What states don’t have sales tax in the US?
They're 5 US states with no sales tax, often called the NOMAD states:
- Alaska
- Delaware
- Montana
- New Hampshire
- Oregon
That said, “states without sales tax” is not the same as “no sales tax complexity.” Alaska permits local municipalities to charge up to 7.5%, Montana taxes resorts in areas with strong dependence on tourism, and New Hampshire taxes meals and accommodations at 8.5%.
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What "no sales tax" actually means for your business
Even if you operate in a no-sales-tax state, you still have a tax obligation. In these states, alternative tax structures such as gross receipts taxes, franchise taxes, local municipal taxes, or corporate activity taxes still apply.
The compliance burden also varies depending on the business model. A store that is geographically concentrated may have a simpler in-state transaction compliance, but a distributed SaaS company or a countrywide ecommerce business can nevertheless trigger economic nexus duties through customers, workers, contractors, or inventory situated in many states.
The filing burden varies from state to state, but it does not go away.
State sales tax vs local sales tax
In the US, the sales tax charged at checkout can include multiple layers:
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For example, Texas applies a 6.25% statewide sales tax rate, but local jurisdictions can add additional taxes on top. The customer ultimately pays the combined rate tied to the delivery location.
This distinction matters when evaluating states with no statewide sales tax.
Alaska does not impose a statewide sales tax, but more than 100 municipalities levy local sales taxes independently. That means businesses selling into Alaska may still need to calculate location-specific tax rates depending on where the customer is located.
Delaware, Oregon, Montana, and New Hampshire are generally simpler from a transaction-calculation perspective because they do not use Alaska-style municipality-wide local sales tax systems across large portions of the state. Some still apply limited local or industry-specific taxes, but the transaction-level sales tax structure is typically less fragmented than Alaska’s.
State-by-state breakdown: the 5 no-sales-tax states
5 states with no sales tax levy 0% at the state level but replace it with a different tax structure, and the operational consequences vary significantly depending on your business model.
Delaware
Delaware remains the state of incorporation for many venture-backed startups, owing to its Court of Chancery, stable corporate law structure, and investor familiarity. The state also does not have a state or local sales tax.
What creates operational friction: Delaware imposes a gross receipts tax on income made in the state. The rates vary from 0.0945% to 1.9914% depending on the business activity. There's no deduction for cost of goods or labor. If you're actually operating in Delaware, that tax applies to top-line revenue, not profit.
Delaware's franchise tax can also scale quickly for startups. Under the Authorized Shares Method, current rates:
- 1–5,000 shares: USD $175
- 5,001–10,000 shares: USD $250
- Each additional 10,000 shares (or portion): Add USD $85
- Maximum: $200,000
This method works well for corporations with few authorized shares.
Most VC-backed startups instead switch to the Assumed Par Value Capital Method, which calculates tax using issued shares and total gross assets reported in the company’s federal tax filings. Under this method, franchise tax is generally charged at USD $400 per USD $1 million of assumed par value capital, with a minimum annual tax of USD $400. In practice, that often reduces franchise tax liability substantially compared to the Authorized Shares Method.
Franchise tax liability can increase significantly depending on a company’s share structure and assumed par value calculation.
Best for: Startups that want investor-friendly legal infrastructure and enterprises that have limited real operation in Delaware.
Watchout: A Delaware incorporation does not shield a SaaS company from multi-state nexus obligations. When revenue passes the threshold of $100,000 in states such as California, Texas, or New York, it has economic nexus obligations in each of those states individually. Incorporation state and nexus state are two separate questions.
Oregon
Oregon maintains a 0% statewide sales tax and generally blocks local sales taxes. For local retail businesses and inventory-heavy operations, that creates a cleaner pricing environment at checkout.
What creates operational friction: Oregon's Corporate Activity Tax (CAT) applies to gross revenue, not profit. Oregon commercial activity exceeds USD $1 million. The tax is calculated as USD $250 plus 0.57% of Oregon commercial activity above that threshold.
For low-margin distribution businesses, CAT exposure can become meaningful before the business reaches strong profitability. Unlike a net income tax, the CAT applies to commercial activity rather than profit.
Best for: Local retail, fleet and equipment buying, and inventory-heavy businesses where avoiding sales tax on inputs provides considerable cost savings.
Watchout: For distributed SaaS businesses, Oregon’s no-sales-tax structure usually provides limited operational advantage once customers and teams are spread nationally. Their nexus obligations are determined by customer location, not company location.
New Hampshire
New Hampshire has no state sales tax and does not tax earned income. That mix makes the state appealing for some founder-led service enterprises and high-income professionals.
What creates operational friction: New Hampshire’s business tax structure is more layered than many founders expect. The Business Profits Tax (BPT) applies to taxable business income, while the Business Enterprise Tax (BET) applies to compensation, interest, and dividends above state thresholds. Businesses may need to file separate calculations for both taxes. New Hampshire also imposes an 8.5% Meals and Rooms Tax on hotels, restaurants, and short-term lodging businesses.
