States with No Sales Tax: Your Guide to Going Tax-Free in the US

When managing compliance and reducing tax burdens, businesses and consumers often consider states with no sales tax as an attractive option. The five states—Alaska, Delaware, Montana, New Hampshire, and Oregon—eliminated sales tax at the state level, offering incentives for companies looking to simplify revenue management and reduce administrative overhead. However, while these states lack a state sales tax, they often rely on other forms of revenue, such as excise taxes, property taxes, and other fees for services, to support infrastructure and public programs. Businesses should carefully assess jurisdiction-specific rules, exemptions, and rates to ensure full compliance with local regulations.

The absence of a state sales tax does not always mean a tax-free experience, as local rates and excise taxes can still apply to certain purchases of goods and services. For example, Alaska allows municipalities to impose local rates, and Delaware applies a gross receipts tax instead of a sales tax on revenue from goods and services. Businesses operating across these jurisdictions should weigh the economic policy and incentives offered against their ongoing compliance obligations. Sales tax automation tools like Kintsugi Intelligence can help businesses track exemptions, calculate rates, and monitor multi-jurisdiction obligations efficiently. By understanding how revenue collection and purchases are handled in these states, businesses can make informed decisions about tax strategies and minimize liabilities.

Alaska

Alaska is one of the most attractive states with no sales tax, but businesses must carefully evaluate compliance requirements due to its unique tax structure. While Alaska does not impose a state sales tax, local jurisdictions have the authority to levy rates ranging from 1% to 7.5% to fund services such as schools, roads, and emergency response programs. These excise taxes can add complexity to managing purchases, particularly for businesses operating in multiple jurisdictions. Companies must monitor local tax rates and track exemptions to avoid tax collection and reporting errors. Businesses can simplify this process using automated tools like Kintsugi, which supports compliance across multiple jurisdictions and ensures accurate tax management.

In addition to local sales tax rates, Alaska relies heavily on excise taxes for revenue generation, especially for goods such as gasoline, alcohol, and tobacco. These taxes often affect purchases related to services and products that businesses depend on, making compliance with local tax codes essential. Despite the absence of a state sales tax, companies should not overlook economic policy considerations, including property rates and licensing fees, which vary across jurisdictions. Leveraging tools like Kintsugi Intelligence can help businesses manage compliance, track exemptions, and stay up-to-date on shifting rates in Alaska. With the right tools, companies can take advantage of incentives offered by states with no sales tax while minimizing risks and ensuring smooth operations across local jurisdictions.

Delaware

Delaware is one of the most well-known states with no sales tax, offering significant incentives for businesses and consumers looking to minimize tax burdens. The state has earned a reputation as a corporate haven due to its business-friendly economic policies and the absence of state sales tax on purchases of goods and services. However, businesses operating in Delaware must still comply with excise taxes, licensing fees, and a gross receipts tax, which applies to revenue rather than profits. This structure means that businesses need to carefully manage compliance and track taxable goods and services to avoid penalties. Platforms like Kintsugi help to simplify reporting and compliance by providing automated solutions for tracking exemptions and monitoring rates across jurisdictions.

While Delaware eliminates the need to collect sales tax, businesses should be aware of its gross receipts tax, which can range from 0.0945% to 0.7468%, depending on the industry. Unlike traditional sales tax, this revenue-based tax applies to all goods and services sold, making compliance essential for accurate reporting. Additionally, Delaware imposes excise taxes on certain purchases, such as alcohol and tobacco, further contributing to the state’s revenue. Automated tools like Kintsugi can help streamline compliance and manage rates for multi-jurisdiction obligations for companies with a physical or economic nexus in Delaware. By leveraging these tools, businesses can maximize incentives, reduce administrative burdens, and ensure they remain compliant with state regulations while benefiting from Delaware’s tax advantages.

Montana

Montana is one of the few states with no sales tax, making it an attractive option for businesses and consumers looking to save on purchases of goods and services. The absence of a state sales tax reduces administrative burdens for businesses, as they are not required to collect or remit taxes on transactions. However, businesses operating in Montana must still comply with local excise taxes, particularly in high-traffic areas and resort towns, where rates can reach up to 3%. These local rates are often applied to tourism-driven purchases and services, which means businesses must carefully evaluate compliance requirements within each jurisdiction. Tools like Kintsugi can help businesses track these rates, monitor exemptions, and ensure compliance with jurisdiction-specific rules.

While Montana offers significant tax incentives due to its lack of a state sales tax, it relies heavily on property and excise taxes to generate revenue. For example, excise taxes are imposed on goods such as fuel, alcohol, and tobacco, which can affect pricing and purchases for both businesses and consumers. Additionally, companies operating across multiple jurisdictions in Montana must be aware of licensing requirements and exemptions that may apply to certain goods and services. Leveraging tools like Kintsugi Intelligence enables businesses to manage compliance, track rates, and ensure accurate reporting across jurisdictions. With proper planning and automated solutions, businesses can take full advantage of Montana’s tax incentives while staying compliant with state and local regulations.

