5 States With No State Sales Tax
Many people don't factor in sales taxes when they're looking at the tax-friendliness of different states.
Many people don't factor in sales taxes when they're looking at the tax-friendliness of different states. That's a mistake. Forty-five states plus the District of Columbia impose a sales tax. In addition, local sales tax is collected in 38 states. The combined state and local levy can be hefty, too. In Tennessee, for example, the average combined state and local sales tax is 9.53%, according to the Tax Foundation. That's a big bite out of your wallet every time you make a purchase.
On the flip side, for states that don't impose a sales tax — Alaska, Delaware, Montana, New Hampshire and Oregon — residents are often hit hard with other taxes (like income or property taxes). Afterall, money for roads and schools has to come from somewhere. New Hampshire, for example, has some of the highest real estate taxes in the country. In Oregon, income tax rates can be as high as 9.9%, which is the fourth-highest top rate in the nation. The information below will help you understand more about what you will really pay to live in the five states with no sales tax. For each state, we've also included a link to our full guide to state taxes to help you put these shopping destinations in perspective.
Income tax brackets are 2019 values. Property tax values are for 2018, the most recent data available.
Alaska
- Overall Rating for Taxes: Most tax-friendly
- Sales Tax: While the Last Frontier has no state sales tax (or else it wouldn't be on this list), localities can levy sales taxes, which can go as high as 7.5%. But, according to the Tax Foundation, the statewide average is only 1.76%. That's the lowest combined average rate for states that impose either state or local sales taxes.
- Income Tax Range: No state income tax.
- Property Taxes: In Alaska, the median property tax rate is $1,183 per $100,000 of assessed home value, which is above the national average.
For details on other state taxes, see the complete guide to taxes in Alaska.
Delaware
- Overall Rating for Taxes: Tax-friendly
- State Sales Tax: Delaware has no state or local sales taxes. It's interesting to note that, in response, New Jersey halved its sales tax in Salem County, which borders Delaware.
- Income Tax Range: Low: 2.2% (on taxable income from $2,001 to $5,000). High: 6.6% (on more than $60,000 of taxable income). These rates are middle-of-the-road when compared to other states.
- Property Taxes: For Delaware homeowners, the median property tax rate is $563 per $100,000 of assessed home value, which is the sixth-lowest rate in the U.S.
For details on other state taxes, see the complete guide to taxes in Delaware.
Montana
- Overall Rating for Taxes: Tax-friendly
- State Sales Tax: No state sales tax, but some resort destinations such as Big Sky, Red Lodge and West Yellowstone have local sales taxes.
- Income Tax Range: Low: 1% (on up to $3,100 of taxable income). High: 6.9% (on more than $18,400 of taxable income). Income taxes can be higher than average, but Montana does permit filers to deduct some of their federal income tax.
- Property Taxes: For homeowners in Montana, the median property tax rate is $836 for every $100,000 of assessed home value. That's a below average rate.
For details on other state taxes, see the complete guide to taxes in Montana.
New Hampshire
- Overall Rating for Taxes: Most tax-friendly
- State Sales Tax: None.
- Income Tax Range: New Hampshire doesn't have an income tax. But there's a 5% tax on dividends and interest in excess of $2,400 for individuals ($4,800 for joint filers).
- Property Taxes: The median property tax rate in New Hampshire is $2,195 for every $100,000 of assessed home value. That's the third-highest rate in the country.
For details on other state taxes, see the complete guide to taxes in New Hampshire.
Oregon
- Overall Rating for Taxes: Not tax-friendly
- State Sales Tax: None.
- Income Tax Range: Low: 5% (on up to $7,100 of taxable income for married joint filers and up to $3,550 for single filers). High: 9.9% (on more than $250,000 of taxable income for married joint filers and more than $125,000 for single filers). Residents can deduct some of their federal income tax from state taxable income. For 2019, the subtraction is limited to $6,800 ($3,400 if married filing separately). There are also payroll taxes in the Tri-County Metropolitan Transportation District (TriMet) and the Lane County Mass Transit District.
- Property Taxes: The median property tax rate for Oregon homeowners is $1,006 per $100,000 of assessed home value, which is close to the national average.
For details on other state taxes, see the complete guide to taxes in Oregon.
