Residents in certain US states may find that the prices listed on product labels closely match the amounts paid at checkout, making it an appealing option for those looking to minimize daily expenses. Nevertheless, not all states without a general sales tax necessarily have lower overall tax burdens.
State and local governments rely heavily on sales taxes as a primary source of revenue. Data from the Tax Foundation indicates that these taxes account for approximately one-third of total state tax income, which is subsequently allocated towards essential public services, including education, law enforcement, firefighting, and other vital community needs.
As of 2026, five US states - Alaska, Delaware, Montana, New Hampshire, and Oregon - will continue to exempt general state sales tax from their residents, resulting in potential savings for consumers on purchases such as clothing, furniture, and electronics. Meanwhile, each state has implemented alternative revenue streams to fund its public services.
Alaska does not impose a statewide sales tax, however, local jurisdictions have the authority to establish their own tax rates.
The average local tax rate in the region is 1.82%, with some communities experiencing rates as high as 7.85%. The state's economy is heavily reliant on the extraction of oil and gas, which generates approximately 85% of its total state revenue.
One notable benefit of living in Alaska is that it does not impose a state income tax on its residents.
Delaware stands out as a state with particularly favorable tax laws, making it an attractive option for individuals looking to minimize or avoid sales tax obligations.
A recent development has led to a competitive dynamic with neighboring New Jersey, which has implemented a reduced sales tax for specific products in Salem County, situated near the Delaware border.
Delaware boasts one of the lowest average property tax rates in the country, standing at 0.41%, as per ATTOM data. For a home valued at $512,245, the estimated annual property tax bill would be approximately $2,081.
Montana does not impose a general sales tax on its residents and visitors. However, those staying in hotels, motels, ranches, tourist complexes, or campgrounds are subject to a 4 percent accommodation tax.
Additional taxes may be applicable to specific services, including car rentals.
Montana levies a state income tax with a progressive rate structure, spanning from 4.70% to 5.90%. The average annual property tax burden is approximately 0.72% of a home's value, translating to around $3,384 per year for a property valued at $467,815.
New Hampshire does not impose an income tax on its residents, a policy that is set to remain in place through the elimination of interest and dividend taxes by 2025.
The state heavily relies on property taxes to fund its services, with a notable average effective rate of 1.27% ranking among the highest in the nation. This translates to a substantial annual property tax bill for homeowners, with a typical residence valued at $648,164 potentially facing an annual tax liability of approximately $10,134.
Oregon is one of the states that does not impose a general state sales tax. However, there is an exception for residents who purchase vehicles outside the state. In such cases, they may be required to pay a use tax, which is equivalent to 0.5% of the vehicle's retail price, excluding taxes.
Residents in the area also benefit from lower daily expenses, which are further complemented by a state income tax structure ranging from 4.75% to 9.9%. Meanwhile, property taxes average 0.81%, resulting in an estimated annual tax burden of approximately $4,807 for a typical homeowner with a property valued at $591,688.
The tax implications of not paying sales tax on a homestead exemption vary depending on individual circumstances. While this exemption can provide significant savings for high-volume shoppers, it necessitates alternative revenue streams for governments to compensate for the lost tax revenue.
Individuals contemplating a relocation should thoroughly examine various state and local charges, including income tax, property tax, and sales tax, in addition to reviewing sales tax rates, to make informed decisions about their potential move.
Carefully evaluating the total tax implications of a potential move can make a significant difference in one's financial situation, as the savings from lower costs in other areas may be offset by higher housing or income taxes.
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