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The 5 States in the U.S. Without a Sales Tax

The United States has many different types of taxes that vary depending on the state that we live in. One of the most common taxes Americans hear about is Sales Tax, which is based on what state you are in when you make a purchase. This means that when people are traveling to another state, they are subject to their sales tax rules. However, America does have five states that do not impose a sales tax, but each of these states has different conditions depending on a multitude of things such as income, property taxes, and more. In this article, we will discuss the five states that don’t levy a sales tax and the different stipulations for each of them.

Alaska

The Last Frontier is considered one of the most tax-friendly states in the U.S. Without a sales tax or income tax, they do have a slightly higher than average property tax rate. The state does however provide a plethora of ways for the people of Alaska to apply for tax exemptions on their property.

Many counties throughout Alaska have the choice of whether or not to impose a sales tax, and many choose to do so. One county in Alaska known as the Juneau Borough charges a hefty 5% sales tax on all purchases eligible. This has allowed the county to collect roughly $50 million in sales tax revenue since its initiation of the tax in 2020.

Delaware

Not only does Delaware not levy any sales tax on its residents or visitors, but no counties or jurisdictions within the state impose any sort of sales tax. Delaware does have something called a gross sellers tax, which is meant to tax the total sales from goods and services of Delaware businesses. Many American businesses consider Delaware to be the “shelter of corporate taxation” because of its moderate-income tax, low property tax, and lastly no sales tax.

Montana

Due to the low population of the state, Montana also chooses to not impose a sales tax. There are local counties and jurisdictions that do impose sales taxes, however. The places that impose a sales tax in Montana are usually heavily tourist populated areas such as Big Sky and other municipalities. Montana makes up for no sales tax by imposing hefty property taxes as well as keeping their income tax right around the country’s average.

New Hampshire

Although New Hampshire decides to not collect a sales tax, they have one of the highest property tax rates in the United States. This is how the state collects most of its tax revenue because the tax on income in New Hampshire is also very limited, as it only applies to dividends from stock purchases and interest on certain bank accounts.

Oregon

The state of the Beaver does not collect a sales tax, but there are some implications when it comes to out-of-state vehicles in Oregon. If an Oregon resident purchases an automobile outside of their home state, they must pay the sales tax on that vehicle to register it through the state of Oregon. The state also offsets the lack of sales tax by having one of the country’s highest income tax rates in the country. Oregon also provides a higher than average property tax rate for its residents.

Wrap Up

While sales tax is a thing that should be taken into account, it doesn’t amount to as much as the other hefty tax rates that certain states like to offer such as property and income tax.

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