Best fit for: Service businesses with operations in New Hampshire and founders who want to optimize for personal income tax savings.
Watchout: Business owners moving to New Hampshire looking for simple taxes will find a more complex business tax climate than they expected. The BET, in particular, catches startups off stride because it applies even if the company is not successful.
Montana
Montana does not have a comprehensive statewide sales tax and does not have broad local sales taxes. That makes the state a draw for tourism, outdoor recreation, and hospitality enterprises outside of resort-heavy areas.
What creates operational friction: Montana’s resort and lodging taxes establish local compliance duties that differ from municipality to municipality. If you’re in Big Sky, Whitefish, or West Yellowstone, you’re dealing with resort-area taxes that don’t apply 50 miles away. Montana also has a corporate income tax, which is at the state level no matter where you are located.
Best fit for: Equipment-intensive operations, construction enterprises, and tourism organizations that know the local tax landscape of their town.
Watchout: Founders researching "Montana, no sales tax" often miss that their specific location inside the state matters. A resort rental business in Big Sky faces tax obligations that a manufacturing operation in Billings doesn't.
Alaska
Alaska is the most operationally complex of the 5 tax-free states despite having zero statewide sales tax.
What creates operational friction: Alaska is the most operationally complex of the five NOMAD states. The Alaska Department of Commerce, Community, and Economic Development says 107 municipalities levy a general sales tax, from 1% to 7%. In certain places like Sitka there are seasonal rates that vary throughout the year.
Remote vendors aren’t immune. The Alaska Remote Seller Sales Tax Commission (ARSSTC) manages economic nexus for remote merchants in member towns. ARSSTC as of January 1, 2025, eliminated the 200-transaction barrier, leaving only one dollar-based trigger: $100,000 in gross yearly sales into Alaska.
If you cross that threshold, you register with the ARSSTC and collect local sales taxes across all participating jurisdictions simultaneously. Storing inventory in an Alaska warehouse or employing contractors in the state triggers physical nexus from the first dollar, with no minimum threshold.
Best for: Businesses that operate locally just within certain Alaskan municipalities that don’t charge taxes.
Watchout: Alaska is ostensibly a no-sales-tax state, but it can be more complicated than most other states in terms of multi-jurisdiction compliance. A single ARSSTC registration helps streamline compliance across participating municipalities, but the operational overhead is still significant.
Why operating from a no-sales-tax state doesn't eliminate multi-state obligations
Where you register your business controls your legal structure. Where your customers, employees, and inventory are located controls your tax obligations.
Economic nexus changed the rules
The 2018 South Dakota v. Wayfair decision let states tax out-of-state sellers based on customer activity, not physical presence. Most states trigger at USD $100,000 in annual revenue or 200 transactions. Your customers determine your obligations, not your office location.
In practice, most states rely on a small set of recurring nexus triggers beyond incorporation location. Revenue thresholds are the most visible, but physical presence rules still matter.
Remote employees, contractors, and inventory stored through Amazon FBA or third-party warehouses can all establish a nexus even before revenue thresholds are crossed. For distributed ecommerce businesses and remote-first startups, compliance exposure often expands alongside hiring, fulfillment, and customer growth.
Sales tax nexus checklist
States typically establish sales tax nexus through a combination of economic activity and physical presence triggers. Your business may create nexus in a state if you:
- Exceed the state’s economic nexus threshold, commonly USD $100,000 in annual sales or 200 transactions
- Employ remote workers operating from that state
- Store inventory through Amazon FBA or third-party fulfillment warehouses
- Maintain a physical office, coworking location, or temporary retail presence there
- Use in-state contractors or representatives tied to sales or service delivery
- Regularly deliver taxable goods into the state
For distributed ecommerce businesses and remote-first startups, nexus exposure often expands incrementally through hiring, inventory placement, fulfillment operations, and customer growth across multiple jurisdictions.
The operational triggers founders usually miss
The obvious trigger is crossing USD $100,000 in revenue in a given state. The less obvious ones:
- Remote employees establish physical nexus from day one
- Amazon FBA or 3PL inventory creates nexus wherever it's stored
- Contractors can establish agency nexus in some states
A Delaware-incorporated SaaS startup with a distributed team and national customers carries nexus obligations across every state where those touchpoints exist.
The compliance burden compounds once you factor in how spend actually flows across those states. Reimbursements paid to remote employees, vendor invoices from multiple jurisdictions, and cross-state card transactions all need to be tracked, categorized, and reconciled against the right entity. Most founding teams handle this manually until the volume makes that unsustainable.
Aspire’s1 approval workflows and real-time spend tracking help distributed teams manage reimbursements, vendor bill payments, and corporate card2 transactions as operations expand across states. That becomes increasingly important once employee spending, purchasing activity, and vendor payments start flowing across multiple jurisdictions.
When operating from a no-sales-tax state actually helps
The no-sales-tax advantage is most tangible for businesses with concentrated local operations and significant purchasing activity:
- Inventory-heavy businesses save on the cost of goods because they're not paying sales tax on wholesale inventory purchases.
