States without sales tax offer significant administrative advantages for retail and e-commerce businesses. The five states without sales tax are Alaska, Delaware, Montana, New Hampshire, and Oregon (often remembered by the acronym NOMAD).
Forming an LLC in states without sales tax means you do not have to collect, report, or remit state-level sales tax on purchases made by residents of that state. This significantly reduces compliance overhead for startups.
Even if you form your business in one of the states without sales tax, you may still owe sales tax in other states. Under the South Dakota v. Wayfair ruling, if you sell enough products to customers in California or Texas, you establish an "economic nexus" and must collect their state sales tax.
While Alaska has no state-level sales tax, it does allow local municipalities to charge their own local sales taxes. Always verify local jurisdiction rules before assuming your transactions are completely tax-free.
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State-specific formation guides, cost breakdowns, compliance checklists, and expert comparisons — updated for 2026.