Which states have no sales tax?

• Five states have no statewide sales tax: New Hampshire, Oregon, Montana, Alaska, and Delaware. These are sometimes called the NOMAD states.
• Businesses based in NOMAD states can establish nexus and an obligation to collect sales tax in other states.
• There are local taxes in some states with no sales tax. For example, Alaska allows local sales taxes, Montana allows resort taxes in some parts of the state, and Oregon has local lodging taxes.

Sales tax is a tax on the exchange, sale, or transfer of goods and services. It’s generally added to the retail sales price, collected by the retailer at checkout, and paid by the consumer. Retailers are responsible for remitting sales tax to the appropriate taxing authority and filing sales tax returns. 

The majority of states have both state and local sales taxes. Seven states have a statewide sales tax but no local sales taxes.

There are five states with no sales tax at the state level: 

• Alaska
• Delaware
• Montana
• New Hampshire
• Oregon 

The states with no statewide sales tax are sometimes referred to as the NOMAD states (“N” for New Hampshire, “O” for Oregon, and so forth).

Some of the states with no sales tax are considered to be tax-friendly states. In its 2026 State Tax Competitiveness Index, the Tax Foundation gave high marks to three of the states with no sales tax. It ranked New Hampshire, Alaska, and Montana third, fourth, and sixth, respectively. Delaware came in at 24; Oregon was 35.

All five states with no state sales tax levy taxes on certain transactions. There are local option taxes in Alaska and Montana, for example, and Delaware has a gross receipts tax. 

There are also excise duties in each of these five states. Excise duty is similar to sales tax, but excise duties apply to specific products (like alcohol, cigarettes, and petrol). Furthermore, excise duty is typically based on the units or volume sold rather than a percentage of the retail price.

More than 100 local municipalities or boroughs in Alaska levy local sales taxes on certain goods and services. Local sales tax rates vary by location and can be as high as 7.5%, but the average combined sales tax rate in the state is currently 1.82%. This is one reason the Tax Foundation considers Alaska to be a tax-friendly state.

Several jurisdictions in the Last Frontier have seasonal sales tax rates to capitalise on the influx of tourists (or to reward hardy locals for remaining in Alaska during the long, dark winter). Local tax rates in these areas increase during the summer months.

Delaware imposes a gross receipts tax on the total gross revenues of a business. Gross receipts tax is levied on the seller of goods or services, rather than the consumer. The state does not allow deductions for the cost of goods or property sold, material or labour costs, interest expense, discounts paid, delivery costs, state or federal taxes, or any other expenses.

Gross receipts tax rates vary by business activity and currently range from 0.0945% to 1.9914%. The variable tax rate for petroleum products can be even higher. 

Certain communities in Montana may levy a resort and local option tax to fund local transport services and transport system improvements. Resort and local option taxes are only permitted in communities that have a population of less than 5,500 and meet specific resort criteria. 

The resort tax is a local option sales tax on the retail value of goods and services sold by certain businesses, including lodging and camping facilities, restaurants, and destination recreational facilities like ski resorts. Luxury products are also usually subject to the resort tax. 

Jurisdictions in Montana with a local resort tax include:

• Big Sky: 4% of the retail value of luxuries and the items or services sold to tourists and transient visitors (though locals may also purchase them); “Necessities of Life are not intended to be taxed”

• Red Lodge: 4% tax on the retail value of all goods and services sold, except goods and services sold for resale

• West Yellowstone: 4% on luxury items sold within the city limits

• Whitefish: 3% on the retail sale of alcoholic beverages, lodging, restaurant and prepared food, ski resort goods and services, and defined luxury items

Sales tax proposals periodically surface in Montana, as in Alaska. But according to the Montana Budget and Policy Center, most Montana voters don’t want a state sales tax.

New Hampshire imposes a meals and rooms (rentals) tax upon patrons of restaurants and hotels or other facilities in the state with sleeping accommodation. The tax applies to rooms and meals costing 36 cents or more as well as to car rentals. 

