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Is There Tax-Free Shopping in the USA?

The short answer is – yes! While there is no nationwide sales tax, five U.S. states impose zero sales tax, allowing you to shop tax-free year round: Alaska, Delaware, Montana, New Hampshire, and Oregon. I‘ll explain everything you need to know as your tax-free shopping guide.

As your tech-savvy friend, I‘ve analyzed taxes across the country to find the best hacks for avoiding sales tax. With the right knowledge, you can legally shop tax-free and save big on your next computer, TV, vacation, or even car purchase!

Overview of Sales Tax in the USA

Before we dive into the tax-free opportunities, let‘s quickly cover how sales tax works here:

  • There is no federal nationwide sales tax. It‘s assessed at the state and local levels.
  • 45 states collect statewide sales tax, with rates from 2.9% to 7.25%.
  • 38 states allow additional local sales taxes on top of the state taxes.
  • Combined rates can exceed 9% in cities like Chicago and Los Angeles.
  • The seller collects tax at the point of sale. Use tax may apply if sales tax was not paid.
  • Taxable goods include tangible personal property like merchandise and goods. Fewer states tax services.
  • Exemptions exist for groceries, prescriptions, clothing, manufacturing equipment.

It‘s a complex patchwork! But focusing on those 5 states where the rate is 0% makes tax-free shopping simple.

The 5 Tax-Free Shopping States

Here are the key details on the 5 states with no sales tax:

Alaska

  • 0% statewide and local sales tax.
  • Prices you see are the final prices you pay, with no tax added.
  • Perfect for a tax-free vacation with incredible nature and wildlife!

Delaware

  • No traditional sales tax, but does tax gross receipts of businesses.
  • No tax directly paid by consumers, but costs may be passed on.
  • Home of great outlet shopping near major metro areas.

Montana

  • No state sales tax, though local taxes can apply.
  • Very few populated areas collect local tax, so nearly tax-free.
  • Big Sky Country offers outdoor adventure and charming towns.

New Hampshire

  • Completely tax free – no state or local sales taxes.
  • Live Free or Die state with beautiful mountain landscapes.
  • Sales tax free shopping from small towns to cities like Manchester.

Oregon

  • Zero sales tax on state and local levels.
  • Shop in lively Portland or quiet coastal communities tax-free.
  • Tech hub of Oregon perfect for upgrading your laptop and gadgets.

Sales Tax Rates in All 50 States

To demonstrate how much sales tax varies across the country, here are the combined state and average local rates for each state as of 2022:

State Average Combined Rate
Alabama 9.22%
Alaska 0%
Arizona 8.78%
Arkansas 9.51%
California 8.82%
Colorado 7.95%
Connecticut 6.36%
Delaware 0%
Florida 7.08%
Georgia 7.58%
Hawaii 4.44%
Idaho 6.94%
Illinois 8.82%
Indiana 7.00%
Iowa 6.94%
Kansas 8.69%
Kentucky 6.00%
Louisiana 9.52%
Maine 5.50%
Maryland 6.00%
Massachusetts 6.25%
Michigan 6.00%
Minnesota 7.42%
Mississippi 7.07%
Missouri 7.67%
Montana 0%
Nebraska 6.94%
Nevada 8.27%
New Hampshire 0%
New Jersey 6.60%
New Mexico 7.88%
New York 8.52%
North Carolina 6.99%
North Dakota 5.43%
Ohio 7.17%
Oklahoma 8.62%
Oregon 0%
Pennsylvania 6.34%
Rhode Island 7.00%
South Carolina 7.46%
South Dakota 6.40%
Tennessee 9.55%
Texas 8.19%
Utah 8.35%
Vermont 6.18%
Virginia 5.30%
Washington 9.23%
West Virginia 6.39%
Wisconsin 5.43%
Wyoming 5.36%

The five 0% sales tax states really stand out! This table demonstrates how much sales tax can vary across state lines.

Tax-Free Shopping for Tourists

One of the best perks of tax-free states is that visitors from other states or countries can also shop tax-free.

The US government does not provide VAT refunds like in Europe. But tourists and visitors can simply shop in Oregon, Montana, New Hampshire, Alaska, or Delaware to avoid paying any sales tax.

Anchorage, Portland, and Manchester are particularly great options. These major cities have no additional local taxes beyond the 0% state tax. The price you see is the price you pay!

Delaware offers tax-free outlet shopping, but businesses may incorporate some gross receipts tax costs. Still a great deal for visitors passing through!

Tax-Free Online Shopping Challenges

Here‘s the catch when it comes to online shopping – many major retailers now collect sales tax nationwide following changing laws and court cases.

So even if you live in a tax-free state, ordering from Amazon or big box stores likely means paying your home state‘s sales tax rate during checkout. Lame!

