Have you ever paid more than the actual price of an item when shopping online? If you don’t live in one of the five states with 0% sales tax: Alaska, Delaware, Montana, Oregon, and New Hampshire – chances are, you have. The additional cost consumers pay apart from the item’s price is the sales tax.
Paying sales tax is always hard for consumers, but it is the state’s lifeblood. On the other hand, businesses find sales tax to be both an obligation and a headache. Fortunately, in states without sales tax, purchasers are exempted from paying additional sales tax when buying goods or services.
Before getting into the nitty gritty of states with no sales tax, you should also ensure you understand ecommerce sales tax.
Let’s learn about the US states with no sales tax.
Which States Do Not Have Sales Tax?
Five of the 50 states in the USA do not impose a state sales tax. Four states do not have state or local sales tax, while one has local tax impositions. Here are the details of these states:
1. Alaska
Alaska
does not impose a statewide general sales tax on goods and services. However, local governments are allowed to levy their own sales taxes, which means the rates vary across cities. As of January 1, 2024, the average local sales tax rate in Alaska is about 2.54%.
The City of Utqiagvik imposes a 10% sales tax. Be aware that the sales tax rates in Seldovia, Sitka, and Skagway can change throughout the year. Utilize Alaska’s
Mapping, Analytics, and Data Resources to find detailed information on various local tax rates. For more information, visit the
Alaska Department of Revenue.
2. Delaware
Delaware neither imposes state nor local sales tax; therefore, the Delaware sales tax rate is 0%.
While consumers may be exempt from paying sales tax in Delaware, business owners are subject to a gross receipts tax. This tax is levied only on businesses and not consumers. The rate of gross receipts tax varies according to the type of business activity.
3. Montana
Although Montana, known as the “Treasure State,” is subject to various types of taxes, Montana has no state or local government sales tax. However, residents may still have to pay some local option taxes on goods and services. As a popular tourist destination, Montana also imposes resort and property taxes.
4. Oregon
Oregon does not impose sales tax on goods and services. This makes Oregon a no-sales tax state, with Oregon’s sales tax rate at 0%. This means $50 will cost you at most $50 in Oregon (what a treat!). Moreover, there is no local sales tax imposition either.
5. New Hampshire
The New Hampshire state tax rate is 0%, with no sales tax levied by the state or local government. Consumers can purchase without paying the additional cost.
Since there is no sales tax, the government charges a high property tax to compensate for the revenue. The state also has other tax impositions, such as excise, real estate, corporate, and personal state income tax.
States with No Local Sales Tax
Besides Delaware, Montana, New Hampshire, and Oregon, some other states do not levy a local sales tax. However, they have state sales tax requirements. The following is the list of states where the local sales tax rate is 0%.
- Connecticut
- District of Columbia
- Indiana
- Kentucky
- Maine
- Maryland
- Massachusetts
- Michigan
- Rhode Island
States with Low General Sales Tax Rates
Not a resident of the states with zero sales tax? You can still have some edge with low sales tax rates. The following are the top states with the lowest state-wide sales tax rates.
- Colorado – 2.9%
- Alabama – 4%
- Georgia – 4%
- Hawaii – 4%
- New York – 4%
- Wyoming – 4%
Want to Learn More? Connect with TaxHero.
Sales tax is inevitable for businesses, so it is better to learn about it. Contact certified public accountants at TaxHero by booking a call and let the professionals assist you with everything related to sales tax.
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