Like a general statewide sales tax, the New Hampshire meals and rooms tax is imposed on the customer but collected and remitted by the business operator.

Although there’s no general state sales tax in Oregon, the state has a bicycle excise tax that feels much like a sales tax. Retailers must collect the flat $15 bicycle excise tax at the point of sale. 

There are also vehicle taxes in Oregon.

If your business is located in a state with no sales tax, you can still be required to collect and remit sales tax if you have nexus with other states.

Sales tax nexus is a connection between a business and a taxing jurisdiction that obligates the business to collect sales tax. If a retailer located in Illinois has nexus with Texas, for instance, it must register for Texas sales tax and collect and remit all applicable Texas sales and use taxes. 

Businesses based in Alaska, Delaware, Montana, New Hampshire, and Oregon can establish sales tax nexus with other states. Therefore, it’s essential for businesses in NOMAD states to understand and pay attention to sales tax nexus laws. 

There are several ways for a business to establish nexus with a state:

• Physical presence in a state (physical presence nexus, or physical nexus)

• Economic activity in the state (economic nexus)

• Referrals originating in the state (click-through nexus)

• Ties to affiliates in the state (affiliate nexus)

Since physical nexus and economic nexus laws are the most widespread, we’ll focus on them.

Physical presence is one of the most common ways for a business to establish sales tax nexus for state sales tax. It can be created in surprising ways, including by delivering goods into a state in your own vehicles, having employees in a state (permanently or temporarily), and having inventory in a state. In some states, merely attending a trade show can create sales tax nexus.

Before the US Supreme Court’s decision in South Dakota v. Wayfair, Inc. (21 June 2018), states didn’t have the authority to tax businesses lacking a physical tie to the state. The Wayfair ruling freed states to tax remote sellers (in addition to businesses with physical presence nexus).

Every state with a statewide sales tax now has an economic nexus law for sales tax, as do Puerto Rico and Washington, D.C. More than 50 local jurisdictions in Alaska also enforce economic nexus.

All economic nexus laws provide an exception for businesses selling under a certain economic nexus threshold. Broadly speaking, there are six different economic nexus thresholds in the United States:

• $100 000
• $100,000 or 200 transactions
• $100 000 and 200 transactions 
• $250 000 
• $500 000 
• $500 000 and 100 transactions

You can find state-specific details in our state-by-state guide to economic nexus laws.

The states with no sales tax have each responded to Wayfair, economic nexus, and online sales tax requirements differently. Alaska and New Hampshire have taken the most divergent stances.

About half of the Alaska localities with a local sales tax have adopted economic nexus. The Alaska Remote Seller Sales Tax Commission (ARSSTC), which was created in 2019, administers remote sales tax for these local authorities. Today, more than 50 jurisdictions are members of the ARSSTC and tax remote sales.

Like a growing number of other states, Alaska dropped its 200-transactions threshold. Effective January 1, 2025, the economic nexus threshold for Alaska is $100,000 in gross sales in the state in the current or previous calendar year.

New Hampshire is about as far from Alaska on the issue of online sales tax as it is geographically. Former New Hampshire Governor Chris Sununu steadfastly opposed online sales tax after the 2018 Wayfair ruling, though he was unable to prevent other states from imposing a remote sales tax obligation on businesses in the Granite State.

However, New Hampshire Senator Maggie Hassan has been leading an effort in Congress to provide small business relief from remote sales tax collection. We’re waiting to see what, if anything, will happen next.

The remaining states with no sales tax have taken a more measured approach. At one time or another, the tax departments in each of these states acknowledged the existence of economic nexus and/or advised taxpayers to comply with applicable online sales tax laws.

If you’re located in a state with no sales tax and you sell into one or more states that collect sales tax, you need to keep sales tax top of mind. You may not have a sales tax obligation in the states where you have customers. Then again, you might.

Our free economic nexus risk assessment can help you find out where you’re most at risk of developing sales tax nexus.