States With No Sales Tax

In the United States, a sales tax refers to the tax that is placed on good and services sold. Unlike other countries in the world where the national government regulates the tax, the US has regulations at the both the national and the state level. The sales tax is obtained by doing a multiplication of the purchasing price of a product by the tax rate. In some cases, the states may choose to impose the tax at a lower level, such as delegating the authority to the local government. However, some states do not impose any form of sales tax. These states are Alaska, Montana, New Hampshire, Oregon, and Delaware. For these five states, this has been the case since January 2017.

States With No Sales Tax

Alaska

The state of Alaska does not impose a sales tax within the state. Alaska is also particularly unique as it is also one of the states in the US that does not impose any form of tax on personal income. One of the reasons why the state does not do this is that it imposes a significant sales tax on oil extraction companies based in the state. These companies usually pay tax per every barrel of oil and the amount of money received caters for the needs of the state government. The state also imposes vehicle rental tax and a tax on passengers using commercial vessels providing overnight accommodations while in Alaskan territory.

However, the local governments, including boroughs, are free to charge up to 7.5% sale tax. In different parts of the state, the regulations vary but Fairbanks and Anchorage have no form of sales tax while there is a 5% sales tax in Juneau. In some cases, there is both a municipal sales tax and a borough sales tax.

Montana

Similar to Alaska above, the state government does not impose a sales tax but some municipalities do so, especially if the municipalities are popular destinations. Good examples of such destinations include West Yellowstone, Red Lodge, Big Sky, and Whitefish, which have a sales tax of up to 3%. In some cases, there is something known as a lodging and usage tax, which is usually 7%, that is charged by hotels and campgrounds while there is a 4% tax charged by car rental firms.

In recent years, however, the state of Montana has been enduring some tough economic times due to lack of money to finance the state budget. Consequently, these problems have trickled down to crucial sectors such as health and human services. In 2017, this sector had to endure a 4.5% loss of its previous budget allocation. To solve this situation, there are considerations of reinstating sales tax, which will bring an estimated $20 billion.

New Hampshire

New Hampshire prides itself as one of the states that also has no income or sales tax. In fact, the state government recently fought a ruling by the Supreme Court of the US that states can enforce sales tax on goods purchased online. However, the state has some tax on things like prepared meals (9%), motor vehicle rentals (9%), and a few other things.