Which states have no sales tax, and what that does and doesn’t mean for your startup

01The five states, one at a time#

“No sales tax” means something slightly different in each. The common case for a startup:

• Alaska: no state sales tax, but many cities and boroughs levy their own. Remote sellers register with the Alaska Remote Seller Sales Tax Commission once their sales into Alaska exceed $100,000 in the current or prior year (the 200-transaction test was dropped from 2025), and collect each participating jurisdiction’s rate.
• Delaware: no sales tax on the buyer. The seller pays a gross receipts tax on its Delaware receipts instead, at rates set by business activity.
• Montana: no general sales tax. Designated resort communities, such as Whitefish, Big Sky and West Yellowstone, may levy a local resort tax of up to 3%, run locally rather than by the state.
• New Hampshire: no general sales tax, but an 8.5% Meals and Rooms (Rentals) Tax on restaurant meals, hotel stays and motor vehicle rentals.
• Oregon: no sales tax. Oregon’s Corporate Activity Tax applies to businesses with more than $1 million of Oregon commercial activity: $250 plus 0.57% of taxable activity over $1 million. Registration is required within 30 days of reaching $750,000.

02What it means for a seller based there#

A company headquartered in a no-sales-tax state has no home-state sales tax return to file (outside Alaska’s localities), and its local customers don’t pay sales tax. That’s all. Since the Supreme Court’s 2018 decision in South Dakota v. Wayfair, every state with a sales tax can require out-of-state sellers to collect once their sales into the state cross its economic nexus threshold, most commonly $100,000 a year. A remote employee in another state usually creates nexus there too.

So an Oregon or Delaware company selling software nationally has exactly the same sales tax exposure in Texas, New York or Washington as a company based in those states. Its location only settles the tax on sales to its own state’s customers.

The same is true for the many startups that incorporate in Delaware but operate in California or New York. Incorporation doesn’t create a physical presence: the company’s sales tax obligations follow where it has people, property and sales, not where its charter is filed.

03What it means for a buyer#

A business or person in one of the five states generally pays no sales tax on purchases delivered there. The reverse doesn’t work: buying from a seller in a no-sales-tax state doesn’t make a purchase tax-free in your own state. If the seller doesn’t charge your state’s tax, you owe use tax at the same rate on items used there. That’s the rule behind the Washington resident who buys a laptop in Portland, and the startup in New York that buys hardware from an Oregon vendor: both owe use tax at home.

04Gross receipts taxes: taxing the seller instead#

States without a sales tax still need revenue, and two of the five raise some of it from businesses’ top line. Delaware’s gross receipts tax is paid by the seller on receipts from Delaware business activity, at rates the Division of Revenue lists from 0.0945% to 1.9914% depending on the activity, after an exclusion that generally starts at $100,000 a month. New businesses file quarterly by default, and larger ones monthly. Oregon’s Corporate Activity Tax works similarly at 0.57% above $1 million, with a $250 base.

Gross receipts taxes differ from sales tax in two ways that matter to the books. They’re an expense of the business, recorded on the P&L in operating expenses or taxes, not a liability on the balance sheet collected from customers. And they apply to revenue without any deduction for costs, so a low-margin business pays the same rate as a high-margin one. Some states with a sales tax also levy a gross receipts tax, Washington’s business and occupation tax being the best-known example.

05How rates compare elsewhere#

The other 45 states and the District of Columbia levy a statewide sales tax, and most add local rates on top. The Tax Foundation’s mid-2026 figures put the population-weighted national average combined state and local rate at 7.53%. The highest average combined rates were Louisiana (10.13%), Tennessee (9.61%), Washington (9.57%), Arkansas (9.48%) and Alabama (9.46%). Those are averages; the rate at a particular address can be higher or lower, which is why a seller calculates tax by full address rather than by state.

Rates change. Local jurisdictions adjust them several times a year, and no state changed its statewide rate in the first half of 2026 while several combined averages rose through local changes. Treat any table, including this one, as a snapshot.

06What to do with this#

For a startup selling across the country:

• Don’t assume a no-sales-tax headquarters means no sales tax work. Track sales by state against each state’s threshold, wherever you are based.
• If you sell into Alaska, check your sales there against the $100,000 threshold and, if over, register with the Remote Seller Sales Tax Commission.
• If you have revenue from Delaware or Oregon activity, check whether the gross receipts tax or the Corporate Activity Tax applies, and book it as an expense.
• Book use tax on untaxed purchases used in a sales-tax state, including software and hardware from out-of-state vendors.