Alaska, Delaware, Montana, New Hampshire, and Oregon don't impose any direct state sales taxes, as of 2020, while New Mexico charges sales taxes, but not on cars. "Local Resort Tax." Receive full access to our market insights, commentary, newsletters, breaking news alerts, and more. Juneau’s sales tax is 5%. Additionally, many states with low sales tax have higher income taxes. State sales tax: 5%; State and local property taxes per capita: $1,621; Tennessee. Even though there may be drawbacks, the five states that don't have sales tax are Alaska, Delaware, Montana, New Hampshire and Oregon. Delaware Paul Brady Photography / Shutterstock.com. Tennessee, on average, has the highest sales tax at 9.44%. But, in five lucky states, residents are exempt from sales tax (for the most part). No conditions - Delaware is sales tax free! He also needs to be careful about what city he chooses in Alaska. Federation of Tax Administrators.   There is a tax of $2.10 per pack of cigarettes. 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.   Delaware's 0% sales tax has made the state attractive for art dealers and collectors who wish to escape hefty sales tax bills on paintings and related pieces. Alaska. Accessed Jan. 22, 2020. Alaska: 0.000%. Accessed Jan. 22, 2020. Government of Delaware. Some states are more lax on their minimum sales tax requirements, and a handful don’t charge sales tax at all. Additionally, its average personal income per capita is on the lower side - at around $42,917, according to USA Today. Accessed Jan. 22, 2020. States often treat the sale of software differently than the sale of digital products. "Rental Vehicle Tax (RVT)." "State policymakers looking to make their tax codes more equitable should consider eliminating the sales taxes families pay on groceries if they haven’t already done so, or at least reducing these taxes or partially offsetting them through a tax credit. Sales tax is calculated by multiplying the purchase price by the applicable tax rate. All but five U.S. states have a statewide sales tax which is collected on most consumer purchases made within state borders. In three states, clothing up to a certain cap is exempt (in Massachusetts the cap is $175, … Alaska exempts its residents from sales tax, which sounds great. The total state and local tax burden on Alaskans, including income, property, sales, and excise taxes, is just 5.16% of personal income, the lowest of all 50 states. Some have no taxes at all and some states charge very high tax rates. In lieu of a sales tax, Delaware assesses a gross receipts tax on certain businesses. Delaware makes extensive use of excise taxes that are levied as a flat rate per gallon on goods such as motor fuel and alcohol. The states with the lowest combined state and local sales tax rates are Hawaii, Wyoming, Wisconsin, and Maine. Accessed Jan. 22. Juneau’s sales tax is 5%. Sales tax gets even more complicated for online sellers. Delaware Division of Motor Vehicles. We also reference original research from other reputable publishers where appropriate. Many states allow non-standard rates on many items including meals, lodging, telecommunications and specific items and services. I live in a state (Montana) that has no sales tax. And while this tax is not shared by consumers, it may be reflected in the cost of the actual goods themselves. So, are you ready to move to one of these five states so that you can avoid paying sales tax on the items that you buy every … In addition to base sales taxes, certain municipalities and counties impose additional surtaxes. The lucky residents of New Hampshire don't have to pay any sales tax. However, Alaska's personal income per capita is also one of the highest in the nation, hitting around $48,973 as of 2018. "Cigarette Tax Overview." Alaska, Delaware, Montana, New Hampshire and Oregon are free of sales tax, but some Alaska cities charge local sales tax. As another example, the state of Illinois charges sales tax at a reduced rate of 1% on grocery items. According to USA Today, Americans generally pay a sales tax of between 2.9% and 7.25% of the price of the good in most states. So, while Delaware residents get a break from sales tax, they may be paying for it in other ways. Accessed Jan. 22, 2020. However, even states that don't charge a direct sales tax on a vehicle may charge a registration, document, or use tax when you go to register the vehicle. But, what does it mean to be exempt from sales tax, and which states are sales-tax-free? Sales taxes in the United States are assessed by every state except Alaska, Delaware, Montana, New Hampshire and Oregon. The four states that don’t have a sales tax: Delaware; Montana; New Hampshire; Oregon; If you live and operate your business in one of these states, you don’t have to worry about collecting and remitting sales tax. Sales Tax: 6% state levy. However, other kinds of sales tax, like excise and value-added tax, add on to the consumer's budget. State by State Sales Tax Policy . Here, we’ve rounded up the states without income tax. Some states are more lax on their minimum sales tax requirements, and a handful don’t charge sales tax at all. A transfer tax is a charge levied on the transfer of ownership or title