What 5 States Have No Sales Tax?

A type of tax levied on the retail sale of goods and services is sales tax. Each state has its own unique sales tax structure, with some governments charging no sales tax at all. When choosing a location to live or operate, both individuals and corporations may want to take this into account.

Alaska doesn’t have a state-wide sales tax, but some local governments do. This is due to Alaska’s substantial earnings from oil and gas extraction, which enables the state to evade sales tax on the majority of products and services.

Sales tax exemption is only one of the ways Delaware, which is renowned for having a business-friendly environment, draws in new enterprises. Delaware has no state taxes on commercial inventory in addition to a low corporation tax rate. Another state without a statewide sales tax is Montana, but some municipal governments do levy one. Taxes on tourism and natural resources are just two of the many sources of income for the state. The absence of a sales tax is one of the ways New Hampshire maintains its reputation for having low taxes. The state also levies neither an income tax nor taxes on the profits from investments.

Having eliminated its sales tax in 1980, Oregon is the most recent state to join the group of nations without a sales tax. Income taxes, business taxes, and taxes on natural resources all provide funding for the state.

It’s vital to keep in mind that even though certain states do not have a sales tax, they might have other taxes that make up for it. To make up for the lost revenue, some of these states might increase their income taxes or property taxes, for instance.

Some states levy a usage tax in addition to a sales tax. A tax known as usage tax is levied on products and services that are bought outside of a state but used there. One state that levies a use tax is Washington State. When sales tax was not paid at the time of purchase, the Washington State use tax is levied on the products and services used within the state.

Therefore, the following five US states do not impose a sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon. Although people and businesses seeking to avoid sales tax may find these states appealing, it’s necessary to take into account additional levies that can compensate for the lack of a sales tax. In addition, some states impose a use tax on items and services that are bought outside the jurisdiction but are utilized there. Compliance with use tax regulations can be helped by a consumer use tax account.