Almost every state in the country has a sales tax. There are 45 states plus Washington, D.C. that impose sales taxes. State sales tax rates range from a high of 7.25% in California to 2.9% in Colorado. The only five with no state sales tax are Alaska, Oregon, Montana, Delaware, and New Hampshire.
Before we dive into the tax-free opportunities, let‘s quickly cover how sales tax works here: There is no federal nationwide sales tax. It‘s assessed at the state and local levels. 45 states collect statewide sales tax, with rates from 2.9% to 7.25%.
State law exempts sales tax on clothing, shoes, school supplies and backpacks that are priced below $100. Diapers, too.
Mississippi: Affordable Living
As of August 2022, Mississippi is the least expensive state to live in, according to worldpopulationreview.com. The Magnolia State has a cost of living index of 83.3.
Tax-Free Shopping
Sales tax refund policies vary by state in the U.S. Generally, there is no refund for sales tax on items bought domestically, except when exporting them.
The United States Government doesn’t refund sales tax to tourists and foreign visitors. Sales tax charged in the United States is paid to individual states, not the Federal government – the same way that Value Added Tax (VAT) is paid in many countries.
Most clothing also is tax-free year-round in some states, including Massachusetts, Minnesota, New Jersey, New York, Pennsylvania and Rhode Island.
While sales tax applies broadly to most goods, there are some exceptions where you can shop tax free depending on the state. Most states exempt "essential" groceries like fruit, vegetables, meat, eggs, and bread from sales tax.
Currently, seven states—Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, and Wyoming—don’t levy income taxes on individuals.
‘The Last Frontier’, Alaska is the most tax-friendly state in the country. It has no sales tax and no state income tax. Alaska charges a slightly higher than average property tax rate of 1.18%, but the state has several ways to apply for property tax exemptions.