# States with No Sales Tax: What SaaS Sellers Should Know (2026)

> States with no sales tax explained for SaaS sellers. The 5 NOMAD states, what nexus still triggers, and how SaaS taxability varies across the US.
- **Author**: Aarthi Poonia
- **Published**: 2026-06-11
- **Category**: Tax, US, Compliance
- **URL**: https://dodopayments.com/blogs/states-with-no-sales-tax-saas-sellers

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Five US states have no statewide sales tax: New Hampshire, Oregon, Montana, Alaska, and Delaware. They are sometimes called the NOMAD states (an acronym from their initials). For SaaS sellers, "no sales tax" sounds simple, but the operational reality is more nuanced. Some of these states still allow local sales taxes. Some still have other taxes that can apply to digital services. And the absence of state sales tax does not change your obligations in the 45 other states where you do business.

This guide walks through what each NOMAD state actually charges, what SaaS sellers need to know operationally, and how to think about US sales tax across the full country.

## The five NOMAD states

| State | State Sales Tax | Local Sales Tax | SaaS Taxability |
|---|---|---|---|
| New Hampshire | 0% | None | Not taxed |
| Oregon | 0% | None | Not taxed |
| Montana | 0% | None (limited resort towns) | Not taxed |
| Alaska | 0% | Local only (up to 7.5%) | Often locally taxed |
| Delaware | 0% | None | Not taxed |

Four of the five (NH, OR, MT, DE) have no sales tax at any level. Alaska is the exception: cities and boroughs in Alaska can impose their own sales taxes.

## What "no sales tax" means for SaaS sellers

If you are a SaaS company selling to customers in New Hampshire, Oregon, Montana, or Delaware, you do not collect sales tax on those transactions. You also do not have to register for sales tax in those states (assuming no other compelling reason).

For Alaska, the picture is more nuanced. There is no Alaska state sales tax, but many Alaska boroughs and cities have local sales taxes (Anchorage, Juneau, Fairbanks, etc.). These local taxes apply to SaaS sometimes (depends on the local jurisdiction's definition of taxable services). Selling SaaS to Alaska customers may trigger local nexus and local registration in specific boroughs.

In short: NH, OR, MT, DE are clean. Alaska requires attention.

## What other taxes still apply

Even in NOMAD states, SaaS sellers may have other obligations:

### 1. Income tax in some NOMAD states

- **Oregon**: has corporate income tax (CIT) and personal income tax. If you have nexus for income tax (typically physical presence: employee, office, server), you owe Oregon income tax.
- **Delaware**: famous for low corporate income tax for non-Delaware operations but has gross receipts tax for in-state activity. Delaware-incorporated SaaS pay federal taxes normally; Delaware franchise tax is a separate annual obligation.
- **Alaska**: corporate income tax applies to most corporations.
- **Montana**: corporate income tax applies.
- **New Hampshire**: Business Profits Tax (BPT) and Business Enterprise Tax (BET) apply.

So while NOMAD states do not charge sales tax, they do collect other state-level taxes that can apply to SaaS businesses with nexus.

### 2. Franchise taxes

Delaware-incorporated SaaS pay an annual Delaware franchise tax regardless of where customers are. This is not a sales tax; it is a corporate franchise fee tied to incorporation, not to revenue location.

### 3. Local taxes (Alaska)

Several Alaska boroughs have local sales taxes that apply to SaaS in some cases. If you have meaningful Alaska revenue, check the local taxability rules per borough.

## SaaS taxability across the full US

The bigger operational question is what happens in the other 45 states + DC + Puerto Rico. SaaS taxability varies enormously:

### States that generally tax SaaS

- New York
- Pennsylvania
- Texas
- Washington
- Massachusetts
- Connecticut
- Ohio
- Utah
- Hawaii
- New Mexico
- South Dakota
- Tennessee
- Washington DC
- (and others, with conditions)

### States that generally do NOT tax SaaS

- California
- Florida
- Georgia
- Illinois (with some exceptions)
- Virginia
- North Carolina
- Maryland (B2B exception possible)
- Michigan
- (and others, with conditions)

### Mixed / depends on conditions

- Indiana (depends on hosting)
- Arizona (varies by county)
- New Jersey (depends on B2B vs B2C)
- Several others

These categorizations change. Always verify with the state's Department of Revenue or a current tax service before relying on a specific position.

