Which States Have the Lowest Sales Tax?

Sales taxes can significantly impact the cost of goods and services, whether you’re making a small or large purchase. As of 2024, five states have no state sales tax, offering some of the lowest rates in the country. Each of these states, however, may have individual municipalities that impose excise taxes, income taxes, and taxes imposed on tourist locations. For example, the sales tax in New York state is 4%, but New York City has additional taxes, increasing the rate to 8.875%. 

Sales tax laws in the United States are not subject to federal regulation, and each state controls its base sales tax. Sales taxes are imposed on retail transactions and certain services.

Key Takeaways

• Five states—Alaska, Delaware, Montana, New Hampshire, and Oregon—do not impose a state sales tax.
• California has the highest state sales tax rate in the U.S. at 7.25%.
• Some states without a sales tax may still impose local or excise taxes on specific goods, such as alcohol or tobacco.
• States without sales taxes may have higher property or income taxes to generate revenue.

1. Alaska

While there is no imposed state sales tax in Alaska, local governments can levy taxes on certain goods and services. The sales tax is 5% in Juneau, while Anchorage and Fairbanks do not have sales taxes, and the average rate statewide for municipalities is 1.76%.

2. Delaware

Instead of imposing a sales tax, Delaware assesses a gross receipts tax on certain businesses. Delaware makes extensive use of excise taxes levied as a flat rate per gallon on goods such as motor fuel and alcohol.

The state has relatively high corporate income taxes and imposes additional taxation on specific distributors of goods and services, allowing the state to have a 0% property tax and sales tax.

7.25%

The sales tax in California is the highest tax imposed by any state in America. Puerto Rico, which is a non-state territory, levies an 11.5% sales tax.

3. Montana

Overall, the state of Montana levies a 0% sales tax. However, localities that attract many tourists charge low sales taxes of up to 3%, referred to as a resort and local option tax, to support infrastructure frequented by tourists. To qualify for this tax, a city must have a permanent population of under 5,500, and these locations include Whitefish, Red Lodge, Big Sky, and West Yellowstone.

4. New Hampshire

New Hampshire does not impose a state sales tax; however, an 8.5% meals and rentals tax applies to prepared meals in restaurants, short-term room rentals, and car rentals. A timber tax of 10% of the value of the wood is imposed at the time of cutting, excluding cutting for personal use.

Local governments cannot declare sales taxes due to the statewide 0% sales tax, so excise taxes are imposed on tobacco and electricity sales.

5. Oregon

With a zero statewide sales tax, municipalities in Oregon impose taxes on certain goods such as tobacco and prepackaged alcoholic beverages. Some local governments implement sales taxes, such as Ashland’s 5% tax on prepared foods.

Oregon has a higher personal income tax rate than other states, but it does not tax intangible properties like stock accounts and bonds.

Other States With Minimal Sales Tax Rates

While five states have no sales tax, 11 other states that have relatively low sales tax rates, ranging from 2% to 5%.These include:

• Alabama (4%)
• Colorado (2.9%)
• Georgia (4%)
• Hawaii (4%)
• Louisiana (4.45%)
• Missouri (4.23%)
• New York (4%)
• North Carolina (4.75%)
• Oklahoma (4.5%)
• South Dakota (4.5%)
• Wyoming (4%)

Which U.S. States Have No Sales Tax?

Alaska, Delaware, Montana, New Hampshire, and Oregon are the five states without a sales tax.

What Is the Most Tax-Friendly State?

Various states have favorable tax treatments, from sales tax to income tax. For example, Delaware has no sales tax and has the country’s seventh-lowest median property tax rate. Like Delaware, Alaska has no state sales tax, although Juneau has a 5% local sales tax rate. In addition, there’s no income tax across the state. Meanwhile, Wyoming offers low sales tax, property tax, and no income tax—making it one of the most tax-friendly states in America.

Which U.S. States Have the Highest Sales Tax?

California has the highest sales tax in the nation, at 7.25%. Following California are Indiana, Mississippi, Rhode Island, and Tennessee, all with 7% sales tax rates.

Which States Have the Highest Combined State and Local Sales Tax?

The states with the highest combined state and local sales taxes are Alabama (9.25%), Arkansas (9.46%), Louisiana (9.55%), Tennessee (9.55%), and Oklahoma (8.98%).

The Bottom Line

State tax laws vary widely across the U.S., and sales tax is just one factor to consider when evaluating a state’s tax burden. While states like Delaware and Oregon benefit from low or no sales taxes, they often offset this with higher income or property taxes. On the other hand, states like California and New York have higher sales tax rates, but they often provide more extensive public services in return.

Understanding the overall tax landscape—including state, local, and excise taxes—can help you plan your finances and budget for the actual cost of living in different states.