US states have different sales tax structures because of their specific economic needs, demographics, and priorities. For instance, a state that relies heavily on tourism might set higher sales taxes on hotels and restaurants, while states with strong manufacturing sectors might keep taxes low on business inputs to attract and retain factories and jobs. States craft their sales tax policies to ensure they’re bringing in the revenue they need without stifling growth.

Political and cultural influences also affect sales tax structure. More progressive states might exempt essentials such as groceries and medicine from sales tax to help lower-income families, while states that favor smaller government might choose a flat sales tax for simplicity and to reduce administrative costs. This mix of economic strategy and political philosophy creates a wide variety of tax structures across the country and lets states support their local economies and communities in ways that make sense for them.

Below, we’ll identify which states have the lowest sales taxes, which have the highest, and which do not have state sales tax at all.

What’s in this article?

• US states with no state sales tax
  
• US states with the lowest sales tax
  
• US states with the highest sales tax
  

US states with no state sales tax

Five US states don’t have statewide sales tax:

• Alaska: Alaska relies on revenue from the oil and gas industry, which lets the state maintain a low tax burden on residents and businesses. Many municipalities impose sales taxes to fund essential services, with an average of 1.82%.
  
• Delaware: Delaware’s lack of sales tax is part of its business-friendly environment, attracting corporations and shoppers from neighboring states. This policy is complemented by other tax advantages such as no corporate income tax for income generated outside the state.
  
• Montana: Montana’s lack of sales tax aligns with its “frontier” spirit and limited government philosophy. The state’s revenue primarily comes from property and income taxes, along with tourism and natural resource extraction.
  
• New Hampshire: New Hampshire’s motto, “Live Free or Die,” reflects its strong libertarian ideals, including a preference for low taxes. The state relies on property taxes and business taxes to fund public services, while the lack of sales tax is seen as a way to attract residents and businesses.
  
• Oregon: Oregon’s lack of sales tax is offset by relatively high income taxes, personal and corporate. This policy mix creates a progressive tax system while maintaining a competitive business environment.
  

US states with the lowest sales tax

Though most states have sales tax, the rates vary widely. Here are the states with the lowest average combined state and local sales taxes:

• Hawaii (4.5%): Hawaii’s 4% General Excise Tax rate acts as state sales tax and is increased by additional local sales taxes.
  
• Wyoming (5.44%): Wyoming’s 4% state sales tax rate increases with local sales taxes.
  
• Maine (5.5%): Maine has a 5.5% state sales tax rate and no local sales taxes.
  
• Wisconsin (5.7%): Wisconsin’s 5% state sales tax rate increases with the addition of local sales taxes.
  
• Virginia (5.77%): Virginia’s 4.3% state sales tax is increased by a 1% mandatory local add-on sales tax rate, along with other local sales taxes.
  
• Kentucky (6%): Kentucky has a 6% state sales tax rate and no local sales taxes.
  
• Maryland (6%): Maryland has a 6% state sales tax rate and no local sales taxes.
  
• Michigan (6%): Michigan has a 6% state sales tax rate and no local sales taxes.
  

US states with the highest sales tax

On the opposite side of the spectrum, here are the states with the highest average combined sales taxes:

• Louisiana (10.11%): Louisiana’s low 5% state sales tax rate increases substantially after local sales taxes are added.
  
• Tennessee (9.55%): Tennessee’s relatively high 7% state sales tax rate increases after local sales taxes are added.
  
• Arkansas (9.46%): Arkansas’ 6.5% state sales tax rate increases after local sales taxes are added.
  
• Washington (9.429%): Washington’s 6.5% state sales tax rate increases after local sales taxes are added.
  
• Alabama (9.427%): Alabama’s low state sales tax rate of 4% increases substantially because of high local sales tax rates.
  
• Oklahoma (9%): Oklahoma’s low 4.5% state sales tax rate increases after local sales taxes are added.
  
• Illinois (8.89%): Illinois’ 6.25% state sales tax rate increases after local sales taxes are added.
  
• California (8.8%): California’s relatively high 7.25% state sales tax rate goes up with the addition of local sales taxes.