States Without a Sales Tax

Feb 25, 2024 By Triston Martin

Every state has a sales tax, 45 of them, plus one in the District of Columbia. The rates range from a maximum of 7.25 percent in California to 2.9 percent in Colorado until 2022. Most states permit local cities, counties, municipalities, and counties to add their own sales tax to the state's rate, but there are a few non-consumer-friendly exemptions.


Five states do not impose the sales tax: Alaska, Montana, Delaware, Oregon, and New Hampshire. Alaska is frequently included on the list, too, but the state's rules are a little ambiguous. Delaware does not have any sales tax; however, it does have a gross receipts tax on business. The gross receipts tax in Delaware is a percentage of the total revenue from sales of goods and services provided in the state. It can range from 0.0945 percent to 0.7468 percent in February 2022. The tax is not taxed to consumers in a charge; however, its impact can be evident in the prices of services and goods.


Alaska


Although there is no sale tax for Alaska, local government officials are given the power to tax specific goods and services. Sales tax rates are at 5% in Juneau as well as Anchorage and Fairbanks are not subject to sales tax. The gas tax is the lowest in the country in the nation at 8.95 cents per gallon. Sales taxes are imposed on wholesalers and distributors of alcoholic drinks and are paid in a flat amount. Taxes on excise are $34.50 for passengers traveling on commercial vessels that have overnight accommodation and additional taxes on motor fuel, which consumers can be eligible for refunds.


Delaware


Delaware is a state that imposes a gross-revenues tax on businesses that are not in the form of sales tax. Delaware makes the most of excise taxes charged at an unadjusted cost per gallon on products like motor fuel and alcohol. Taxes are in the amount of $2.10 for each pack of cigarettes. The state is a bit high in corporate income tax rates and is taxed on specific companies that sell products and services, which allows the state to enjoy a zero property tax and a sales tax. Delaware's zero sales tax makes the state an attractive choice for collectors and dealers who want to avoid hefty sales tax charges on artworks and related pieces.


Oregon


Oregon does not have a sales tax; it does so partly due to the fact that it has one of the states with the highest income taxes in the nation and is generally regarded as an extremely tax-paying state. The state legislature has thought about implementing sales taxes several times, but it has not been voted on. While there are no localities in Oregon that are required to collect an overall sales tax, Local governments often tax specific purchases like hotel rentals and prepared food items. Additionally, state taxes on alcohol, lodging, and telecoms are transferred to the consumer.



Montana


Montana is a state that does not have a sales tax and can make some up for the revenue lost by levying state income taxes and those that tax natural resources. Some tourist-friendly municipalities located in Montana have a local sales tax of 3% to 7% on specific types of transactions, such as vehicle rental and lodging.


The areas in Montana that draw many visitors and resorts for house owners offer a sales tax that can be as low as 3 percent, also known as a resort or local option tax. To be eligible for this tax, cities must have a population of less than 5,500. The goal of this tax is to help support tourist-friendly infrastructure. Car and lodging firms generally charge sales tax. Montana is different from other states in the sense that local governments aren't allowed to collect sales tax.



New Hampshire


In addition to not having a sales tax for general sales, New Hampshire also has no personal income tax and receives most state revenue via property taxes. There isn't any sales tax for the state; however, there is a sales tax of 9% on cooked food items, hotel rooms, and car rentals. In addition, the state collects excise tax on cigarettes, gasoline, alcohol, and electricity.

Related Articles