Nomad states: 5 states without sales tax (and those with the lowest)

Collecting and paying taxes aren’t favorite topics among businesses. State sales tax can mean extra time and work for business owners.

If you operate in a state that requires sales tax, you need to get a sales tax license and stay current on the sales tax rate for your state. Otherwise, you risk hefty fines.

However, some states don’t collect sales tax. Five states do not have state sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon. But that doesn’t make them entirely tax-free. We’ll look at the five states that don’t have a sales tax rate and highlight other tax rates you need to know.

Jump to:

1. Alaska
2. Delaware
3. Montana
4. New Hampshire
5. Oregon

The hidden trap: Economic nexus in 2026

Benefits of NOMAD states

States with low sales tax rates

States with the highest tax rates

Sales tax variability across states

Why you need to know your state sales tax rate

Find peace of mind come tax time

Let’s dive into each of the five states that have no sales tax:

1. Alaska

Alaska does not have a statewide sales or state income tax. However, many local municipalities impose their own sales tax.

Other taxes may also impact how affordable it is to operate in Alaska, including:

• Corporate income tax rate of up to 9.4%
• Local sales tax rates in Alaska range from 1% to 7.85%

Note that some of these local jurisdictions administer the local tax only part of the year, charging higher rates during popular tourist seasons.

2. Delaware

Delaware doesn’t have a state sales tax, either. The state makes up for this by collecting income taxes and several other taxes from businesses.

As a Delaware business owner, you may also have to pay:

• Gross receipts tax of up to 2%, depending on the business activity
• Corporate income tax rate of up to 8.7%
• Corporate franchise tax, ranging from a minimum of $175 to a high of $200,0000

Cities also collect property taxes to help fund projects and services that improve and protect the community. While property taxes vary from jurisdiction to jurisdiction, the average property tax in Delaware is 0.43%.

3. Montana

Montana is another state that does not have a state sales tax. Montana doesn’t have local sales taxes, either.

However, it makes up for it with other taxes, such as:

• Corporate income tax rate of 6.75%
• State lodging and facilities sales and use tax of 8%

On the flip side, Montana property taxes are fairly low, averaging 0.83%.

4. New Hampshire

There’s no sales tax in New Hampshire—not even in individual municipalities. However, businesses operating in the state should also be aware of the following taxes:

• Business profits tax of 7.5%
• Business enterprise tax of 0.55%

You’ll also see meals and room tax on your bill if you are dining out, staying in rented accommodations, or renting a motor vehicle in the state. The New Hampshire meals and rentals tax rate is 8.5%.

5. Oregon

Oregon does not have a sales tax, but it does have some of the highest income tax rates. Municipalities in Oregon can also set their own local sales taxes. When considering operating your business in Oregon, some taxes you should be aware of are:

• Corporate income tax rate of 6.6%
• Corporate Activity Tax of $250 plus .057% on commercial activity over $1 million

Some cities also have food and beverage and other local taxes you’ll want to watch out for.

The hidden trap: Economic nexus in 2026

In 2026, every state that has a sales tax will also enforce economic nexus laws. This means that if your business sells to customers in other states through your website, social media, or phone, you may have to register, collect, and remit sales tax to those states once you reach certain sales milestones.

Why nomad businesses still pay sales tax

Operating from a tax-free home base like Oregon or Delaware doesn't exempt you from the laws of the states where your customers live. If you ship a product to a customer in California or Texas, you're using those states’ infrastructure to conduct business.

Under the 2018 Wayfair Supreme Court decision, states have the legal right to demand sales tax once you establish a nexus through your sales volume.

Common 2026 thresholds

Nexus laws are constantly shifting. For 2026, business owners should keep a close eye on these three categories of thresholds:

• The standard threshold: The most common benchmark is $100,000 in gross sales. States like Florida, Georgia, and Colorado require you to register for a sales tax permit once your sales to their residents exceed this amount in a calendar year.
• The shift away from transaction counts: Illinois officially removed its 200 transaction threshold on January 1, 2026, joining states like California, Indiana, and Maine that now focus solely on revenue.
• High volume thresholds: Some larger economies set the bar higher to protect very small sellers. In New York and California, for example, you generally do not trigger economic nexus until you exceed $500,000 in sales.
• Marketplace facilitators: If you sell exclusively through platforms like Amazon, Etsy, or Walmart, these facilitators usually collect and remit the tax for you. However, some states still require you to register and file zero tax returns once you cross their economic threshold.

Benefits of NOMAD states

Operating in a state with no sales tax means you don’t need to worry about figuring out sales tax.

Operating in a state with no sales tax can benefit your business, including:

• Generating fewer tax responsibilities: If the state has no sales tax at all, that’s one less thing you have to worry about. You don’t have to worry about collecting sales tax on each transaction or making sure you pay sales tax.
• Simplifying operations: When sales tax rates change, you need to be on top of it. This means not having to worry about sales tax calculations and adjusting prices.
• Reducing overhead: The administrative time, legal consulting, and other time costs of managing state sales tax are no longer necessary if you live in a state with no sales taxes.

Doing business in a NOMAD state allows you to save time by not having to calculate and pay sales taxes.

States with low sales tax rates

There are also plenty of states with low sales tax rates. Note that some of these states have lower tax rates, like property taxes, making them more appealing than NOMAD states for certain businesses.

Here are the states with the lowest sales tax rates:

• Colorado: 2.9%
• Alabama: 4.0%
• Georgia: 4.0%
• Hawaii: 4.0%
• New York: 4.0%
• Wyoming: 4.0%

There are trade-offs to take note of, however. For example, Colorado has the lowest sales tax rate but a higher cost of living. Also, don’t forget to account for local sales tax rates when considering sales tax obligations.

States with the highest tax rates

Even if your state doesn’t have a sales tax, your small business may still have to collect local sales taxes or similar types of taxes in these states, especially if you’re an online retailer selling to customers in other states and needing to collect internet sales tax.

On the opposite side, several states have much higher tax rates:

• California: 7.25%
• Indiana: 7%
• Mississippi: 7%
• Rhode Island: 7%
• Tennessee: 7%

Though some of these rates seem low, remember to look at the combined sales tax rate. The combined rate includes the statewide sales tax rate and local sales tax rates.

A good example of this is New York. It has a fairly low state tax rate of 4%, but the average local tax rate is 4.5%.

Sales tax variability across states

Sales tax rates and regulations differ significantly across various states. This variability includes the existence of local sales taxes and differences in tax-exempt goods and services.

Some states allow local jurisdictions to impose additional sales taxes on top of the state rate, leading to varying total sales tax rates within the state.

But states offer exemptions on certain items such as medical supplies, nonprepared food, clothing, and services. These exemptions can vary widely, affecting how businesses price and categorize their products.

Why you need to know your state sales tax rate

As a business owner, understanding and complying with tax laws can help you avoid audits, fines, or other penalties. That’s why it’s important to know when and how much to charge for sales tax.

Note that even if your state has a sales tax, the state may not collect sales tax on every item. There are specific exemptions from sales tax. Some items that are typically tax-exempt include medical supplies, nonprepared food items, and clothing.

Types of organizations that may be exempt from sales tax include nonprofits, educational institutions, and government agencies.

Find peace of mind come tax time

To keep your business in good standing, you need to know which sales tax may apply to you and ensure that you pay accurately. But how can you do that?

One of the easiest ways to keep track of sales tax obligations is to use accounting software like QuickBooks that allows for automatic sales tax calculations according to your type of product or service. This makes it easy for you to remain compliant by taking out the guesswork and trying to keep tabs on all the different taxation rules.