New Hampshire

New Hampshire is one of the most appealing states with no sales tax, offering businesses and consumers significant incentives for reducing tax-related costs on purchases of goods and services. While there is no state sales tax, businesses must still account for compliance with other tax obligations, such as excise taxes on fuel, alcohol, and tobacco. These excise taxes contribute to revenue for public services, infrastructure, and state programs. Additionally, New Hampshire imposes taxes on interest and dividends, which businesses and investors should carefully monitor to ensure compliance. Platforms like Kintsugi help to simplify compliance by automating reporting and tracking rates across jurisdictions, helping businesses remain accurate and efficient.

Although New Hampshire does not collect sales tax, it relies heavily on property taxes to generate revenue, resulting in some of the highest rates in the country. Businesses should also consider licensing fees and regulatory requirements for specific services, especially if operating across multiple jurisdictions. Companies dealing with exemptions or multi-jurisdiction compliance can benefit from tools like Kintsugi Intelligence to streamline processes and minimize reporting errors. Additionally, businesses selling goods and services online must evaluate economic nexus rules, as transactions involving out-of-state customers may still trigger compliance obligations. With proper planning and automated tools, businesses can leverage New Hampshire’s tax incentives while ensuring accuracy and meeting state regulations effectively.

Oregon

Oregon is one of the most attractive states with no sales tax, making it a favorable option for businesses and consumers looking to save on purchases of goods and services. The absence of a state sales tax reduces administrative burdens, but businesses must still adhere to strict compliance requirements for other taxes. Oregon relies heavily on revenue generated through income taxes, which have some of the highest rates in the country, reaching up to 9.9%. Additionally, excise taxes apply to specific purchases, including fuel, tobacco, and alcohol, impacting both businesses and consumers. Companies operating in Oregon can simplify compliance by leveraging tools like Kintsugi to monitor rates, track exemptions, and ensure adherence to local and state regulations.

Although Oregon provides incentives through its lack of sales tax, businesses should carefully evaluate other jurisdiction-based obligations, particularly when conducting interstate transactions. While purchases within Oregon are exempt from sales tax, businesses selling to out-of-state customers may still face compliance challenges related to economic nexus laws. These rules require businesses to collect and remit sales tax in other states where they meet certain revenue or transaction thresholds. Tools like Kintsugi Intelligence help businesses track rates, handle exemptions and streamline multi-jurisdiction reporting. By leveraging automated solutions, businesses can benefit from Oregon’s tax incentives while maintaining accurate reporting and reducing risks associated with compliance in other states.

Strategic Considerations for Businesses Operating in States with No Sales Tax

For businesses operating in states with no sales tax, the absence of a state sales tax can provide significant incentives, reducing overhead costs and simplifying certain administrative processes. However, companies must remain aware of other revenue-generating mechanisms, such as excise taxes, property taxes, and licensing fees, which vary across jurisdictions. For example, Delaware imposes a gross receipts tax on goods and services, while Alaska applies local rates through municipal-level excise taxes. Businesses must carefully assess compliance obligations, particularly when handling purchases subject to exemptions or special rates. Leveraging tools like Kintsugi can simplify multi-jurisdiction reporting, track rates, and ensure that businesses remain compliant with local and state regulations.

While states with no sales tax offer appealing incentives, businesses must also evaluate economic nexus rules, which may trigger sales tax obligations in other states based on revenue or transaction thresholds. For example, companies operating in Oregon or Montana but selling to customers in jurisdictions with sales tax must still collect and remit taxes if they meet those thresholds. Compliance with these rules is essential to avoid penalties and audits, especially when dealing with interstate purchases of goods and services. Tools like Kintsugi enable businesses to automate compliance, manage exemptions, and monitor rates across multiple jurisdictions. With a proactive approach and the right tools, businesses can optimize tax strategies, maintain compliance, and maximize the benefits of operating in states with no sales tax.

Handling Compliance in States with No Sales Tax

States with no sales tax—Alaska, Delaware, Montana, New Hampshire, and Oregon—offer businesses and consumers valuable incentives by reducing tax burdens on purchases of goods and services. However, these states still rely on alternative revenue sources, such as excise taxes, property taxes, and fees, to fund public services and infrastructure. Businesses must carefully evaluate these obligations to ensure full compliance with jurisdiction-specific rules and reporting requirements. While the absence of a state sales tax simplifies processes for many businesses, operating across multiple jurisdictions may introduce complexities related to economic nexus laws and varying rates. Tools like Kintsugi provide automated solutions for managing compliance, tracking rates, and identifying exemptions, enabling businesses to operate efficiently while minimizing tax-related risks.

Although the benefits of operating in states with no sales tax are clear, businesses must take a strategic approach to tax planning and reporting to capitalize on available incentives. Companies selling across jurisdictions may still be required to collect sales tax if they meet economic nexus thresholds, making monitoring purchases, revenue, and rates essential. Leveraging tools like Kintsugi can streamline multi-jurisdiction reporting and ensure businesses meet all compliance requirements. Whether operating in Delaware with its gross receipts tax or managing local excise taxes in Alaska, businesses need accurate, automated systems to handle tax obligations effectively. By prioritizing compliance and adopting modern solutions, companies can maximize the advantages of operating in states with no sales tax while minimizing administrative burdens and protecting themselves from audits or penalties.