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 fact, in Louisiana (which took the top spot in our round-up of the 10 States With the Highest Sales Tax), the average combined state and local sales tax is 9.55%, according to the Tax Foundation (opens in new tab). 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, residents are often hit hard with other taxes (like income or property taxes). After all, 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 steep as 9.9%, which is one of the highest top rates in the nation.
The information below will help you understand more about what you will really pay to live in the 5 states with no sales tax. For each state, we've also included a link to our full guide to state taxes for middle-class families (opens in new tab) to help you put these shopping destinations in perspective.
Income tax brackets are 2022 values, unless otherwise noted. Median property tax rates are for 2021, the most recent data available from the U.S. Census Bureau (opens in new tab).
Alaska
Overall Rating for Middle-Class Families: 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 $1,171 per $100,000 of assessed home value, which is above the national average.
For details on other state taxes, see the Alaska State Tax Guide (opens in new tab).
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Delaware
Overall Rating for Middle-Class Families: Most 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). The top rate is middle-of-the-road when compared to other states. Wilmington also imposes a city tax on wages.
Property Taxes: For Delaware homeowners, the median property tax rate is $533 per $100,000 of assessed home value – the lowest among the states featured on this list.
For details on other state taxes, see the Delaware State Tax Guide (opens in new tab).
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Montana
Overall Rating for Middle-Class Families: 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 $3,300 of taxable income). High: 6.7% (on more than $19,800 of taxable income).
Beginning in 2024, there will be only two tax rates: 4.7% (on up to $20,500 of taxable income for single filers and $41,000 for married couples filing jointly) and 6.5% (on taxable income over $20,500 for single filers and $41,000 for married couples filing jointly).
Property Taxes: For homeowners in Montana, the median property tax rate is $740 for every $100,000 of assessed home value.
For details on other state taxes, see the Montana State Tax Guide (opens in new tab).
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New Hampshire
Overall Rating for Middle-Class Families: Tax-friendly
State Sales Tax: None.
Income Tax Range: New Hampshire doesn't have an income tax. However, currently there's a 5% tax on dividends and interest in excess of $2,400 for individuals ($4,800 for joint filers).
The tax on dividends and interest is being phased out. The rate will be 4% for 2023, 3% for 2024, 2% for 2025, and 1% for 2026. The tax will then be repealed on January 1, 2027.
Property Taxes: The median property tax rate in New Hampshire is $1,766 for every $100,000 of assessed home value.
For details on other state taxes, see the New Hampshire State Tax Guide (opens in new tab).
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Oregon
Overall Rating for Middle-Class Families: Not tax-friendly
State Sales Tax: None.
Income Tax Range: Low: 4.75% (on up to $7,500 of taxable income for married joint filers and up to $3,750 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).
Counties and special districts can also impose local income taxes.
Property Taxes: The median property tax rate for Oregon homeowners is $823 per $100,000 of assessed home value.
For details on other state taxes, see the Oregon State Tax Guide (opens in new tab).
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