These States Have No

Sales Tax

Sales Tax

Sales tax is a tax paid to the government for sales

of certain goods and services.

In the U.S, food sold at grocery stores and

prescription medicine are generally excluded from

sales tax, while some states also exclude clothing.

Use Tax

Most people are familiar with sales tax, but fewer know about use taxes.

Use tax applies to purchases of tangible personal property from out-of-

state retailers for use in-state and includes purchases from Internet

retailers, from catalog companies, or when visiting another state.

Consumers in states with sales taxes have an obligation to pay use tax on

out-of-state purchases (though not many people do in practice).

Twenty-seven states currently have a line on their tax form for taxpayers to

include their use tax obligations.

State Versus Local Sales Taxes

• 45 states in the U.S. have a state sales tax.

• 46 states allow local sales taxes.

• The average state sales tax is 5.1%.

• The average local sales tax is 1.3%.

• The combined average state and local sales tax is 6.4%.

Source: Tax Foundation

The 5 States With

No Sales Tax

Delaware

• Compare that with shopping in Maryland (6%), Pennsylvania (6.34%), New Jersey (6.97%), or New York (8.47%).

Source: Wikimedia Commons

• Delaware has no state or local sales taxes.

• It funds itself mainly through the individual income tax, as well as corporate taxes.

Source: Tax Foundation

Montana

• Montana has no state or local sales taxes on general goods.

• It funds itself mainly through property taxes, resort taxes, and an income tax.

• Tourist destination locales are allowed to charge a “resort tax,” which is a sales tax capped at 3% on goods and services catering to tourists.

Source: Wikimedia Commons

Source: Tax Foundation

New Hampshire

• Compare that with shopping in Massachusetts (6.25%), Maine (5.5%), Vermont (6.14%), or Rhode Island (7%).

Source: Wikimedia Commons

• New Hampshire has no state or local sales taxes.

• It funds itself mainly through property taxes, as well as corporate income taxes.

Source: Wikimedia Commons

Source: Tax Foundation

Oregon

• Compare that with shopping in California (8.41%), Idaho (6.03%), Nevada (7.93%), or Washington (8.88%).

• Oregon has no state or local sales taxes.

• It funds itself equally through property taxes and an individual income tax.

Source: Wikimedia Commons

Source: Tax Foundation

Alaska

• Alaska primarily funds itself through taxes and royalties on oil and gas production.

• Alaska has no state sales tax but does allow a local sales tax, which is capped at 7%.

• The Tax Foundation’s population-weighted average of local sales taxes comes to 1.69%.Source: Wikimedia Commons

Source: Tax Foundation

All 50 Combined

State and Local Tax Rates

All 50 Combined

State and Local Tax Rates

Source: TaxFoundation.org/Maps

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