to property from one individual or entity to another. Beware that some of these “tax free” states do have some loopholes that occasionally target visitors. States often treat the sale of software differently than the sale of digital products. Accessed Jan. 22, 2020. These rates are not represented in this chart. Accessed Jan. 22, 2020. *These states have no sales tax at all. However, even states that don't charge a direct sales tax on a vehicle may charge a registration, document, or use tax when you go to register the vehicle. In fact, you will pay a state sales tax in 45 states plus the District of Columbia. The following rules apply to New York since you asked: New York has a 4% state sales tax. "Taxpayer Assistance - Overview of New Hampshire Taxes." State sales tax can factor into making purchases large or small, by increasing the cost you pay above the sticker price. Which States Don't Have Sales Tax? Though Delaware doesn’t impose a state sales tax, it does require certain businesses to pay a gross receipts tax. Delaware. Oregon is the final state on our list that does not charge a sales tax anywhere in the state. Oregon is sales tax free - and, to boot, has a lower cost of living compared to the national average. Delaware, our last NOMAD state, does not have a sales tax but, as you have probably guessed by this point, has some other taxes. 0% – 7.85% A cap on the local sales/use tax applies on sales of any item of tangible personal property. When you're at the supermarket or the mall and you go to check out, there's usually an additional price added on - the sales tax. Will I be required to pay Sales Tax on Precious Metals? Amazon also tracks destination and origin states, so you don’t have to. However, keep in mind that there is an income tax rate that ranges between 5 percent on the low end and 9.9 percent on this high end. Alaska Department of Revenue -- Tax Division. Still, these states may levy other forms of tax - but the lack of sales tax can make shopping more cost-effective, especially for out of state visitors. Cost of living is a concern for most people and whether you are relocating for work, family, or to retire, taxes are often a key consideration in deciding where to live. Including county and city sales taxes, the highest total sales tax is in Arab, Alabama, 13.50%. Accessed Feb. 7, 2020. 3  But, to help offset that, the Granite State has one of the higher personal income per capita in the nation - hitting around $47,530 on average. This means if Stephen really wants to save on his taxes, he’ll need to move 3,600 miles north – and dress warmly. "Corporate Income Tax FAQs." Factoring the combination of state and average local sales tax, the top five highest total sales tax states as ranked by the Tax Foundation for 2020 are: Tennessee 9.55% Arkansas 9.53% Even though there may be drawbacks, the five states that don't have sales tax are Alaska, Delaware, Montana, New Hampshire and Oregon. However, for businesses, Delaware does impose gross receipts tax - which constitutes some percentage of the receipts of goods sold by the business in the given state. Delaware. The areas of Montana that attract many tourists and house resorts have a low sales tax of up to 3%, referred to as a resort and local option tax. Now that I’ve made this sound complicated, I want to offer a light at the end of the tunnel. To qualify for this tax, a city must have a permanent population of under 5,500; the purpose of this tax is to support infrastructure frequented by tourists. Montana Department of Revenue. Delaware Division of Revenue. So, while many areas in Alaska do not impose sales tax, many localities do - but the high income per capita may somewhat balance the cost of living in The Last Frontier. Alaska Department of Revenue -- Tax Division. However, some other states that do not impose a general sales tax have fixed the loopholes in the law and don’t allow just anyone to register the vehicles. Delaware Division of Revenue. 2020. A measure imposing economic nexuswas approved by the Kansas Legislature in March, but Governor Laura Kelly vetoed it on the grounds that other aspects of the bill wo… There’s no general, statewide sales tax in Alaska, but more than 100 local governments levy local sales taxes. Clothing is exempt in the following states, all of which don’t have a general sales tax. These locations include Whitefish, Red Lodge, Big Sky and West Yellowstone. Lodging facilities and car companies typically charge a sales tax.  