> US SaaS sales tax is a 50-state patchwork. The NOMAD states are a small simplification on the map. The real work is the rest of the country, where taxability and nexus thresholds vary widely.
>
> \- Ayush Agarwal, Co-founder & CPTO at Dodo Payments

## How NOMAD states affect SaaS strategy

### 1. Customer location matters more than seller location

For sales tax, what matters is where the customer is, not where you are. A SaaS based in New Hampshire selling to New York customers still has to deal with New York sales tax (assuming nexus). The seller's home state being a NOMAD state does not change anything about customer-side obligations.

### 2. Server location used to matter; now usually does not

Historically, server location could create physical nexus for tax purposes. Most modern SaaS uses cloud infrastructure (AWS, Azure, GCP) and physical server location is not really under your control. State rules have largely caught up; pure cloud SaaS rarely creates server-based nexus in itself. Verify per state.

### 3. Incorporation state is a separate question

Many SaaS incorporate in Delaware for corporate law reasons. Delaware incorporation does not create sales tax nexus in Delaware (because there is no sales tax) but does create the annual Delaware franchise tax obligation.

### 4. Employee location is the main physical nexus trigger

If you have an employee in any state, you create physical nexus there for both income tax and sales tax (in states that tax SaaS). Hiring remotely means tracking nexus in each employee's state.

## Misconceptions to avoid

### "I am in Oregon, so I do not collect sales tax."

Wrong for any customer outside Oregon. You collect (or do not collect) based on the customer's state, not yours.

### "I am incorporated in Delaware, so I do not pay sales tax anywhere."

Wrong. Delaware incorporation affects corporate law, not sales tax obligations. You owe sales tax in any state where you have nexus and your product is taxable.

### "SaaS is not taxed, only physical goods."

Wrong. Most US states tax SaaS in some form. Treating SaaS as universally nontaxable is a common and expensive mistake.

### "NOMAD states have no taxes."

Wrong. They have no statewide sales tax. They typically have income tax and other state taxes. Delaware has franchise tax. Alaska has local sales taxes.

## How merchant of record handles US sales tax

For a SaaS that does not want to track nexus, register state by state, and file 45 different sales tax returns, a [merchant of record](https://dodopayments.com/blogs/what-is-a-merchant-of-record) absorbs the entire workflow as the legal seller. The MoR registers in the relevant states, collects the right tax based on customer location, files the returns, and remits to the states.

For [Dodo Payments](https://dodopayments.com), US sales tax is part of the broader 190+ tax jurisdiction coverage. The underlying SaaS supplier does not interact with state tax portals at all. The MoR handles the NOMAD states correctly (no collection) and the 45 other states based on their specific SaaS taxability rules.

## Quick reference

| Question | Answer |
|---|---|
| Do I collect sales tax in NH, OR, MT, DE? | No |
| Do I collect sales tax in AK? | No state, sometimes local depending on the borough |
| Does NOMAD residency exempt me from other states? | No, customer-side state rules apply |
| Does Delaware incorporation help with sales tax? | No, only corporate law and franchise tax |
| Where can I find authoritative state taxability rules? | Each state's Department of Revenue, or a current tax service |

## FAQ

### Which US states have no sales tax?

Five states have no statewide sales tax: New Hampshire, Oregon, Montana, Alaska, and Delaware. Alaska allows local sales taxes at the borough and city level, so it is not entirely sales-tax-free in practice.

### Do SaaS sellers in Oregon need to collect sales tax?

Not for Oregon customers, because there is no Oregon sales tax. For customers in other states, the SaaS may need to collect sales tax in those states based on nexus and taxability rules in those states. Customer location drives the obligation, not seller location.

### Is SaaS taxable in California?

Generally no. California treats SaaS as nontaxable in most cases. However, downloaded software, physical media, and certain bundled offerings can be taxable. Always verify the current rule for your specific product.

### Does Delaware incorporation reduce sales tax?

No. Delaware incorporation is a corporate law and franchise tax topic. Sales tax obligations are determined by where your customers are and where you have nexus, not by where you are incorporated.

### Does a merchant of record collect sales tax for me?

Yes. An MoR is the legal seller and registers in the relevant US states, collects tax based on customer location and product taxability, files returns, and remits to the states. The underlying SaaS supplier does not handle US sales tax operationally.

## Conclusion

The NOMAD states are a useful simplification but they cover only 5 of 50 states. The real US sales tax work happens in the other 45 states where rules vary widely by state and by product. For SaaS sellers, the choice is to track and file across all states manually, use a tax service, or use a merchant of record that absorbs the entire workflow.

If you want US sales tax (and global tax) handled for you, [Dodo Payments](https://dodopayments.com) operates as merchant of record across 190+ jurisdictions. See [pricing](https://dodopayments.com/pricing).
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