States with No Sales Tax
- Alaska
- Oregon
- Montana
- New Hampshire
- Delaware
Sales Tax Variations
Among states that do have a sales tax, some are less significant than others. Colorado’s 2.9% state sales tax rate is less than half of many other states’ rates.
States Taxing Certain Transactions
Although none of the NOMAD states have a general statewide sales tax, select transactions in each state are subject to tax:
- Alaska allows local sales taxes.
- Sales tax rates vary by location and, in certain localities by the time of the year.
States without Sales Tax
Sales tax generates revenue for state-wide operations, but five states currently do not impose a state sales tax including Alaska, Delaware, Montana, New Hampshire, and Oregon.
States Suitable for Business Expansion
Additionally, if you’re expanding your business into new states, it’s important to know which ones don’t have sales tax in order to minimize your expenses.
Lowest Sales Tax State
The US state with the lowest sales tax is Delaware, where the sales tax rate is 0%.
States Exempting Luxury Goods
Montana, New Hampshire, and Oregon are the only states that truly don’t impose any sales taxes or extra taxes that can trickle down to the consumer.
Tax Rates in the U.S.
The five states with the highest combined state and local average tax rates are:
- Louisiana (9.55%)
- Tennessee (9.547%)
- Arkansas (9.48%)
- Washington (9.29%)
- Alabama (9.22%)
The five states with the lowest average total rates are:
- Alaska (1.76%)
- Hawaii (4.44%)
- Wyoming (5.36%)
- Wisconsin (5.43%)
- Maine (5.50%)
Tax Burden in Illinois
The 5% income tax is a flat rate for all Illinoisans, making the burden much heavier for middle-income earners. State sales taxes aren’t any better at 6.25%, and local governments can add up to 4.75% to that total.