States With No Sales Tax: What Shopify Sellers Need to Know

Five US states have no general sales tax: Oregon, Montana, New Hampshire, Delaware, and Alaska. If you sell on Shopify and ship to customers in these states, you typically do not need to collect sales tax on those orders. But there are a few nuances - especially with Alaska - that every ecommerce seller should understand.

This guide breaks down each no-sales-tax state, explains what it actually means for your Shopify store, and covers the edge cases that trip sellers up.

The 5 States With No Sales Tax

Here is a quick overview before we dig into the details:

These five are in a completely different category from low-tax states like Colorado (2.9% state rate). In these five states, there is no statewide sales tax applied to retail purchases - period.

Now let's look at each one in detail.

Oregon

State sales tax rate: 0%

Oregon has no sales tax at all. There is no state sales tax, no county sales tax, and no city sales tax. When a customer in Portland or Eugene buys from your Shopify store, you charge them exactly $0 in sales tax.

Oregon does have a Corporate Activity Tax (CAT), which is a gross receipts tax on businesses with more than $1 million in Oregon commercial activity. But this is a business-level tax - it is not added to customer receipts at checkout, and it has nothing to do with sales tax collection or remittance.

Why this matters for Shopify sellers: Oregon is the cleanest of the five no-sales-tax states. No asterisks, no local exceptions. You do not need to collect sales tax on orders shipped to Oregon, and you do not need a sales tax permit there.

Fun fact: Oregon's lack of sales tax makes it a popular cross-border shopping destination for residents of neighboring Washington state, which has a 6.5% state sales tax rate (plus local taxes that can push the combined rate above 10%). If you run a brick-and-mortar store near the Oregon-Washington border, you will see plenty of Washington plates in your parking lot.

Montana

State sales tax rate: 0%

Montana has no general sales tax. The state legislature has consistently rejected proposals to implement one, and there is no statewide mechanism for collecting sales tax on retail transactions.

However, Montana does allow certain resort communities to impose a local Resort Tax of up to 3%. This applies in towns like Big Sky, Red Lodge, West Yellowstone, Virginia City, and Whitefish. The resort tax typically covers lodging, restaurants, and some retail purchases within those resort areas.

Why this matters for Shopify sellers: The resort tax applies to transactions that happen within those resort communities - think in-person restaurant meals and hotel stays. As an online Shopify seller shipping products to Montana addresses, you do not need to collect any sales tax. Montana has no remote seller or economic nexus law for sales tax because there is no general sales tax to collect.

Montana is also known for its LLC-friendly laws, which has led to some creative (and sometimes questionable) tax avoidance strategies involving registering vehicles and other large purchases through Montana LLCs. That is a separate issue from ecommerce sales tax, but it comes up in conversations about Montana and taxes.

New Hampshire

State sales tax rate: 0%

New Hampshire has no general sales tax on goods. You can buy clothing, electronics, furniture, and pretty much anything else without paying sales tax.

New Hampshire does have a Meals & Rooms Tax of 8.5%, which applies to restaurant meals, hotel and motel rooms, and motor vehicle rentals. But this is a specific excise tax on hospitality services - it does not apply to general retail goods purchased online or in stores.

The state also has no personal income tax on wages (though it does tax interest and dividends at 3%, which is being phased out). This combination of no sales tax and no income tax makes New Hampshire a genuinely low-tax state for consumers.

Why this matters for Shopify sellers: Unless you are running a restaurant or hotel through Shopify (which some sellers do), you do not need to worry about New Hampshire's Meals & Rooms Tax. For standard ecommerce - selling physical products shipped to New Hampshire addresses - there is no sales tax to collect. No registration needed, no filing needed, no tax added at checkout.

Delaware

State sales tax rate: 0%

Delaware has no sales tax. None. Zero. It is one of the cleanest no-sales-tax states alongside Oregon.

What Delaware does have is a Gross Receipts Tax, which is a tax on business revenue. This tax is paid by the business, not the consumer, and it ranges from 0.0945% to 1.9914% depending on the type of business activity. The key point: this tax is not added to the customer's receipt. It is a cost of doing business in Delaware, similar to how a business might pay a licensing fee or franchise tax.

Delaware is also famously the incorporation capital of America. More than 60% of Fortune 500 companies are incorporated in Delaware thanks to its business-friendly court system and corporate laws. If your Shopify business is incorporated as a Delaware LLC or corporation, that is a completely separate matter from sales tax collection.

