Most states want a cut of just about every purchase you make. However, there are a handful of states that don’t charge sales tax.
In some cases, those states make up for it in other ways, such as other taxes. Additionally, while some states don’t have a statewide sales tax, they might allow local municipalities to charge their own sales taxes.
Let’s take a look at five states that don’t charge a statewide sales tax and what you can expect from them.
You don’t have to worry about a statewide sales tax or a local sales tax in Delaware. So, while businesses don’t have to worry about collecting sales taxes, they do have to pay revenue in other ways.
For example, businesses have to pay an annual licensing fee. Additionally, some businesses, such as wholesalers, might be subject to a gross receipts tax on tangible goods sold. The seller of these goods might be responsible for paying a tax, and they might find ways to pass those costs onto customers.
New Hampshire doesn’t have a general sales tax so you don’t have to worry about paying one at the cash register.
However, for businesses in New Hampshire, there is a business enterprise tax. This tax has been gradually dwindling, however. The tax was reduced from 0.75% in 2016 to 0.55% for taxable periods after December 31, 2022. New Hampshire also charges a communications tax so consumers who use two-way communications devices are charged a 7% tax on their service.
There’s no general-use sales tax in Montana. However, even though there aren’t state sales taxes, Montana does levy individual income taxes. Businesses must pay taxes on their income too. Montana also collects natural resource taxes from businesses engaged in certain behaviors. Finally, Montana does collect property taxes.
So even if you aren’t paying sales tax on your purchase, there are other ways the state is raising revenue.
You don’t have to worry about paying a sales tax on goods bought in Oregon. However, if you purchase a new vehicle out-of-state, you will need to pay a vehicle use tax before you can have it titled and registered in Oregon. You do need to pay individual income tax in Oregon as well as property taxes. So, even without sales taxes, the state does its best to raise revenue.
Alaska is an interesting case. There’s no statewide sales tax levied, but it is possible for localities to charge their own sales taxes.
According to the State of Alaska, a large portion of the state isn’t subject to property taxes, but local areas have a lot of freedom in deciding which taxes to levy. The state website claims that larger municipalities tend to use property taxes for revenue while smaller cities use local sales tax or levy other types of taxes. Finally, there is no personal income tax in Alaska.