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What you see is what you pay for.

Key Point

  • There are five states that do not charge state sales tax.
  • Of these, only three do not allow local consumption tax.
  • States without sales taxes tend to have higher taxes in other areas, such as property taxes and income taxes.

In most parts of the United States, shopping requires a little math. This is because most areas have state and local sales taxes.

Worse, most stores do not include these taxes in the prices displayed on their shelves. It means that it can be close to % higher. That extra expense can throw a wrench into your personal finances.

However, for some US residents, sales tax paid in other states is as foreign as VAT (Value Added Tax) paid by UK shoppers. They live in one of five states he has no state sales tax.

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1. Alaska

If you don’t mind living on the edge of the frontier, you can avoid many taxes. Alaska does not impose a state sales tax or a state income tax. Property tax rates are moderate, but often waived.

However, just because Alaska doesn’t charge sales tax doesn’t mean you can avoid it entirely. Some smaller municipalities have their own sales tax regulations. The state’s largest cities, Anchorage and Fairbanks, have no sales tax, while the Juneau Borough, where the capital is located, has a 5% sales tax rate.

2. Delaware

The tiny state of Delaware is known as a great place to start a business thanks to its business-friendly laws (and no laws). It’s also convenient for residents who don’t want to deal with sales tax. There is no state sales tax and no local sales tax is allowed. Property taxes are also among the lowest in the country.

That said, Delaware isn’t exactly a tax-free paradise. States impose gross revenue taxes on certain businesses and excise taxes on certain commodities such as gas and alcohol. Residents also pay relatively high income tax rates.

3. Montana

Few people live in Montana, but they don’t have trouble paying sales tax. There is no state sales tax and no local sales tax imposed by most counties and cities.

However, if you’re just coming to the state for vacation, you may be subject to a local resort tax on restaurants and hotels. And if you’re a resident, beware of very high income taxes and uncompetitive property taxes.

4. New Hampshire

With the motto “Live Free or Die Free”, New Hampshire can be expected to do things its own way. When it comes to taxes, this includes no state or local sales tax and exemption from state income tax.

you can’t live freely However, for all taxes. There are certain luxury taxes, such as a surcharge on eating out. Homeowners also pay some of the highest property taxes in the country. Also, be prepared to pay additional taxes on certain types of investment income.

5. Oregon

Located in one of the states with the highest sales tax rates in the nation (California), Oregon has no state or local sales tax.

This lack of sales tax has some limitations. There are tobacco and alcohol taxes, and some areas tax other luxury items such as prepared foods.Oregon has the highest income tax rate and moderate property tax rate.

A small fraction of the total tax burden

As painful as paying sales tax is, it serves an important purpose. State and local taxes are used to fund essential services such as schools and libraries.

Furthermore, just because you don’t pay sales tax doesn’t mean you don’t pay tax at all. As noted above, states without sales taxes tend to make up for the difference in other ways, such as higher income and property taxes.

So, when estimating your spending in a particular area, try to look at your overall tax burden rather than focusing on one aspect, such as sales tax.

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