Why this matters for Shopify sellers: You do not collect sales tax on orders shipped to Delaware. Period. Even if your business is incorporated in Delaware, even if you have a registered agent there, you have no sales tax obligations for Delaware orders because the state simply does not have a sales tax.

If you have employees or physical operations in Delaware, you may need to pay the Gross Receipts Tax on your business revenue, but that is between you and the Delaware Division of Revenue - it has nothing to do with charging your customers at checkout.

Alaska

State sales tax rate: 0% - but local taxes are a different story

Alaska is the tricky one. The state of Alaska does not impose a sales tax. But unlike the other four states on this list, Alaska allows local municipalities to levy their own sales taxes - and many of them do.

Here are some examples of local sales tax rates in Alaska:

• Juneau: 5% city sales tax
• Kodiak: 7.5% combined (city + borough)
• Skagway: 5% city sales tax
• Kenai Peninsula Borough: 3% borough sales tax
• Wasilla: No local sales tax (not all areas charge one)
• Anchorage: No local sales tax

Because there is no state sales tax infrastructure, Alaska has no statewide system for collecting remote seller taxes. Instead, the Alaska Remote Seller Sales Tax Commission (ARSSTC) was created to allow participating municipalities to collectively enforce economic nexus rules on remote sellers.

The Alaska economic nexus threshold for participating municipalities is $100,000 in sales or 200 transactions in the prior or current calendar year. If you exceed this threshold in sales to customers in participating Alaska municipalities, you may be required to register with the ARSSTC, collect local sales tax, and remit it.

Why this matters for Shopify sellers: Alaska is the one "no sales tax" state where you might actually need to collect tax. If your Shopify store does significant volume shipping to Alaska, you should check whether you have crossed the economic nexus threshold for ARSSTC municipalities.

That said, for most small to mid-size Shopify sellers, Alaska volume is low enough that this does not come into play. Alaska's total population is around 730,000, and ecommerce orders to the state tend to be limited by high shipping costs.

If you do need to collect Alaska local taxes, Shopify Tax can handle it. You would register with the ARSSTC, then configure Shopify to collect the appropriate local rates for participating jurisdictions.

What This Means for Shopify Sellers

Here is the practical takeaway for running your Shopify store:

You do not need to collect sales tax for customers in Oregon, Montana, New Hampshire, or Delaware. Full stop. There is no sales tax in these states, no permits to register for, and no returns to file.

Alaska is the exception. If you hit the $100,000 / 200-transaction threshold in participating Alaska municipalities, you may need to register with the ARSSTC and collect local sales tax. But for most Shopify sellers, this does not apply.

You do not need to register for sales tax permits in these states. Many sellers waste time and energy trying to register in all 50 states. Do not do this. You only need to register in states where (a) there is a sales tax, and (b) you have nexus - either physical presence or economic nexus from exceeding the state's sales threshold.

You do not need to file sales tax returns in these states. No tax means no return. If you use a compliance tool like BreezyFile to manage your multi-state sales tax filings, these states will not appear in your filing queue because there is nothing to file.

Customers cannot "avoid" sales tax by shipping to these states. Well, technically they can if they have a legitimate shipping address there. But if a customer in Texas asks you to ship to a forwarding address in Oregon to avoid Texas sales tax, that is between the customer and their home state's use tax laws - not your problem as the seller.

Setting Up Shopify Tax for No-Sales-Tax States

The good news: Shopify handles this automatically. Here is what you need to know about your Shopify tax settings for these five states:

Shopify Tax (built-in) and Shopify Tax (third-party apps) will not charge sales tax for orders shipped to Oregon, Montana, New Hampshire, or Delaware. You do not need to do anything special. The system knows these states have no sales tax and will calculate $0 in tax automatically.

For Alaska, the setup depends on your situation:

1. If you have NOT hit the Alaska economic nexus threshold: Do nothing. Shopify will not charge sales tax for Alaska orders by default, and you do not need to collect.

2. If you HAVE hit the threshold and registered with the ARSSTC: You will need to enable tax collection for Alaska in your Shopify admin. Go to Settings > Taxes and duties > United States, and configure Alaska with the appropriate local tax rates. Shopify Tax can handle the municipality-level rates if you are using the automated tax calculation feature.

