In life, only two things are constant: taxes and death. Typically, the three common types of taxes citizens have to deal with are sales, property, and income tax. Income and property taxes are subject to change according to the state you’re living in and its legal system. However, sales tax is entirely dependent on the location you make purchases. Meaning, whenever you travel to another state, you will have to pay sales tax according to what the state government has set. That said, sales taxes aren’t controlled by the federal government. Although specific goods such as non-prescription and prescription drugs might not be subject to the state’s sales tax, they aren’t exempt from local sales taxes. For instance, New York imposes a four percent sales tax on purchases. However, New York City adds extra taxes, making the total rate 8.875 percent.
That said, some states in the U.S. don’t impose any sales tax at all. So, with that in mind, let us take a look at the best places to make purchases in the U.S.-no sales tax included.
Alaska
Alaska, also referred to as ‘The Last Frontier,’ is the most tax-friendly state in the United States of America. It was admitted to the American Union in 1959 as the 49th state. Currently, the state is home to 736,081 people. However, the best thing about this state is that it imposes no income and sales tax on its residents. Nonetheless, the state charges a higher than usual property tax of around 1.18 percent. But, it also provides residents with property tax exemptions to lighten the financial burden.
That said, there are some ‘boroughs’ in Alaska that charge federal sales tax having different rates. For instance, while Fairbanks and Anchorage don’t impose sales tax on purchases, Juneau, Kalifornsky, and Soldotna, charge around five, three, and six percent, respectively. It amounted to more than 47 million dollars in sales tax collected in 2020. Moreover, passengers traveling through commercial vessels staying overnight pay an excise tax of around 34.50 dollars. Furthermore, the state also imposes the least gas tax in the entire nation, with the figure being around 8.95 cents per gallon.
Oregon
Oregon is an American state located in the Northwest Region of the western U.S. This state’s income rank is 21, with a median household income of around 60.212 dollars. In addition, Oregon was home to various indigenous people for hundreds of years. However, the best thing about this great American state is its relaxation in sales taxes laws and regulations.
While Oregon is another sales-tax-free state to some extent, the state imposes a sales tax if you purchase particular types of goods or items. For example, you will have to pay excise tax on packaged alcoholic drinks and tobacco taxes on purchasing tobacco-related products such as cigarettes and cigars. Moreover, according to Ashland’s five percent tax, the local government might ask you to pay sales taxes on prepared food. Furthermore, Oregon has a high personal income tax compared with other U.S. states. However, it isn’t imposed on intangible properties like bonds and stock accounts.
New Hampshire
Typically, in New Hampshire, restaurants, car rentals, and short-term room rentals charge a sales tax of around nine percent. Moreover, the state also sets 0.75 dollars with every hundred dollars real estate sale and seven percent tax on phone services. Not to mention, electricity and tobacco also see some sales taxes. However, the local government cannot impose sales tax due to the statewide zero percent sales tax rule. Moreover, you won’t have to pay any sales tax if you’re a B2B seller who wants to resell the abovementioned goods.
That said, paying timber tax is a must when cutting at ten percent value of the wood. Nonetheless, if you’re chopping down wood for personal use, there can be some exceptions. Plus, according to New Hampshire state law, income tax is only subject to dividend and interest income.
Montana
Montana is an American state located on North and South Dakota borders from the east and Idaho from the west. It has an income rank of 38 with a median household income of 53,386 dollars. The sales tax laws in Montana are similar to those imposed in Alaska. Usually, there are no sales taxes in this American state. However, car companies and resort destinations like West Yellowstone, Red Lodge, and Big sky impose local sales taxes at a low three percent. That said, a city must have a population under 5,500 to qualify for such a tax requirement. Typically, this tax exists to support the infrastructures and various places visited by tourists.
Moreover, Montana has different local jurisdictions than other states and cannot impose sales on minor purchases. But since this state is visited by thousands of tourists every year, charging tax on tourist-based activities will be excellent for improving the infrastructure.
Delaware
Delaware is an American state bordered by the Atlantic Ocean, New Jersey, Pennsylvania, and Maryland. Its income rank is 18th, with a median household income of 62,852 dollars. This state was admitted into the American union back in 1787.
Although Delaware doesn’t impose any sales tax on its citizens, particular companies must pay gross receipt tax. Plus, this tax doesn’t apply to consumers purchasing items and goods. But, the sellers of these items and goods are subject to gross receipt tax. Moreover, according to Delaware’s Division of Revenue, this gross receipt tax depends on the company’s operations and activities and ranges from 0.0945 to 0.7468 percent.
Conclusion
Suppose you’re in any of the American states mentioned above. In that case, you can benefit from being excluded from all out-of-state sales tax rules and regulations while you make purchases. In contrast, you might have to pay some local/resort taxes, excise taxes, local sales taxes, or other related taxes. Again, it depends on the state you live in or plan to live in eventually. So, if you’re planning to visit these states in the foreseeable future, it would be wise to do some research or visit the state’s official website. Doing so will ensure that you don’t get blindsided by any additional taxes you didn’t plan on paying.