A state has not added a statewide sales tax since Richard Nixon was in the White House. Vermont was the last to due so in 1969. There are five remaining states with no state level sales tax: New Hampshire, Oregon, Montana, Alaska and Delaware – often referred to as the NOMAD states.
Businesses based in these states still have the obligation to track their nexus footprint outside of their state and manage sales tax where they’ve determined they have an obligation. If you sell in to one of these states, you most likely will not have to collect and remit sales tax from these customers.
Sales may soon be different in Alaska, though, where the governor is reportedly readying to introduce a sales tax. Local jurisdictions already have the Alaska Remote Seller Sales Tax Commission to streamline sales tax collection and remittance. Of Alaska’s 162 municipal governments, approximately 110 already levy some form of sales tax (including some seasonal ones) of 1% to 7%.
Proponents have studied many models for an Alaska sales tax, including a year-round rate of 2%. Researchers say that a 2.3 % tax on most goods and services could earn the state up to $850 million to ease a budget deficit created in part by volatile oil prices. The idea seems to be gathering real momentum at last.
Oregon doesn’t have a sales tax but like some other states, it does have high rates of tax on income and property. Municipalities are allowed to set their own local sales taxes; some cities also have a tax that applies to the sale of prepared food and beverages.
Not nearly on Alaska’s level of progress with a sales tax, Oregon has often debated the subject in conjunction with lowering some of the state’s other high taxes. The most recent proposed legislation was defeated last year.
New Hampshire has some of the steepest property taxes in the nation but imposes no sales tax affecting businesses at the state or local level. There are excise taxes on certain services. Granite State lawmakers are still adamant about counteracting the Supreme Court’s 2018 Wayfair decision and sales tax obligations for online sellers.
Montana may not have a statewide sales tax, but it does allow localities to assess sales tax, usually small, tourist-destination cities. Sales tax in some localities and counties can be as high as 5%. Out-of-state businesses with nexus in Montana may be required to obtain a seller’s permit and to charge, collect and remit local taxes.
Delaware does require certain businesses and sellers to pay a gross receipts tax that varies based on business activity. The tax is on the total gross revenues of a business, regardless of their source and is levied on the seller of goods (tangible or otherwise) or services, rather than on the consumer. Rates are 0.0945% to 0.7468%, depending on the business activity. See more at this FAQ page.
Sales tax isn’t getting any easier. Let TaxConnex manage the burden of keeping up with all the changes and challenges that come with staying compliant in this post-Wayfair world. Contact us to learn what it means when sales tax compliance is all on us. And click here to learn more about Economic Nexus Laws By State.