage and you’ll pay nothing. Shop in Homer and you’ll pay close to 8%.
Montana has a narrower version of the same wrinkle. There’s no general sales tax, but certain resort communities, including Whitefish, Big Sky, and West Yellowstone, impose a local resort tax of up to 3% on lodging, restaurants, bars, and recreational facilities.6Montana Department of Revenue. Local Resort Tax You won’t see it at a hardware store. You will see it on a dinner tab in ski country.
Delaware, New Hampshire, and Oregon are the cleanest of the five. None of them authorize local governments to add their own sales taxes, so the price on the shelf is the price you pay.7Tax Foundation. State and Local Sales Tax Rates, 2026
Use Tax on Purchases from a No-Tax State
This is the part most shoppers miss. If you live in a state that charges sales tax and you buy something from a seller that doesn’t collect it, you technically owe your home state a “use tax” on that purchase. The rate matches your state’s sales tax rate. The purpose is to keep residents from avoiding tax simply by crossing a border or buying from an out-of-state vendor.
A weekend trip to New Hampshire for a new television, a piece of furniture picked up in Delaware, a laptop bought on an Oregon vacation: all of them are use tax situations if your home state taxes those goods. Most states include a use tax line on the annual income tax return where you’re expected to report untaxed purchases and pay the difference. If you paid some sales tax to another state, you can generally credit that amount against what you owe. Pay 4% somewhere else when your home rate is 6%, and you owe the remaining 2%.
Enforcement against individual consumers has historically been light. The obligation is still real, and for businesses buying inventory, equipment, or supplies from out-of-state vendors, use tax audits are common and the penalties add up quickly.
Online Shopping Is No Longer a Workaround
Buying online from a retailer based in a no-tax state used to be a way to avoid sales tax at home. That path has mostly closed. In South Dakota v. Wayfair, the Supreme Court overturned the old rule requiring a seller to have a physical presence in a state before that state could require sales tax collection. Under the current standard, a state can require any seller with enough economic activity in the state, a “substantial nexus,” to collect and remit tax.8Supreme Court of the United States. South Dakota v. Wayfair, Inc.
Every state with a sales tax has now enacted economic nexus laws. About 40 states set the threshold at $100,000 in annual sales into the state; a handful set the bar higher, at $250,000 or $500,000. Once a seller crosses the line, they collect tax on orders shipped to customers in that state no matter where the seller sits.
Marketplace facilitator laws go a step further and require platforms like Amazon, Etsy, and Walmart Marketplace to collect and remit sales tax on behalf of the third-party sellers using them. Every state with a sales tax has some form of this rule. The practical result: most online purchases now include sales tax automatically, even when the seller itself is too small to cross the economic nexus threshold. Ordering from a business located in Delaware or Oregon doesn’t change what your home state expects.
Choosing Where to Shop or Live
If you’re weighing a move, the sales tax question is the smallest part of the answer. What replaces the sales tax in each of the five states does more to shape your annual tax bill than the zero at the register. High earners feel Oregon’s income tax; homeowners feel New Hampshire’s property tax; travelers to Montana’s resort towns pay the local levy on the meals and lodging that drew them there in the first place. If you’re just shopping across a border for a big-ticket item, the tax you avoid at the register may be tax you owe your home state on the use tax line of next April’s return. The savings are real in some cases and imaginary in others, and the difference is in the details of what you buy, where you live, and what your state does with the information you report.