US Alaska & Montana to implement Sales Tax?

US “Sales Tax Club” expands? Alaska and Montana reopen the debate

Two of the five remaining US states without a statewide sales tax are again asking a once-taboo question: is it time to join the other 45? The current ‘hold out’ states are: Alaska, Montana, New Hampshire, Delaware and Oregon

Alaska: From Oil Dependence to Seasonal Sales Tax

In Alaska, fiscal volatility is the catalyst. Governor Mike Dunleavy has proposed Senate Bill 227 to address a projected $1.5 billion deficit for FY2026, driven in part by declining oil and gas revenues. The bill would introduce the state’s first-ever statewide sales and use tax from 1 January 2027.

The proposal is structurally significant:

• Seasonal rates: 4% from 1 April to 30 September (peak tourism), 2% from 1 October to 31 March.

• Broad base: tangible goods, digital products, prewritten software, utilities, professional services, construction labor, telecoms, entertainment, lodging, and SaaS-style access to computer systems.

• Exemptions: food, internet access, resale transactions, isolated sales.

• Sunset clause: expiry on 1 January 2034.

Notably, SB 227 would centralize administration of more than 100 local sales taxes currently operated by municipalities (many coordinated via the Alaska Remote Seller Sales Tax Commission). If enacted, compliance would shift from a fragmented local regime to Department of Revenue oversight—materially altering workflows for remote sellers already registered locally.

If Alaska proceeds, it would be the first state to adopt a general sales tax since Vermont in 1969—a landmark shift in US state tax architecture.

Montana: Diversification or Distortion?

In Montana, the debate is more exploratory but increasingly prominent. At the University of Montana’s Bureau of Business and Economic Research Economic Outlook Seminar, Director Jeff Michael highlighted growing interest in a statewide levy as a tool to diversify revenue and offset rising property taxes.

Proponents argue a sales tax could broaden the base and capture revenue from non-residents. However, analysts caution that expectations around tourism receipts may be overstated: Montana visitors spend proportionally less on taxable retail and more on outdoor activities and fuel. More targeted instruments—such as lodging or fuel taxes—may be more efficient if the policy objective is tourist capture.

Equity concerns also loom large. Montana is currently viewed as having one of the least regressive state tax systems. A general sales tax would likely shift that balance, disproportionately affecting lower-income households who spend a greater share of income on taxable consumption.

Demographies and commodity volatile may force the call

For both states, the issue is less ideological than structural: how to stabilise revenues in the face of commodity cycles, demographic change and expenditure pressure.

If Alaska moves first, the symbolic impact could be substantial. The shrinking “no sales tax” club—Alaska, Montana, New Hampshire, Delaware and Oregon—may soon find itself redefined.

US Sales Tax rates and selling thresholds