Delaware does not have a sales tax
Delaware is one of five U.S. states with no statewide sales tax. This means when you buy goods or services in Delaware, you pay no sales tax at the register. The state has not imposed a sales tax since its founding, and there is no local sales tax either.
This fact matters if you live in Delaware, work there, or do business across state lines. It also matters if you are comparing your tax burden to other states or trying to understand why a purchase in Delaware costs less than the same item in a neighboring state.
Key Takeaways
- Delaware has no state or local sales tax on any purchase, making it one of five states without one.
- If you buy something in Delaware and take it to another state, you may owe that state's sales tax depending on where you live and how that state's laws work.
- Online retailers must collect sales tax based on where the buyer lives, not where Delaware is located, so buying online from a Delaware company does not automatically mean no tax.
- Delaware residents who buy from out-of-state retailers may owe use tax on those purchases, though it is rarely enforced for individual consumers.
How the lack of sales tax affects your purchases
When you buy something in a Delaware store, the price you see is the price you pay. There is no additional tax added at checkout. This applies to clothing, groceries, electronics, and most other goods. Services like haircuts, repairs, and restaurant meals also have no sales tax in Delaware.
The savings add up over large purchases. A $1,000 item costs $1,000 in Delaware, whereas the same item might cost $1,070 or more in a neighboring state with a 7 percent sales tax. Some people travel to Delaware specifically to make large purchases for this reason, though the savings only matter if you live close enough that travel costs do not erase the benefit.
What happens when you take a Delaware purchase to another state
Buying something in Delaware and moving it to another state does not automatically trigger that state's sales tax. However, most states have a use tax that applies to goods you bring in from out of state. Use tax is meant to level the playing field between local purchases and out-of-state ones.
In practice, use tax is almost never collected from individual consumers at the border or when you register a vehicle. It exists mainly on paper as a way to tax businesses that buy goods out of state for resale. If you are a consumer buying for personal use, you are unlikely to encounter a use tax bill, even though technically you may owe one under the other state's law.
The exception is vehicles. If you buy a car in Delaware and register it in another state, that state will usually charge sales or use tax based on the purchase price. Some states allow you to credit any tax you paid in Delaware, but Delaware has no tax to credit, so you will owe the full amount.
Online purchases from Delaware companies
Buying online from a Delaware-based retailer does not mean you avoid sales tax. Federal law requires online retailers to collect sales tax based on where the buyer lives, not where the company is located. This rule applies whether the retailer is in Delaware, California, or anywhere else.
If you live in a state with sales tax and order from a Delaware company, that company must collect your state's sales tax and send it to your state. The retailer's home state does not matter. The only time you pay no tax on an online purchase is if you live in one of the five states without sales tax (Delaware, Montana, New Hampshire, Oregon, or Alaska) and the retailer has no physical presence in your state.
Delaware use tax for residents
Delaware residents who buy goods from out-of-state retailers are technically supposed to report and pay Delaware use tax on those purchases. Delaware's use tax rate varies by item but generally mirrors what sales tax would be in other states—around 0 percent for most goods, since Delaware has no sales tax.
This creates an unusual situation: Delaware residents owe use tax to Delaware on out-of-state purchases, but Delaware's use tax rate is zero for most items. In effect, Delaware residents owe nothing. The use tax exists mainly to maintain legal symmetry with other states and is not a practical concern for individual shoppers.
Why Delaware has no sales tax
Delaware's lack of sales tax is historical, not accidental. The state has relied on other revenue sources, particularly corporate income tax and fees from businesses incorporated in Delaware. Many large corporations are incorporated in Delaware because of its business-friendly laws and court system, which generates significant state revenue without a sales tax.
This revenue model means Delaware does not need a sales tax to fund state services. Other states without sales tax—Montana, New Hampshire, Oregon, and Alaska—use different revenue sources, such as income tax or natural resource taxes. Each state's tax structure reflects its own history and economic base.
Frequently Asked Questions
Do I have to pay sales tax if I buy something in Delaware and use it in Delaware?
No. Delaware residents pay no sales tax on any purchase made in Delaware, regardless of where they use the item. The lack of sales tax applies to all purchases within the state.
What if I buy a car in Delaware and register it in Pennsylvania?
Pennsylvania will charge you sales tax or use tax on the vehicle based on its purchase price. You will owe this tax when you register the car in Pennsylvania. Some states allow credits for tax paid in other states, but since Delaware has no tax, there is nothing to credit.
Can I order online from a Delaware company and avoid sales tax?
Only if you live in a state without sales tax and the company has no physical location in your state. If you live in a state with sales tax, the Delaware company must collect that tax from you at checkout, even though they are based in Delaware.
Do Delaware businesses pay any tax on inventory or goods?
Delaware businesses do not pay sales tax on their inventory. They may pay corporate income tax, property tax, and other state fees depending on their business structure, but not sales tax. This applies to all businesses operating in Delaware.
Is there any tax on groceries in Delaware?
No. Delaware has no sales tax on groceries, prepared food, or any other category of goods. Some states exempt groceries from sales tax while taxing other items, but Delaware taxes nothing because it has no sales tax at all.