Are you looking for the best option to open your company in the United States?
Right now, you must be gathering information about each of the essential aspects of this process. Such as how to start your business in the USA, what the requirements are, what type of structure to begin with, etc.
You must also consider economic aspects, expenses, and more.
For example, taxes.
So, in this article, you will learn about the 5 states where no sales taxes are imposed.
But before that, let me clarify a few details.
About Sales Taxes
Although I’m going to list 5 states in the U.S. that do not impose sales taxes, it does not mean you are completely exempt.
States that do not impose sales taxes seek these benefits in various ways.
This can be through the increase of other types of taxes, such as income tax, property tax, or property tax. As well as through the costs of social security or taxes on purchasing gasoline or alcohol, for example.
So remember that not always will a state be the best option solely based on its taxes. You must have a comprehensive view of everything and conduct thorough research.
Now, let’s get started with the states.
U.S. States with No Sales Taxes
1. Alaska
In the case of Alaska, you are not completely exempt from sales taxes. These taxes will depend on the government’s assessment.
However, Alaska has a very low tax rate, with an average of 1.76%. So, there isn’t much to worry about.
In addition to having such a low rate, this state does not impose income tax or motor vehicle tax. Most of the state’s revenue comes from natural resources.
A very good option to consider for starting a business in the United States, whether it’s an LLC, C Corp, S Corp, etc.
2. Oregon
In this state, there is no sales tax, but income taxes are imposed, with rates ranging from 5% to 9.9% on average.
For individual filers, the maximum income tax rate applies to income over $125,000, while for joint filers, it applies to income over $250,000.
3. Montana
As previously explained, most of these states compensate for the lack of sales tax with other taxes and sources of income.
In the case of Montana, you are not completely exempt from sales taxes, and although the rate seems quite low (with an average of 1 to 6.9 percent), the maximum rate applies to income over $17,400.
In addition to taxes, Montana charges tax on Social Security benefits.
4. New Hampshire
New Hampshire does not impose any sales tax. The government in this state assesses taxes based on dividend income, not wage income.
Although it may seem that you don’t have to pay many taxes, let me tell you that New Hampshire generates its revenue in other ways.
For example: high taxes on alcohol, tobacco, gasoline, and property and vehicle taxes. The average vehicle tax rate is 1.8% ($180 per $10,000 of vehicle value), and the average property tax rate is 2.15%.
5. Delaware
In the case of the last state we’ll discuss, Delaware is a state where people typically travel just to make tax-free purchases. This alone can give you an idea of Delaware’s tax situation.
This state does not impose sales tax or vehicle tax.
The only taxes you have to pay are the corporate franchise taxes, which have a very low rate (2.2 to 6.6 percent) and some of the lowest tax rates in the United States.
If you’re wondering how Delaware generates its revenue, I’ll tell you.
Delaware is home to many large corporations, so its income comes from corporate franchise taxes.
Have you decided in which U.S. state to start your business?
We are Rex Legal, and we are always ready to provide you with guidance on the entire legal process involved in starting a business in the United States.
Contact us, and we’ll be happy to assist you.
