Which States Have the Lowest Sales Tax?

The NOMAD five — with their asterisks

The two asterisks are the useful part. Alaska has no state sales tax but over a hundred local ones⁴ — Juneau charges 5%, Kodiak 7% — which is a whole guide of its own: Alaska sales tax. Montana's designated resort communities levy up to 4%. Only New Hampshire, Oregon and Delaware are zero at every address — mapped ZIP by ZIP here — and even they collect their share elsewhere: NH's 8.5% meals and rooms tax², Delaware's gross receipts tax on the seller's side of the counter³, Oregon's vehicle tax.

The lowest-rate states that do tax

Two patterns produce a low combined rate: a genuinely low state rate with light locals (Wyoming), or a moderate flat rate with no local taxes allowed at all (Maine, Michigan, Maryland, Kentucky) — the same uniform-rate states where ZIP-level lookup can't miss. Hawaii is its own animal: the 4% General Excise Tax is levied on business gross receipts across a very broad base — services and groceries included — and is commonly passed through at up to 4.712%, so its "lowest rate" raises more per person than the number suggests.

How this ranking is built

"Lowest sales tax" has three defensible answers depending on what you measure, and mixing them is why published lists disagree:

• No sales tax at all: Delaware, Montana, New Hampshire and Oregon levy no general sales tax at any level. Alaska has no state sales tax but does have local ones, which is why it appears in a different place depending on the metric.
• Lowest combined rate among states that tax: Alaska at about 1.82% average — an average across municipalities that levy and many that do not, so almost nobody actually pays 1.82%. After Alaska, Hawaii at 4.5% and Wyoming at 5.39% are the genuinely low combined rates.
• Lowest state statutory rate: Colorado at 2.9%, which is misleading in isolation because Colorado's average local rate of about 4.82% is larger than its state rate, putting the combined figure near 7.72%.

This page ranks on the second measure — state rate plus population-weighted average local rate — and excludes selective excise taxes on fuel, alcohol, lodging and prepared food, which are real costs but are not general sales tax. Rates come from our maintained dataset with each revenue department attached as the source; see tax data sources for verification status.

Why a low sales tax rarely means low tax overall

States that forgo sales tax revenue collect it somewhere else, and the substitution is usually visible:

• Oregon runs no sales tax and one of the higher state income tax burdens in the country, plus a corporate activity tax on business receipts.
• New Hampshire has neither a general sales tax nor a broad wage income tax, and funds itself substantially through property tax — among the highest effective property tax rates in the United States — plus business profits and business enterprise taxes and the Meals and Rentals tax.
• Delaware levies a gross receipts tax on businesses that never appears on a receipt but is embedded in shelf prices, alongside franchise fees from its incorporation industry.
• Montana has an income tax and permits resort communities to levy local resort taxes, so visitors to Big Sky or Whitefish meet a sales-type tax anyway.
• Alaska has neither a state sales tax nor a state income tax, funding itself historically from resource revenue — while its municipalities levy the local sales taxes that put it on this list at all.

The practical lesson for anyone choosing where to buy, live, or register a business is that a sales tax ranking answers a narrow question. It tells you what a taxable purchase costs at the till, and almost nothing about total tax burden.

What the difference is worth

On $40,000 of annual taxable spending, moving from Louisiana's 10.13% to Wyoming's 5.39% saves about $1,896 a year; moving to a no-sales-tax state saves the full $4,052 at the register — before accounting for whatever that state charges instead.

Two cautions apply to anyone planning around the gap. First, use tax follows you home: buying in Delaware or Oregon and bringing goods back for use in your own state creates a use tax liability there, enforced most reliably on vehicles and other titled property where registration reveals the purchase. Second, border effects are smaller than they look once the neighbouring state's local rates are counted — compare specific localities using the ZIP code lookup rather than state averages.

The honest fine print

• Low sales tax ≠ low taxes. New Hampshire's property taxes are among the nation's highest; Oregon runs a full income tax. States that skip one tax lean on another — the reverse of the high-sales-tax states, which often skip income tax instead.
• Shopping trips have rules. Buying in a 0% state saves real money at the register, but your home state levies use tax on what you bring back — the full picture, including when the trip genuinely pays, is in border shopping and sales tax.
• Sellers: never hardcode the NOMAD five to zero. Alaska and Montana break that assumption address by address. Treat every state as a lookup state.