Montana differs from other states in that local jurisdictions are not permitted to collect sales taxes. These states don’t impose state-level sales taxes, meaning you won’t be assessed an additional fee when purchasing a retail good or service. Alaska. Ouch. There are even fewer states that have minimum sales tax rates below 5%. Still, while all of these states do not impose sales tax, some of them do permit localities to levy some sales tax. Delaware, known for having a business-friendly climate, has no state sales tax largely as a method of attracting shoppers from neighboring states like Pennsylvania, New Jersey, and Maryland, all of which have sales taxes.Over 40% of the state's revenues instead come from corporate taxes from the many out of state companies that choose to register in Delaware. As of 2017, 5 states (Alaska, Delaware, Montana, New Hampshire and Oregon) do not levy a statewide sales tax. One typical source is sales taxes . Accessed Jan. 22, 2020. Still, because it is minimal, Alaska is typically very tax efficient for buying goods and services. In all of those states, individual counties and cities do impose their own sales tax. For example, the sales tax in New York State is 4%, but New York City has additional taxes making the rate 8.875%. While certain goods such as groceries, prescription and non-prescription drugs, and clothing may be exempt from the state’s general sales tax, these same goods may be subject to local sales taxes. The offers that appear in this table are from partnerships from which Investopedia receives compensation. But, there's a caveat - Alaska does permit localities to impose sales tax in some areas - up to 1.76%. These states are Delaware, Montana, New Hampshire, and Oregon. Oregon, for example, has one of the higher income taxes in the country, coming in at around 9.9% - even taxing most retirement income (so, maybe think elsewhere if you're looking to retire). But a few lucky online sellers don’t have to worry about sales tax. The state of Oregon is also sales tax exempt, plus it has the lowest cost of living. And while the sales tax comes in a variety of forms - from excise tax to value-added tax - most states in the U.S. add it to the base price of the goods. These states are Delaware, Montana, New Hampshire, and Oregon. If you live and run your business out of the five U.S. states that do not have a sales tax – and, if you don’t have sales tax nexus in any other states – then sales tax may not be on your radar at all. "Frequently Asked Questions -- Communications Services Tax." For full details on sales tax rates nationwide, see the Tax Foundation's page. An economic nexus bill died in Florida, where the legislature is no longer in session. While there is no sales tax in Alaska, local governments are endowed with the ability to impose taxes on certain goods and services. You'll have to shop in states that either don't have a sale tax, have a very low tax rate, or shop during a sales tax holiday if you don't want to shell out a fair bit of extra money every time you approach a cash register. #SalesTaxTipTuesday 0% – 9.0% Some local jurisdictions do not impose a sales tax.. Yes/No Some of the cities and counties do apply use tax. Accessed Jan. 20, 2020. These states may also charge a tax on vehicles bought out of state or bought from dealers out of state. But when you peel back the layers, you’ll find that residents aren’t exactly living tax-free. "Commercial Passenger Vessel Excise Tax Historical Overview." Accessed Feb. 7, 2020. Forty-five states and the District of Columbia impose a state sales and use tax. Federation of Tax Administrators. This can make a huge difference in how much you pay for retail items, since rates can range as high as 7.25% in California, according to research from Tax Foundation. Although Alaska doesn't have a state sales tax, localities are allowed to collect sales tax ranging from 1 to 7 percent. Delaware Division of Revenue. Accessed Jan. 22, 2020. What States Have No Sales Tax on RVs. Only three states don’t have economic nexus or a similar remote sales tax policy: Florida, Kansas, and Missouri. Tennessee residents don’t have to pay state taxes on their wages. An excise tax is an indirect tax charged by the government on the sale of a particular good or service. Remember to check the state where your order will be shipped, which may differ from where you live. "Frequently Asked Questions -- Real Estate Transfer Tax (RETT)." Oregon Department of Revenue. These locations are the best—and worst—for sales taxes as of 2020. Excise tax, sometimes colloquially coined "sin tax," are taxes on products like cigarettes or alcohol. "Delaware Property Tax Rates, 2016 - 2017," Page 2. Sales taxes are typically imposed on retail transactions and certain services. Click on your state in the image map below to see how sales tax may affect your order. But, why? While almost every state in the U.S has a sales tax, five lucky states - Alaska, Delaware, Montana, New Hampshire and Oregon - don't. "How property taxes work in Oregon." Some states charge no sales tax, while some localities charges as much as 10% when state and local sales taxes are combined. Of course, there’s one caveat. In New York state, recent laws called "Amazon laws" require companies to pay sales tax even if they aren't based in a specific state. But, it also has a lower personal income per capita, at a little over $40,000 - or, 15th lowest, according to USA Today. "State Motor Fuel Tax Rates." Accessed Jan. 22, 2020. Here you can set which states need sales tax collected, and at which levels (state, county or local). Accessed Jan. 22, 2020. As of 1/1/2021. State Sales Tax Rules for Gold & Silver Bullion / Coins Sales Tax Rules by State. Though Delaware doesn’t impose a state sales tax, it does require certain businesses to pay a gross receipts tax. Property taxes are higher than average, with an annual assessment of over $2,625 being charged on a home valued at $247,000. A tax on remote sales is a hard sell in the Sunshine State, but it could resurface. For instance, Kalifornsky charges a local sales tax of 3%, while Soldotna imposes a combined sales tax of 6%. NO sales tax will be charged for Gold, Silver, Platinum, or Palladium bullion items as they are exempt from sales tax when shipping to an Alabama address. Five states don’t have a general sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon (the NOMAD states). Much like Alaska, Montana allows certain localities to impose sales tax. No local sales tax is charged either. State of Delaware. As … "Step 4: Learn About Gross Receipts Taxes." There are even fewer states that have minimum sales tax rates below 5%. The general sales tax in Montana is 0%. "Thirteen of the 45 states with a sales tax still impose it on groceries. anon247100 yesterday . Accessed Jan. 22, 2020. The state makes up for that lost revenue with a gross receipts tax on almost all businesses paired with a higher-than-average sales tax. But, before you up and move to New Hampshire, the state also has one of the highest costs of living - at around 5% above the national average, and the ninth highest. Accessed Feb. 7, 2020. This means that you will pay a certain percentage in tax for every item that you buy. While there are five states that do not impose a state wide sales tax, it's fallacious to say they have no sales tax. Florida, for example, levies a 6 percent sales tax and the average locality tacks on 1.05 percent, according to the Tax Foundation, for a combined average of 7.05 percent. Additionally, other states like Tennessee are thought of as some of the most tax efficient states in the country - because, while it does have a hefty sales tax (the highest in the country, in fact), the Volunteer State has no income tax. The states with the lowest combined state and local sales tax rates are Hawaii, Wyoming, Wisconsin, and Maine. Most states have sales tax to help generate revenue for its operations - but five states currently have no sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon. States Have to Make Money. Advertisement. Of course, these states do not have sales taxes; however, there are several other aspects which may influence your business negatively. Accessed Jan. 22, 2020. Tax-Efficient Investing: A Beginner's Guide, State Sales Tax Rates and Food & Drug Exemptions, Commercial Passenger Vessel Excise Tax Historical Overview, Frequently Asked Questions -- Meals and Rooms (Rentals) Tax, Frequently Asked Questions -- Communications Services Tax, Frequently Asked Questions -- Real Estate Transfer Tax (RETT), Taxpayer Assistance - Overview of New Hampshire Taxes, Chapter 473 — Wine, Cider and Malt Beverage Privilege Tax. Consumers don’t have to account for this tax, but the sellers of the goods or services do. State Sales Tax Rates . It's not a huge amount, but it's not zero, either. Action Alerts PLUS is a registered trademark of TheStreet, Inc. Accessed Jan. 22, 2020. © 2021 TheStreet, Inc. All rights reserved. Value-added tax essentially charges incremental tax for each level of production of an end good. Additionally, Montana has a lower cost of living (at around -5.2% below the national average), but has a lower personal income per capita as well (at around $40,985). Hawaii has a similar tax although it is charged to businesses instead of consumers. Montana Department of Revenue. City of Ashland, Oregon. There are currently five states that have no sales tax at all – Alaska, Delaware, Montana, New Hampshire, and Oregon. Montana, for example, has a 3% sales tax for tourist attractions like resorts. According to The Washington Post in 2014, other states that had lower sales tax include Hawaii (4.35% sales tax), Wisconsin (5.43% sales tax), Wyoming (5.49% sales tax), and Maine (5.50% sales tax). So even though you might not have to pay sales tax, there’s a good chance you’ll end up paying some type of tax to generate funding for the state. Alaska Department of Revenue -- Tax Division. Montana Department of Revenue. Accessed Jan. 22, 2020. New Hampshire Department of Revenue. New Hampshire Department of Revenue Administration. New Hampshire Department of Revenue Administration. All states have tax collection mechanisms. States with the highest sales tax rates are California, Indiana, … But in general, the state does not impose sales taxes. That could be as high as 10.4% in certain municipalities. However, there are five states where you will pay no state sales tax at all. With an average cost of living at around 0.8% below the national average, Oregon definitely saves its residents some cash. The states with no income tax are Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming. In Juneau, the sales tax is 5%, while Anchorage and Fairbanks do not have sales taxes. The tax on gas is the lowest in the nation at 8.95 cents per gallon. Sales taxes are levied on the distributors or wholesalers of alcoholic beverages and are incurred at a flat rate.  There is an excise tax of $34.50 for passengers on commercial vessels with overnight accommodations. There are additional taxes on motor fuel for which consumers may claim refunds..

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