Sales tax adds 4-10%+ to every purchase in most states, but there are legal ways to shop tax-free. This guide covers tax-free states, sales tax holidays, duty-free shopping, and exemptions that can save you hundreds annually.
How Much Can You Save?
On a $1,000 purchase in a state with 8% sales tax, you'd save $80 by shopping tax-free. For big-ticket items like computers, appliances, or furniture, the savings add up quickly.
States with No Sales Tax
Tax-Free States (2025)
- Alaska - No state sales tax (some local taxes)
- Delaware - No sales tax at all
- Montana - No sales tax (some resort taxes)
- New Hampshire - No sales tax on most items
- Oregon - No sales tax
Best Tax-Free Shopping Destinations
- Portland, Oregon: Major city, no sales tax, great shopping
- Delaware outlets: Christiana Mall, Tanger Outlets - no tax + outlet prices
- New Hampshire: Tax-free + no income tax (great for residents)
Sales Tax Holidays 2025
Many states offer tax-free weekends for specific categories:
| State | Dates | Categories | Limits |
|---|---|---|---|
| Texas | August 8-10 | Clothing, backpacks, school supplies | $100/clothing, $50/backpacks |
| Florida | July 27 - Aug 9 | Back-to-school items | $100/clothing |
| Tennessee | July 25-27 | Clothing, school supplies, computers | $100/clothing, $1,500/computers |
| Ohio | August 1-3 | Clothing, school supplies | $75/item |
| Massachusetts | August 16-17 | Most retail items | $2,500/item |
| Virginia | August 1-3 | School supplies, clothing | $100/item |
Pro Tips for Tax-Free Weekends
- Shop online - most apply to online purchases too
- Stock up on basics you'll need all year
- Check state-specific rules (some items excluded)
- Big purchases (laptops, TVs) may have limits
- Combine with store sales for maximum savings
Online Shopping & Sales Tax
When Online Stores Must Charge Tax
Since the 2018 South Dakota v. Wayfair ruling, online retailers must collect sales tax if they have "nexus" in your state:
- Physical presence: Warehouse, store, or office in your state
- Economic nexus: Over $100K sales or 200 transactions in state
Legally Avoiding Online Sales Tax
- Ship to tax-free states: If you have an address there
- Small sellers: May not meet economic nexus thresholds
- Use tax states: Some states have "use tax" instead (honor system)
Duty-Free Shopping
Airport Duty-Free Explained
Duty-free shops at international airports offer products without:
- Import duties
- Local taxes
- Some excise taxes
Best items to buy duty-free: Alcohol, tobacco, perfumes, cosmetics, luxury goods
Duty-Free Allowances (Returning to US)
- General: $800 in goods per person
- Alcohol: 1 liter per adult (21+)
- Cigarettes: 200 cigarettes or 100 cigars
- From US territories: $1,600 exemption (USVI, Guam)
Tax Exemptions by Category
Groceries
Many states exempt groceries from sales tax:
- Fully exempt: Arizona, California, Connecticut, and 30+ others
- Reduced rate: Arkansas (0.125%), Illinois (1%), Virginia (2.5%)
- Taxed: Alabama, Hawaii, Kansas, Mississippi, South Dakota
Clothing
- New York: Clothing under $110 is tax-free
- New Jersey: Most clothing exempt
- Pennsylvania: Most clothing exempt
- Minnesota: Clothing exempt
Prescription Medications
Most states exempt prescription drugs from sales tax. Over-the-counter medications vary by state.
Business & Resale Exemptions
Resale Certificates
If you have a business, you may qualify for tax exemptions:
- Resale certificate: Buy inventory tax-free to resell
- Sales tax permit: Required in most states
- Manufacturing exemption: Equipment used in production
- Nonprofit exemption: 501(c)(3) organizations
International Shopping & VAT Refunds
Getting VAT Refunds in Europe
- Make purchase over minimum amount (usually €50-175)
- Request tax-free form at checkout
- Get form stamped at customs before leaving EU
- Submit for refund at airport or by mail
- Receive 10-15% of purchase price back
Countries with VAT Refund Programs
- EU countries: 17-27% VAT rates
- UK: 20% VAT (no longer in EU refund scheme)
- Japan: 10% consumption tax refundable
- Australia: 10% GST refundable on departure
Tips to Maximize Tax Savings
- Time big purchases: Wait for tax-free weekends
- Cross-border shopping: If near tax-free state, make the trip
- Ship to work: If your workplace is in tax-free area
- Delaware shopping trips: Worth it for purchases over $500+
- Use resale certificate: If you have legitimate business need
- International travel: Plan major purchases for VAT refund countries