Steps to verify your Shopify tax setup:

1. Go to Settings > Taxes and duties in your Shopify admin
2. Click on United States
3. Scroll through the list of states
4. Confirm that Oregon, Montana, New Hampshire, and Delaware show no tax collection enabled
5. For Alaska, confirm it matches your registration status

A common mistake: Some sellers enable tax collection in all 50 states "just to be safe." This is wrong. If you collect sales tax in a state where you are not registered, you are holding tax money that you have no mechanism to remit to the state. This creates a liability. Only collect in states where you are registered and have an obligation to collect.

Frequently Asked Questions

Do I still need to file anything in no-sales-tax states?

No. If a state has no sales tax, there is no sales tax return to file. You do not need to register, collect, or remit anything related to sales tax in Oregon, Montana, New Hampshire, Delaware, or (at the state level) Alaska.

You may have other tax obligations in these states - like income tax if you have employees there, or Oregon's Corporate Activity Tax if you have significant revenue - but those are separate from sales tax.

What about Alaska local taxes? How do I know if I owe them?

Check whether you have exceeded $100,000 in sales or 200 transactions to customers in Alaska municipalities that participate in the Alaska Remote Seller Sales Tax Commission (ARSSTC). You can find the list of participating municipalities on the ARSSTC website.

If you are below the threshold, you do not need to collect. If you are above it, register with the ARSSTC, configure Shopify to collect Alaska local taxes, and file returns as required.

For most Shopify sellers, Alaska order volume is well below the threshold.

Can customers avoid sales tax by shipping to a no-sales-tax state?

Technically, if a customer has a legitimate address in Oregon and ships there, no sales tax applies to that order. That is how it works.

But if a customer lives in a state with sales tax and has goods shipped to a no-sales-tax state to avoid the tax, their home state may require them to pay a "use tax" - which is essentially the sales tax equivalent on out-of-state purchases. Use tax is the customer's responsibility to self-report and pay. It is not your obligation as the seller.

As a Shopify seller, you charge sales tax based on the shipping destination. If the destination is a no-sales-tax state, you charge $0. You are not responsible for policing your customers' use tax obligations.

What is use tax, and should I worry about it?

Use tax is a companion to sales tax. It is owed by the buyer when they purchase something from out of state and were not charged sales tax. For example, if someone in California buys from an out-of-state seller who does not collect California sales tax, the buyer technically owes California use tax on that purchase.

As a Shopify seller, you do not need to worry about use tax in the context of no-sales-tax states. Use tax only exists in states that have a sales tax. Oregon, Montana, New Hampshire, Delaware, and Alaska (at the state level) do not have a sales tax, so there is no corresponding use tax.

You may need to worry about use tax in other contexts - like if you buy business supplies from out of state and are not charged your home state's sales tax - but that is a separate matter from selling to customers.

Do these states have other business taxes I should know about?

Yes, the absence of sales tax does not mean these states are tax-free. Here is a quick summary of other business taxes in each state:

• Oregon: Corporate Activity Tax (0.57% of commercial activity over $1 million), corporate income/excise tax, personal income tax
• Montana: Corporate income tax (6.75%), personal income tax, property taxes
• New Hampshire: Business Profits Tax (7.5%), Business Enterprise Tax (0.55%), no personal income tax on wages
• Delaware: Gross Receipts Tax (varies by activity), corporate franchise tax, no personal income tax for non-residents
• Alaska: Corporate income tax (0-9.4%), no personal income tax, local property taxes

These taxes generally apply if you have a physical presence, employees, or significant business activity in these states. For a typical Shopify seller who is simply shipping products to customers in these states, none of these taxes are triggered by the act of making a sale.

Does Shopify automatically know not to charge tax in these states?

Yes. Shopify's built-in tax engine and Shopify Tax both recognize that these states have no general sales tax. When an order ships to an address in Oregon, Montana, New Hampshire, or Delaware, the tax calculation will return $0.

For Alaska, Shopify defaults to not charging tax unless you have specifically enabled local tax collection for Alaska municipalities. If you have registered with the ARSSTC and need to collect, you will need to configure this in your Shopify tax settings.

If you are using a third-party tax app (like Avalara, TaxJar, or similar), those services also handle these states correctly out of the box.

Managing sales tax across multiple states? BreezyFile automates multi-state sales tax filing for Shopify sellers. States with no sales tax are automatically excluded from your filing obligations - one less thing to think about.

More State Sales Tax Guides

• California Sales Tax Guide
• Colorado Sales Tax Guide
• New Jersey Sales Tax Guide
• New York Sales Tax Guide
• North Carolina Sales Tax Guide
• States With No Sales Tax