You’re standing at a register in Oregon. The price tag on that new jacket says $120. When the cashier rings it up, the total is exactly $120. It feels like a glitch in the matrix or a secret cheat code. If you’ve spent your life in Chicago or Los Angeles, that feeling is basically magic.
But here’s the thing. There are only five 0 sales tax states in us, and while they save you money at the checkout counter, "free" is rarely actually free. Tax collectors are smart. If they aren't getting your money when you buy a toaster, they’re usually getting it when you earn your paycheck or when you pay your property tax bill. Sometimes, they just get lucky because they have a massive oil field in their backyard.
The NOMAD States: Who They Actually Are
Most tax experts use the acronym NOMAD to remember these places. It stands for New Hampshire, Oregon, Montana, Alaska, and Delaware. That’s it. Those are the only spots where you can walk into a store and pay the sticker price.
Delaware is the darling of the East Coast. People drive from Maryland, Pennsylvania, and New Jersey just to buy iPhones and laptops in Wilmington or Newark. It’s a massive driver of their retail economy. On the other side of the country, Oregon does the same thing for Californians. But each of these states has a wildly different reason for why they don't tax your shopping bag.
Alaska: The Great Outlier
Alaska is weird. It’s the only one of the 0 sales tax states in us that doesn't have a state-level sales tax but does allow local jurisdictions to charge one. If you’re in Anchorage, you’re golden—0% sales tax. But if you wander into Juneau or Wasilla, you might hit a 5% or 3% tax. It’s a patchwork.
How do they fund their roads? Oil. The Alaska Permanent Fund, fueled by oil revenues, is so flush that the state actually pays you to live there. Most years, residents get a dividend check. It’s the ultimate "anti-tax" state, but it’s heavily dependent on the price of a barrel of crude. If oil prices tank, the conversation about a state sales tax starts bubbling up in the state legislature almost immediately.
Why 0 Sales Tax States in US Aren't Always "Cheap"
Don't pack your U-Haul just yet.
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New Hampshire is a perfect example of the "tax shift." They famously have no sales tax and no state income tax on earned wages. Sounds like a dream, right? Go check their property tax rates. According to data from the Tax Foundation, New Hampshire consistently has some of the highest property tax rates in the entire country.
They’re going to get their money.
If you rent, your landlord is baking that massive property tax bill into your monthly rent. If you own a $400,000 home in New Hampshire, you might be paying $8,000 to $10,000 a year in taxes just for the privilege of standing on your own dirt. Compare that to a state with a sales tax where property taxes might be a third of that. You have to do the math on your specific lifestyle. If you spend $50,000 a year on taxable goods, saving 7% on sales tax is a $3,500 win. But if your property tax jumps by $5,000 to live there, you’ve actually lost money.
The Oregon Paradox
Oregon is the opposite of New Hampshire in terms of how they grab their revenue. They hate sales tax. They’ve voted it down multiple times at the ballot box. It’s part of the state’s cultural DNA. But to make up for it, Oregon has one of the highest state income tax rates in the nation.
If you’re a high earner, Oregon might be the most expensive place you could possibly live. The top bracket hits 9.9%. For a person making $200,000, that’s a massive chunk of change compared to a state like Washington (just across the river), which has no income tax but a very high sales tax.
This creates a hilarious phenomenon in the Portland area. People live in Vancouver, Washington (no income tax) and drive across the bridge to Portland, Oregon (no sales tax) to do their grocery and holiday shopping. It’s the ultimate tax dodge, though technically, Washington expects you to pay "use tax" on those items when you bring them home. Honestly, almost nobody actually does that, but the Department of Revenue would really like it if you did.
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Delaware: The Corporate Loophole
Delaware is tiny, but it’s a powerhouse. They don't just lack a sales tax; they’ve built an entire legal ecosystem that favors corporations. More than 60% of Fortune 500 companies are incorporated there.
Because they make so much money from corporate filing fees and franchise taxes, they don't need to shake down their residents at the cash register. It’s a unique model. For the average person, Delaware is a shopping haven. If you're buying a diamond engagement ring or a car, the savings are legitimate.
One thing to watch out for in Delaware: Gross Receipts Tax. While you, the consumer, don't pay tax, the business pays a tax on its total sellers' receipts. Usually, businesses just bake this into the price of the goods. So, while you don't see a "tax" line on your receipt, the price of the milk might be a few cents higher to cover the store's tax burden. It’s subtle.
Montana and the Luxury Car Trick
Montana is a massive state with a tiny population. Like Oregon, they’ve stayed away from sales tax. This has led to a very specific, slightly shady industry: Montana LLCs for luxury vehicles.
Have you ever seen a $300,000 Ferrari in Florida or Texas with Montana license plates? Now you know why.
On a $300,000 car, a 7% sales tax is $21,000. People set up a "shell" LLC in Montana for a few hundred dollars, "sell" the car to the LLC, and register it in Montana. Since it's one of the 0 sales tax states in us, they save tens of thousands of dollars. Local police departments in states like California have actually started crackdowns on this because it’s technically tax evasion if the car lives in California full-time.
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Is Moving to a No-Sales-Tax State Worth It?
It depends on your "burn rate."
If you are a "consumerist"—someone who loves buying new tech, high-end clothes, and expensive hobbies—the 0% states are incredible. You see the savings every single day.
If you are a "minimalist" who saves 50% of your income and rarely buys "stuff," a state like Oregon will crush you with income tax while giving you almost no benefit on the sales tax side.
Tourism and the "Hidden" Taxes
Even in these five states, you aren't totally safe. Most of them have "sin taxes" or "prepared food taxes."
- New Hampshire: They have a 8.5% tax on meals and room rentals. They know tourists come for the foliage and the skiing, and they tax those people heavily at restaurants and hotels.
- Montana: In "resort communities" like Whitefish or Big Sky, there is a local option tax that can add 3% to your bill.
- Alaska: As mentioned, local sales taxes can be as high as 7.5% in places like Nome.
Practical Steps for Tax Optimization
If you’re seriously looking at 0 sales tax states in us as a relocation strategy or just a place to make a big purchase, stop looking at the sales tax in a vacuum. You have to look at the "Total Tax Burden."
- Check the Income Tax: If you work remotely, moving from California to Oregon won't save you much because Oregon's income tax is still high. Moving from California to New Hampshire? That's a massive win because New Hampshire doesn't tax your salary.
- Look at Property Tax Mill Rates: Use a site like SmartAsset to calculate what your specific home value would cost in taxes in a town like Concord, NH vs. Wilmington, DE. The difference can be thousands.
- Factor in "Use Tax": If you live in a sales-tax state but buy a car in a no-sales-tax state, you generally have to pay the difference when you register the car in your home state. There is no magic "free car" button unless you actually move.
- Evaluate the "Cost of Living" Index: Sometimes, states with no sales tax have higher costs for utilities, insurance, or groceries because of their geography (looking at you, Alaska).
The "perfect" tax state doesn't really exist. It’s all about where you are in life. A retiree with a paid-off house and a high pension might love Delaware. A young professional in tech might thrive in New Hampshire. Just remember: the government always gets its cut. They just change the name of the bill.