- Fleet and equipment operators avoid transaction taxes on large capital purchases.
- Local retailers eliminate the compliance overhead of collecting and remitting sales tax on every transaction.
- Construction and materials businesses see direct cost savings on inputs.
The advantage shrinks for SaaS companies, remote-first startups, and nationwide ecommerce businesses. Their tax exposure is driven by customer distribution across all 50 states. Where the company is based has almost no bearing on that exposure.
What founders should evaluate before choosing a no-sales-tax state
A no-sales-tax state only simplifies operations if most of your business activity actually stays there.
Before choosing one of these states for incorporation or operations, founders should look at where the business will hire, store inventory, fulfill orders, and generate revenue in practice.
Questions worth evaluating early:
- Will employees work remotely across multiple states?
- Will inventory move through Amazon FBA or third-party warehouses?
- Are most customers concentrated in one region or spread nationally?
- Will the business make large equipment, vehicle, or inventory purchases where sales tax savings materially affect costs?
- Is the priority investor-friendly incorporation, simpler checkout pricing, or lower operational overhead?
- Could customer growth still create sales tax obligations in states like California, Texas, Florida, or New York?
For many ecommerce businesses, SaaS companies, and remote-first startups, operations eventually spread across multiple states even if the company starts in Delaware, Oregon, or another no-sales-tax jurisdiction.
Common misconceptions about no-sales-tax states
These five states attract founders for legitimate reasons, but the assumptions that follow them into tax planning are where the real compliance problems start.
“No sales tax” means “no compliance”
States without statewide sales tax often replace it with franchise taxes, gross receipts taxes, lodging taxes, or local municipal taxes.
“No sales tax” also means “no income tax”
Not always.
- Alaska still levies corporate income tax.
- Oregon applies Corporate Activity Tax (CAT) above USD $1 million in commercial activity.
- Delaware imposes franchise tax and gross receipts tax.
- New Hampshire charges a Business Profits Tax (BPT) and a Business Enterprise Tax (BET).
Founders researching “no sales tax no income tax states” often discover that tax exposure still depends on where the business hires, stores inventory, and generates revenue.
Delaware incorporation eliminates nationwide tax obligations
Delaware helps with corporate structure and fundraising. It does not exempt businesses from sales tax obligations in California, Texas, New York, or other destination states.
Online businesses avoid nexus
Wayfair changed this permanently. Remote sellers can trigger registration obligations without physical offices.
Local taxes do not apply in NOMAD states
Alaska municipalities can impose local rates reaching 7.5%, while Montana resort communities can apply localized taxes on lodging, food, and tourism-related activity.
Final thoughts
For most modern businesses, sales tax liabilities are based on where consumers take delivery of goods and services, where employees work, and where inventory is located, not where the company is incorporated. Opting for US states with no sales tax for your headquarters might cut down on some regulatory burdens, particularly for enterprises with local operations.
For distributed businesses, compliance exposure now scales alongside hiring, fulfillment, and customer expansion. But if your team is spread, your clients are national, and your fulfillment infrastructure spans numerous jurisdictions; your tax liabilities follow that footprint, not your location of incorporation.
FAQs
What is the most tax-friendly state for businesses?
There is no “most tax-friendly" state for any firm. Delaware is a good place for startups and raising money. Oregon and New Hampshire can be good for local businesses depending on payroll structure, inventory movement, and revenue model.
Are there regulatory advantages to operating in a no-sales-tax state?
Yes. In jurisdictions without sales tax, local businesses generally have fewer transaction-level reporting obligations and offer more transparent pricing to customers. However, multi-state merchants are still subject to economic nexus regulations and out-of-state compliance duties created by the Wayfair case.
How does a no-sales-tax state affect pricing strategy?
Businesses in no-sales-tax states can provide clearer checkout pricing and lower procurement expenses on acquisitions of goods, vehicles, or equipment. The cost advantage decreases if tax liabilities are distributed across several destination states.
Can online businesses still owe sales tax in other states?
Yes. After the South Dakota v. Wayfair decision, online businesses can establish sales tax nexus in other states based on economic thresholds related to sales, numbers of transactions, inventory, or physical presence.
What is the sales tax in Florida and Texas?
Florida has a statewide sales tax rate of 6%, while Texas has a statewide sales tax rate of 6.25%. Both states also enable local jurisdictions to add on their own sales taxes, and many localities have seen the overall combined rates go up.
What state has the lowest sales tax in the US?
Among states that levy a statewide sales tax, Colorado has among the lowest base state sales tax rates at 2.9%. The states without a statewide sales tax are Alaska, Delaware, Montana, New Hampshire, and Oregon.
Which states without sales tax in the USA are the simplest for businesses?
Delaware, Oregon, Montana, and New Hampshire have more straightforward transaction-level sales tax arrangements when compared to Alaska, which relies more on municipality-level local sales tax. The best option depends on where your company employs workers, keeps inventory, fulfills orders, and generates income.