However, opportunities for tax-free online shopping still exist:

  • Small & out-of-state sellers – Small businesses and sellers located in other states likely won‘t collect sales tax. Order directly from their sites.
  • Use freight forwarders – Have orders shipped tax-free to a freight forwarder warehouse and then forwarded to you.
  • Cross state lines – For big purchases, travel to a tax-free state to place the order in person tax-free.

With some creative thinking, you can find ways around sales tax even when shopping online. Support small businesses to maximize your chances of tax-free checkout.

Tax-Free Shopping for Big Purchases

The savings on big ticket items can be HUGE when you buy in a tax-free state instead of your home state. We‘re talking thousands in savings.

Some examples and money saving hacks:

  • Cars – Fly to Oregon, buy your new car tax-free as a non-resident, then drive home. Ensure you get proper registration and insurance first.
  • RVs – Register an RV in South Dakota or Alaska even as a non-resident to enjoy tax-free ownership.
  • Boats – Nearly all states exempt boats and vessels from use tax. Buy in Delaware tax-free and cruise home.
  • Airplanes – Major purchases like planes may be tax exempt. Or buy in Montana and fly home.
  • Online orders – For large online purchases, consider a freight forwarder as mentioned above.

Always consult your local laws before assuming this is allowed. But frequently, major transportation items are exempt from use tax when purchased tax-free out of state. You can save a ton!

Taking Advantage of Tax-Free Holidays

Even if you live in a normal sales tax state, you can take advantage of temporary tax-free shopping holidays and events.

States offer sales tax exemptions around major shopping seasons, usually 1-4 days in length:

  • Back to School (Aug/Sept) – Clothes, supplies, backpacks, computers
  • Energy Star (Varies) – Energy efficient appliances like refrigerators, washers, air conditioners
  • Emergency Prep (June/July) – Batteries, flashlights, generators, ice packs
  • Firearms (July/Aug) – Hunting supplies, ammunition, gun sales

For example, Florida has a 10-day back to school tax holiday. In 2022, school supplies under $50 were tax-free, and the first $1,000 of any computer was tax-free. Time your big purchases right and save!

Using Coupons and Discounts

Keep in mind that sales tax is calculated as a percentage of the total purchase amount. So use coupons, promo codes, cash back and rewards sites to effectively reduce your sales tax burden.

Example: a $100 purchase in an 8% tax state yields $8 sales tax. But use a 25% off coupon, and the pre-tax total is $75. Now the sales tax is only $6 instead of $8.

Maximize discounts, retail reward points, and rebates. Get cash back through Rakuten, Dosh, and apps that offer % back or flat cash rewards. They indirectly reduce your sales tax as well.

Buying from Small Sellers

Occasionally, small independent sellers like artisans, crafters, and flea market vendors do not charge sales tax. There are exceptions that exempt very small businesses from collecting and remitting sales tax.

Of course, consumers are technically still on the hook to self-report and pay any use tax that is due. But enforcement is largely impossible for small Volume sellers paid in cash.

So shopping at local craft fairs, farmer‘s markets, mom & pop shops offers chances to buy tax-free from small vendors. You help local businesses while avoiding the sales tax man!

Don‘t Assume Tax-Free States Have Low Taxes Overall

One important caveat – tax-free shopping states often make up that revenue in other taxes including:

  • Higher property taxes
  • Steep gasoline taxes
  • High business and corporate taxes
  • Various sin taxes on alcohol and tobacco

So while you may find no sales tax at the register, a tax-free state doesn‘t necessarily mean ultra-low taxes across the board. Do thorough research before packing your bags!

Frequently Asked Tax-Free Shopping Questions

Q: Where can I shop tax free without leaving my state?

A: Check for tax-free holidays in your state, buy from small vendors, or shop online from out-of-state sellers.

Q: What states have no sales tax on groceries?

A: Alaska, Delaware, Hawaii, Illinois, Missouri, New Hampshire, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia, Washington.

Q: Can I buy a car in Oregon if I live in California to avoid tax?

A: Yes, this is perfectly legal as long as you properly register and insure the car in Oregon first before driving home.

Q: Does Walmart charge sales tax on online orders?

A: Yes, Walmart collects local sales tax in most jurisdictions when you place an order online, based on your delivery zip code.

Q: Is there a tax free weekend for back to school supplies?

A: Yes, 16 states offer sales tax free weekends for school supplies and clothes in late summer. Dates vary by state.

Q: Can tourists shop tax free on a trip to the United States?

A: Yes! Visitors can shop tax-free in the states of Alaska, Delaware, Montana, New Hampshire, and Oregon which have 0% sales tax.

The Bottom Line

With strategic planning and researching all the angles, opportunities abound for tax-free shopping across many states. Outright avoiding sales tax may not always be possible, but maximizing tax-free purchases during a major shopping trip or vacation can keep hundreds of dollars in your wallet.

I hope this comprehensive guide gives you the insider knowledge to shop tax-free and stop overpaying the tax man! Let me know if you have any other sales tax questions.