US Tax-Free States Introduction: 5 States with No Sales Tax

Five US states charge no state-level sales tax. Each has unique strengths when used as a billing address for online shopping and US subscriptions. This introduction compares all five, explains how the tax-free mechanism works, and helps you pick the right one.

The 5 Tax-Free States at a Glance

| State | State sales tax | Local sales tax | AVS pass rate | Standout feature |

|---|---|---|---|---|

| Delaware (DE) | 0% | 0% | ~95% | Most recognized by merchants |

| Oregon (OR) | 0% | 0% | ~88% | West-coast friendly |

| New Hampshire (NH) | 0% | 0% | ~90% | Also no wage income tax |

| Montana (MT) | 0% | 0% | ~90% | Business-friendly, rural |

| Alaska (AK) | 0% (state) | Varies by borough | ~85% | Some local taxes apply |

How "Tax-Free" Actually Works

When you buy something online, the merchant determines sales tax from your billing address (the address tied to your payment card), not your shipping address. If that billing address sits in a state with 0% sales tax, no sales tax is added at checkout. That is why a Delaware, Oregon, New Hampshire, Montana, or Alaska billing address removes sales tax on digital goods, subscriptions, and many physical shipments — even if you live in a high-tax state like California or New York.

Important nuance: Alaska has no state sales tax, but many boroughs and cities levy local sales taxes up to ~7%. For a clean 0% result, Delaware, Oregon, New Hampshire, and Montana are the safest choices.

How to Choose the Right One

• Delaware — best for most people. Highest AVS pass rate (~95%), universally recognized by banks and merchants, and the most common state for business incorporation. Default choice.
• Oregon — best for west-coast users. Strong recognition on the West Coast; ~88% AVS pass rate.
• New Hampshire — best if you also want no income tax. One of the few states with neither sales tax nor a wage income tax.
• Montana — best for business / rural addresses. No sales tax and a pro-business environment, though some localities have resort or local taxes.
• Alaska — situational. Good if you already have an Alaska connection, but verify the specific borough's local tax.

Who Should Use a Tax-Free Billing Address

• Shoppers buying from US retailers that tax by billing address.
• Apple ID users (App Store, Apple Music, iCloud, TV+).
• Subscribers to Netflix, Spotify, Adobe, Microsoft 365, and similar services.
• Remote workers and expats who need a stable US billing address.
• E-commerce sellers wanting a credible US business address.

Step-by-Step: Set One Up

1. Generate a valid, formatted address in your chosen tax-free state using our tax-free address tool.

2. Enter it as the billing address on your accounts. Keep the cardholder name matching your bank records.

3. Keep your real address for shipping physical goods.

4. Update each merchant's payment profile so the change applies to future billing.

Common Misconceptions

• "It removes my state income tax." No — it only affects sales tax on purchases.
• "I can use it for shipping." No — shipping goes to your real address; only billing drives the tax calculation.
• "Any fake address works." Wrong. AVS verifies the address; a made-up one gets your card declined.
• "Use tax doesn't exist." A few states request self-reported use tax, but enforcement on small consumer purchases is rare.

Summary

All five states can save you sales tax, but Delaware offers the best overall experience thanks to its ~95% AVS pass rate and universal merchant recognition. Pick Oregon for the West Coast, New Hampshire for dual sales-and-income-tax freedom, Montana for business, and verify local rates in Alaska.